BSIP-0008

bsip-0008.md

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+    BSIP: 0008
+    Title: Fee Backed Assets
+    Authors: Danial Larimer <Dan@cryptonomex.com>
+             Stan Larimer <Stan@cryptonomex.com>
+             Fabian Schuh <Fabian@BitShares.org>
+    Status: Draft
+    Type: Protocol
+    Created: 2015-12-16
+    Discussion: <https://bitsharestalk.org/index.php/topic,20286.0.html>
+    Worker: not applicable
+
+# Abstract
+
+We're all familiar with counterparty free Market Pegged Assets (MPA) and issuer
+backed User Issued Assets (UIA). Theoretically, there could be a third type: Fee
+Backed Assets (FBA).
+
+Hence we propose to develop a feature for *Market based innovation*: if people
+can profit from successful features in the form of fees then it definitely helps
+BitShares become more adaptable over time. More importantly it promotes
+innovation.
+
+# Motivation
+
+A developer installs a new function that charges fees for its service and pays
+those fees to holders of a UIA she creates for that purpose.
+
+She naturally starts out as the owner of those revenue producing assets.
+
+She is free to sell them since each one is a revenue generating counterparty
+free asset backed solely by the blockchain.
+
+Since they have no counterparty, they are not a security. They are simply
+capital equipment, like selling a mining machine.
+
+This new kind of digital asset trades like any of the others but has fascinating
+new properties.
+
+There could be a new asset for every new revenue generating feature in the whole
+ecosystem. Developers recoup their costs by selling (or pre-selling) these
+revenue generating software devices (or keeping them to earn the revenue they
+produce.)
+
+# Examples
+
+## Taxi Rental
+
+Build 100 robotic software taxi cabs that deliver private packages for hire.
+Program them via blockchain logic to take turns delivering packages. Sell the
+cabs to the network in exchange for a set of tickets good for rental minutes on
+a cab. Resell/trade those tickets on the open market. This way, anyone can
+rent time on any of the limited supply of "cabs" and earn fees for performing
+delivery services.
+
+The TAXI FPA could represent all available minutes on a network-owned fleet of
+robotic taxi cabs. Buy up as many minutes of their time as you want and you have
+your own revenue generating business with no counter parties.
+
+## Project/Feature Funding
+
+In the case of [BSIP-0007](bsip-0007.md), the project development can be funded
+by a PRIVACY FPA that gets their owners a cut of fees produced by transactions
+using that feature in the future.
+
+# Regulatory issues
+
+Much consultation with Cryptonomex and with several prominent and trusted
+members of the BitShares community has lead me to some preliminary conclusions
+as to how a "Privacy Mode" feature could best be implemented and  used in a
+safe and timely fashion and at no risk to the BitShares Community.
+
+One of the first and thorniest problems we tackled is the nasty fact of
+*Regulatory Risk*. There exists a vocal contingent of people who want very much
+that an FBA (fee based asset) be created to fund this feature upgrade to the
+BitShares blockchain. They want that everyone be thus enabled an opportunity to
+participate in the fee stream originating from future use of the feature by
+purchasing shares of a `STEALTH` asset.
+
+The conundrum is that whoever creates the FBA and offers it to the public as a
+means of participation in a fee-based income stream faces a risk of coming under
+regulatory scrutiny if the project is a success (e.g. Satoshi Dice) or even if
+it is not a success (through some disgruntled investor complaining to a
+regulatory authority). For a more in depth look in to Regulatory Risk please see
+[1,2].
+
+If something falls within the definition of a *security* under applicable law,
+it will be governed by extensive rules and regulations that can be quite complex
+and expensive to comply with. And subject the issuer to a large fine/other
+penalties if not complied with!
+
+Once the "Privacy Mode" feature has been implemented and is available on the
+blockchain (but not before), it will be possible for future investor and
+entrepreneurs to create FBAs and crowd fund new features by having a *Private
+Mode account* ([BSIP-0007](bsip-0007.md)), issue the FBA from an *unknown*
+jurisdiction that is presumably not subject to securities concerns.
+
+# Management Account
+
+A FBA asset (such as the [STEALTH asset](bsip-0007.md)) will be issued by a
+"management account" for that particular feature as part of a hard fork. The
+initial share holders of the FBA asset have to be defined upon the hard fork.
+The management account will have a Multi-Signature authority assigned to the `X`
+largest share holders of that account weighted proportional to stake and will
+have the power to set the fee.
+
+# Copyright
+
+This document is placed in the public domain.
+
+# See Also
+
+* [1] https://bitsharestalk.org/index.php/topic,20499.msg264752.html#msg264752
+* [2] http://www.cuttingedgecapital.com/what-is-a-security-and-why-does-it-matter/