Investment system

[orthecreedence]

Basis has the concept of blocs, each having an "allocation" (the maximum amount of costs that bloc can assume within the protocol).

How is this initial allocation decided?

Here are the properties for an investment system I think would make sense:

1. Ability for participants to direct production either directly or indirectly (ie, delegate their investment through another agent/bloc like a bank)
2. Investment is incentivized. The idea here is that you want people to invest and there's some payoff for doing so.
3. Investment should carry some weight of responsibility. If I can create a bloc with a high allocation but it costs me nothing personally, then I can just order a lambo and peace out or if I go bankrupt there would be a bunch of materials sitting around collecting dust. The workers (and investors) should be responsible for the costs of their bloc, or else you'd get a lot of "lol wuldn't it be kewl if..." vs "I think we need this...here's an analysis of demand for it blah blah." In other words, allocation would need to come from some tangible resource put up as collateral.
4. Speculation is at least limited. People should invest because it fulfills a need, not because they can DOUBLE THEIR CA$H WITH THIS ONE SIMPLE TRICK!!!!!!1
5. The system is general enough to be emergent and not tied to one specific model of investment.
6. The system should avoid incentivizing "manufacturing demand" (ie, avoid rewarding sales as opposed to meeting a need).

Modeling attribute 1 seems fairly straightforward, however 2 & 3 as well as 2 & 4 are somewhat at odds. If 1 is implemented correctly, the risk from 3 can be spread out (much like interest from banks). However, some delicate balance between 2 and 4 seems prudent.

Here are some previously discussed ideas/mechanisms:

• Credits as allocation - Anybody can take their hard-earned credits and convert them 1:1 into an investment voucher that directly increases the allocation of any bloc of their choosing by 1₡. Investment vouchers can be delegated to another agent/bloc to invest on your behalf. Increases/decreases to the allocation via the cybernetics system would change the share of the investment voucher by the proportional percentage the allocation was changed. Investment vouchers can be withdrawn (decreasing the allocation on withdraw at the same value the voucher is) and converted back to credits.
  • Pro - All the risk is assumed.
  • Pro - Incentivizes investing in blocs that have a good track record, as they are likely to continue to get increases in allocation.
  • Con - Those with the most credits get the most say in production. The age-old problem! However, given that credits are earned only through labor in a co-op, salaries would effectively be somewhat equalized.
  • Con - Disabled/retired/sick/yada yada people can't invest. Perhaps we have some kind of investment voucher UBI?
  • Note - Withdrawal of investment vouchers must take into account the bloc's costs. If the bloc has an allocation of 100 and costs of 50 and I invest 50 vouchers, the bloc would have an allocation of 150 and costs of 50. If their costs went up by another 50 (100 total), what value would my vouchers have?
  • Note - Adjustments to value of vouchers must only be made proportionally to adjustments by the cybernetics system. Investments by others would not affect the value of my vouchers. This encourages investment via allocation adjustments and completely eliminates pump-and-dump speculation.
  • Note - Would increases in investment vouchers that are redeemed be converted back to credits (₡) or UBI? Converting to credits makes them transferable (and redeemable when plugged into a market system) and UBI makes them non-transferable and only spendable on consumer goods. What are the pros/cons here?
• Pre-sales/crowdsourcing - A worker can create a new bloc and put up a product marked for pre-sale that doesn't exist yet marked. The orders that come in for that product would set the allocation for the bloc. For instance, if they pre-sell 980 widgets at a projected cost of 10₡ each, the allocation would be 9800₡.
  • Pro - A somewhat organic method of sensing demand and providing allocation to meet that demand.
  • Pro - All the risk is assumed.
  • Con - Incentivizes "manufacturing demand." If pre-sales can directly affect allocation, I'm incentivized to sell, sell, sell as opposed to meet a need.
  • Con - All the risk is assumed by the customers, leaving them on the hook for the workers' blunders. Perhaps the per-pre-sale allocation increase is a multiplier of some function of existing allocation and projected cost per-unit, making it harder to manufacture demand as well as pushing all risk on customers.
  • Note - Requires setting boundaries on how pre-sales are canceled/refunded/etc. A pre-sale is a commitment both by the producer and consumer, and having some ability for them to back out would be useful.
  • Note - If I want to (maliciously) raise allocation for an existing company, I can just mark an existing production item for pre-sale and any incoming orders for it increase allocation. What mechanisms stop this from happening?
  • Note - There needs to be some method of adjusting per-pre-sale costs based on the delta between the actual costs and the projected costs. If I projected the widget costs 10₡ but it costs 15₡ to make, what happens? If the projected cost is 10₡ but the actual is 5₡ what happens?
  • Note - The more I think about this, the more I'm realizing this falls under the purview of the cybernetics system rather than the investment system.

