4.9 KiB
BSIP: 0007
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-0008, 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-0008), 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) 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.
All FBA require a protocol upgrade (read: hard fork) to create the management account.
Copyright
This document is placed in the public domain.