[orthecreedence]

Need to be careful here.

This works in a money system because when you invest in something you are incentivized by a return of some sort. Obviously this isn't always the case, but it's a general trend. If we do define an investment system, there needs to be some incentive for picking "winners" (in the sense of companies that end up meeting a need). Perhaps a token system with gamified returns would work.

For instance, I invest in Widgets Plus, which bumps up their max costs. They use this bump to ramp up production, and and up doubling their throughput to handle their order backlog. By meeting more needs, perhaps the system adjusts their max costs upwards (effectively prints investment tokens) and as a result, I'm entitled to some portion of this increase, which I can then use to invest in other companies. This model could also work for banks, although do you invest in the bank directly, and then the bank forwards those tokens to other companies? Can a company pledge a portion of its invest tokens in another company?

We also have to balance this out such that we don't exhaust the supply of these tokens or print them endlessly. Also, how do I recoup my investment? By recalling my tokens? That could bankrupt a company. There needs to be a lot of careful thought put into this, and I'm inclined to have some sort of traditional community bank setup instead of trying to democratize this fully on the first round. That said, I think it's important to build with the idea of democratized investment in mind, and in a general enough way that it allows for emergence.

Also keep complexity in mind. Do we really need 16 different currencies floating around? I mean at what point is this such a complicated beast that it's inexplicable to anybody? Need to be careful here. Effectively this is using a currency to replace what would otherwise be a democratic, planned process. Which I think is a decent goal because democratic planning would be slow and brittle. People need to be free to produce without constraints and without permission from the collective.

This needs more thought, but it's good to get these ideas down.

[orthecreedence]

Another thought: just use credits.

Implement some form of decay (aka inflation) on credits: 1% per year (possibly adjustable regionally or globall) that makes your credit value decay over time unless pledged to a company. The company wouldn't be able to spend the credits, but it would really just act as an increase to their allocation.

This is very similar to the liquid democracy idea, in that you could "recall" your credits, maybe with some locking period.

The only problem here is we return to the capitalist model of whoever commands the most money holds the most control over the economy. This isn't my favorite mechanism, especially if using supply and demand for labor markets (which Basis does in its current form).

That said, good to keep things like this in the back pocket. At some point, you do need an investment system and it needs to be understandable.

[orthecreedence]

Another interesting idea following discussions on the Basis matrix channel: using (pre-)orders as a mechanism for setting the allocation for a new company. This requires some devils-in-the-details unwinding, but the general unpolished idea is that you estimate the cost per-unit, and each order is a commitment to buy that unit at that cost, which factors into your initial allocation.

I'm not sure how number of orders and cost-per-unit would translate into a final number. And this would only solve things for direct consumption, not b2b. How would this work for a company that supplies materials solely to other companies? I suppose the same mechanism could work: you convince them to pre-order at some cost, then go from there.

This needs more thought but is a promising way of using the order system (really a demand signal) for setting initial "investment" in a company. And from there, the cybernetics system would adjust allocation afterwards.

EDIT: updating with some notes: pre-orders would be a full commitment to buy (the credits or "costs" would be treated as spent and locked in "escrow," but the pre-order could be cancelled at any time which returns the credits/costs to the orderer.

[orthecreedence]

Been mulling this over for quite a while.

Something that has really stuck out to me is the idea of banking. It's a really old concept and a tried and true model. However, defining bank entities in Basis and determining all the actions/interest rates/etc they control seems painfully rigid. What I want is something generalized that a system of banking could emerge from but that also doesn't restrict other forms of investment.

Another thing I'm thinking about is costs and responsibility. It doesn't make sense that people who start a company would get command of resources but not ultimately be responsible for them. So I like the idea of using credits as a method of upping allocation, because a) if the bloc does poorly then the allocation decreases and b) the bloc members are incentivized to liquidate the resources in the bloc before terminating the bloc.

Tying this together (maybe) I had the idea for converting credits (not UBI, but actual labor credits) into "allocation vouchers/tokens" and using these to increase allocation for blocs. These could be "invested" into any bloc (not just blocs you're a member of) as a method of economic stimulus. If a bloc's allocation is adjusted upwards, the allocation token share increases by the overall percentage, so if/when it is withdrawn it's worth more. Keeping in mind, this investment would not buy a controlling share since we're trying to eliminate absentee ownership.

In regards to banking, I haven't figured out exactly how this would work. If I invest my allocation tokens into a bank, the idea is that the bank would need to be able to pool them and pay themselves for their labor out of any gains, so whatever system of delegation is created would need to enable something like this.

Need to think about this more. I've come up with like five half-ideas now.

[orthecreedence]

Note to self: if we're measuring increase in allocation as the converted credit amount when withdrawing, then this would allow for things like speculative investment in blocs/pump and dump/etc. This could probably be easily curtailed via contract or other mechanisms, but worth noting.

[orthecreedence]

This was the original text of the issue, moving it to a comment:

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Something that has bugged me for a while is the concept of how economic investment decisions are made. While the idea of adjusting bloc allocation (#78) makes sense to a large degree, who decides what the allocation is to begin with?

Some ideas

1. Mutual credit currency Liquid democracy investment that can be pledged and re-pledged. The idea is the currency itself is worthless, but can be used to adjust the allocation of a bloc upward by some fixed amount. You could pledge this to a local bank, which re-pledges it to companies it invests in, or you could pledge it to a company directly (including one you start). If a pledged company fails, the currency returns back to the last person who pledged it. It is also revocable by the original pledger (owner) possibly with some kind of systemic time window (30 days).
2. Like the mutual credit currency, but more of a UBI type situation. Instead of the currency having an owner it returns to, it would effectively transfer from person to person like a normal currency. It loses some percentage of its value every day (like 1% per day or something) unless it's pledged to a company. This currency, like the mutual credit, isn't used for purchases or anything, but is really just an adjustment on a company's max costs. One side effect of having this be a UBI is that a company could effectively just receive endless upward adjustments. Incentivizing diversity might need to be built into this currency.

I like the liquid democracy idea, because it's kind of set-it-forget-it but gives members the ultimate say in investment. If you think you know better than the bank, you can just reclaim your pledged investment credits and invest them yourself. The thing that needs thought is if the system adjusts the allocation downward, what happens? Do the liquid credits return to the last pledger(s) by some margin? FILO? FIFO? Equally to all investors fractionally? Dealing with returning credits to the last handler is an interesting question. Secondly, should there be some kind of time limit on investment? Are credits locked after investment for 180 days? 365 days? Even if the company fails, the investment is locked? This would add a lot of stability, and also make it difficult to serially start companies that fail if you invest in yourself over and over.

The UBI concept is interesting too. I like the properties that it's almost a flow of investment instead of a fixed amount, however it's one more thing people would need to manage, and I could see it concentrating on companies endlessly (because the supply is not fixed). There would need to be, like the liquid investment system, set-it-forget-it flow controls (send my investment basic income to the bank immediately). I think this would only work with some kind of redistributive effect, ie each company has their max costs reduced by 1% to fund the UBI, and from there everything reflows. This eliminates the need to track ownership. However, this would need to be a closed loop (kind of) such that there are N*M tokens (N being members, M being a fixed supply of tokens-per-person) where M is vested for new members (see #91).

[raynor11]

Hey @orthecreedence,

I have been reading up on Basis for a couple of months now and have found it to be a fascinating project and I want to find as many ways to help as possible. I know you are deep into working on Stamp but I have been improving my understanding of the paper and addressing some of the questions/issues you have noted.

One big question I have been asking recently is How is allocation determined?

I had an idea recently that uses some of the ideas you suggested in the investment system to address this. Here is the flow chart and let me explain.

Instead of Basis providing blocs with ₡ that would then be distributed to agents, Basis would hand out Allocation Vouchers (AV). AV would be the new form of ₡ at the bloc level. When a bloc pays out an agent for their work they are paid in AVs. To convert the AVs into ₡ for purchasing items the agent must use them. For an agent to use an AV they must select a bloc to send the AV to, this will send an Allocation Indicator (AI) to Basis suggesting to the Cybernetic system that this is a good company that people want to see grow (basically a vote for the company). After the AV is sent to the bloc the bloc can choose to pass it to another bloc (in case, for instance, a bloc would like to avoid increasing their allocation). Once a bloc has accepted the AV the agent has two options: (1) cashout for ₡ or (2) "invest" the AV.

The cashout is what is currently expected when an agent gets paid by a bloc and is just a conversion. The "investment" has a little more complexity though. When an agent "invests" they are providing their AVs to the bloc to be immediately used and the agent can no longer cashout for ₡, instead a Return Indicator (RI) is sent to Basis to indicate that the agent has "invested" in the bloc with x AVs. These "invested" AVs can increase (or decrease) the agent's UBI from Basis based on how optimally the bloc uses any future increases to its allocation, an optimal use means that any goods sold were at-cost. UBI would be sent to agents from Basis in the form of UBI AVs (the counterpart to normal AVs), the agent must go through the same process as redeeming a normal AV, but if they cashout they will receive UBI tokens that can only be used within the system.

Agents could choose to revoke their investment but this does not perform any cashout, agents do not get benefits for pulling out an investment since they were already recouping their investment through their UBI, therefore revoking only symbolizes that you are not supporting the bloc anymore. Once the investment is revoked the bloc could see reduced future allocation. To ensure that agents do not damage their UBI there would be a minimum UBI and if an agent's "investment" would cause their UBI to fall under the minimum then the "investment" is automatically revoked, as defined earlier.

1. Ability for participants to direct production either directly or indirectly (ie, delegate their investment through another agent/bloc like a bank)
2. Investment is incentivized. The idea here is that you want people to invest and there's some payoff for doing so.
3. Investment should carry some weight of responsibility. If I can create a bloc with a high allocation but it costs me nothing personally, then I can just order a lambo and peace out or if I go bankrupt there would be a bunch of materials sitting around collecting dust. The workers (and investors) should be responsible for the costs of their bloc, or else you'd get a lot of "lol wuldn't it be kewl if..." vs "I think we need this...here's an analysis of demand for it blah blah." In other words, allocation would need to come from some tangible resource put up as collateral.
4. Speculation is at least limited. People should invest because it fulfills a need, not because they can DOUBLE THEIR CA$H WITH THIS ONE SIMPLE TRICK!!!!!!1
5. The system is general enough to be emergent and not tied to one specific model of investment.
6. The system should avoid incentivizing "manufacturing demand" (ie, avoid rewarding sales as opposed to meeting a need).

This model addresses your six points (quoted above) in the following ways:

1. The creation of bank blocs (or even venture capital blocs) is allowed as a bloc can pass off investments or if an agent cashes out the bloc will see a future increase in allocation allowing them to support blocs with that allocation.
2. The incentive is an increase to their UBI, one way to view this is agents are given the option to improve their livability when they retire. I am concerned that this contradicts the base notion of UBI being even for all, but I think it provides the incentive to agents to invest as it ultimately would allow them to decrease their working hours at some point if they choose.
3. The responsibility an agent will see will be their change in UBI. They are responsible for finding blocs that will sell their products at-cost otherwise they will not see their return. The capabilities for blocs to meet at-cost expectations will be handled by the determination of costs within the cost-tracking system.
4. Since their returns are separated from their investment quick money grabs will be reduced. However, I still think some forms of speculation are important, even the big companies we have today were at one point big bets with little payout expected.
5. As noted in the first point blocs will allow investing in many different ways: banks, venture capital, an individual trust bloc, etc. But the concept of how to invest on the agent's end is kept simple if they want.
6. "Manufacturing demand" is not incentivized since a return on an agent's investment is determined by how optimally a bloc uses their new and future allocation to provide products at-cost.

I do want to address the quote below which also arises with this model, although a lot more costly to the agent since there is no cashout for them:

The only problem here is we return to the capitalist model of whoever commands the most money holds the most control over the economy.

This could be addressed by the Cybernetics system. If a bloc is performing optimally, providing products at-cost, then the revoking of the investment could minimally impact the bloc's future allocation, encouraging the agent to find a different path for adjusting the bloc's actions (for instance, pushing to have a resource be increased in cost to address environmental impacts better). But if a bloc is not performing optimally, then the revoking of the investment could significantly impact the bloc's future allocation, potentially forcing it to be dissolved or absorbed by another bloc. As we have seen in the capitalist economy there can still be value in an individual pushing a company in a direction, as long as the system as a whole has the right incentives in place, and for Basis this is the at-cost indicator.

I could go on and on about this idea but it is 2:30 AM and would also love some feedback if you have time!

[orthecreedence]

I'm commenting to let you know that I'm reviewing your post and will get back to you shortly! It has been a busy/crazy week for me and I haven't had time to fully digest this yet, but I didn't want it to sit for too long without a response because I absolutely appreciate the contribution.

[raynor11]

No worries, @orthecreedence, thanks for letting me know!

I had another thought to share, I spent some time considering if the AV "investment" returns should be realized through UBI or normal credits. I see there being two major topics to consider: (1) the availability of in-service systems and (2) the cost to the system to maintain itself. Considering the initial lack of availability of in-service systems UBI would not initially be as valuable of an investment in the early system, so credits may be more attractive to new agents since they could convert their credits to dollars to purchases outside the system. But when considering the cost to the system UBI-based currency would not need to be 1-for-1 backed by a currency like the credits would need with USD, making the "cost" to the system minimal, only dependent on ensuring a stable system. I expect UBI will still be the best choice as suggested in my previous post since it would allow the Cybernetics system to make sure the "investment" system doesn't collapse the system as a whole.

[orthecreedence]

Ok, I had a chance to read this over a few times and think about it in detail. Again, thank you for writing this out and contributing!

Instead of Basis providing blocs with ₡ that would then be distributed to agents, Basis would hand out Allocation Vouchers (AV).

One note here: The blocs don't ever actually get ₡. Instead when agents track labor through a bloc, the cost of that labor is added to the bloc's costs and then Basis itself distributes ₡ to the agent directly. So at no point do the blocs handle credits, but rather act almost as conduits for printing credits while simultaneously taking on the debt of those credits being printed.

This might have already been clear to you, but just thought I'd mention it in case.

For an agent to use an AV they must select a bloc to send the AV to, this will send an Allocation Indicator (AI) to Basis suggesting to the Cybernetic system that this is a good company that people want to see grow (basically a vote for the company). After the AV is sent to the bloc the bloc can choose to pass it to another bloc (in case, for instance, a bloc would like to avoid increasing their allocation).

Interesting...so this would incentivize direct participation in the investment system by effectively making it a requirement. Would AI's follow the AV's? For instance, if Joe sends AV's to Widgets Inc, and Widgets Inc forwards the AVs to Sheet Metal 4U, do the AI's land on Sheet Metal 4U eventually?

Also, under what circumstances would a bloc want or not want to take on AVs?

Once a bloc has accepted the AV the agent has two options: (1) cashout for ₡ or (2) "invest" the AV.

Another question here: if a bloc accepts the AV and the agent cashes out, does the bloc holding the AV become the holder of the labor cost for that ₡ amount? Or would the original bloc that the labor occured under (where the AV first originated) hold that cost? If the original bloc holds the labor cost, then what would the relationship between the AVs and the bloc that ultimately receives the AVs if they are immediately cashed out? Or would cashing out only be allowed on the original bloc that created the AVs?

instead a Return Indicator (RI) is sent to Basis to indicate that the agent has "invested" in the bloc with x AVs.

So this would act almost like shares in the bloc.

UBI would be sent to agents from Basis in the form of UBI AVs (the counterpart to normal AVs), the agent must go through the same process as redeeming a normal AV, but if they cashout they will receive UBI tokens that can only be used within the system.

Would this be supplemental to the regular UBI? Or do you envision would UBI AVs replace the current concept of UBI?

Agents could choose to revoke their investment but this does not perform any cashout, agents do not get benefits for pulling out an investment since they were already recouping their investment through their UBI, therefore revoking only symbolizes that you are not supporting the bloc anymore.

So any gains in a bloc's performance are immediately realized in the UBI? Effectively an immediate performance dividend.

Would revoking also revoke the AIs?

To ensure that agents do not damage their UBI there would be a minimum UBI and if an agent's "investment" would cause their UBI to fall under the minimum then the "investment" is automatically revoked, as defined earlier.

This makes sense. So UBI AVs be negative if the performance goes down? And that would hit a threshold at some point that stops the UBI from going below some livable amount.

The creation of bank blocs (or even venture capital blocs) is allowed as a bloc can pass off investments or if an agent cashes out the bloc will see a future increase in allocation allowing them to support blocs with that allocation.

Can you explain this a bit more? I kind of get the concept of AVs being able to be passed on, but how would a bank bloc gain benefit from passing on AVs? And how does an agent cashing out increase future allocation?

The incentive is an increase to their UBI, one way to view this is agents are given the option to improve their livability when they retire. I am concerned that this contradicts the base notion of UBI being even for all, but I think it provides the incentive to agents to invest as it ultimately would allow them to decrease their working hours at some point if they choose.

Yeah, this makes sense to me.

I had another thought to share, I spent some time considering if the AV "investment" returns should be realized through UBI or normal credits.

Yes, questions about the model aside, this was the main thing that stuck out to me. In my mind, UBI is effectively a survivability system. It removes the constant scramble for bare necessities, creating an economy of optimized exploration instead of cutthroat externalization.

Adjusting the UBI through investments, and also allowing investments to be made from UBI, shifts its core function a bit. My initial reaction is that I'd be interested in seeing these dividends occur in credits instead of UBI, but I also like the idea of the returns needing to be spent internally or reinvested. I guess this goes back to one of my questions above: are UBI AVs supplemental to the regular UBI? That would make sense to me because instead of replacing the UBI, you've created a separate class of currency specifically for investing...it's more like a systemic dividend as opposed to a UBI (but functions similarly to the UBI in how it can be spent).

credits may be more attractive to new agents since they could convert their credits to dollars to purchases outside the system

Yeah and this is what I tend to think of as a "value leak." If the cybernetic system rewards a bloc for doing something that's internally good, and that creates credits that agents can redeem for currency, then you have a situation where the more that blocs do good things, the more potential the network has to bleed value over time.

That's why I'm leaning toward having whatever dividends paid out be more akin to the UBI: non redeemable. I think at this point, that's essential. But it does kind of create the chicken and egg problem: early in the network's life, UBI has little-to-no value, so why would anybody invest? There are like at least a dozen of these early-days difficulties laying around though, so I'm fine having one more.

This is really thought provoking stuff! Thanks for writing!!

[raynor11]

Hey @orthecreedence, it has been a while since I have had the time to put together a post but I have not stopped thinking about this. Here are a few images I would like to share based on your notes and questions.

Definitions of terms and symbols:

An improved flow:

Some initial thoughts on the goal of the income system and the impact UBI and stocks would have:

Some specific answers to a few questions I noted in your previous post:

Would AI's follow the AV's? For instance, if Joe sends AV's to Widgets Inc, and Widgets Inc forwards the AVs to Sheet Metal 4U, do the AI's land on Sheet Metal 4U eventually?

AI's (or I's) would follow the AV's (or V's). This would allow an agent to send their V's to a general bloc (such as an investment-specific bloc) instead of needing to have an advanced knowledge of investment. But it also encourages them to carefully consider where they send their V's since revoking it hurts both the agent and the bloc.

under what circumstances would a bloc want or not want to take on AVs?

I can think of 2 primary cases: (1) if a bloc does not want to grow as quickly (allowing that growth to move elsewhere in the system) and (2) it allows the creation of blocs that focus on passing vouchers to other blocks (ex. banks)

if a bloc accepts the AV and the agent cashes out, does the bloc holding the AV become the holder of the labor cost for that ₡ amount? Or would the original bloc that the labor occured under (where the AV first originated) hold that cost? If the original bloc holds the labor cost, then what would the relationship between the AVs and the bloc that ultimately receives the AVs if they are immediately cashed out? Or would cashing out only be allowed on the original bloc that created the AVs?

When cashing out the credits are subtracted from the original bloc's allocation. The relationship between the AV's (or V's) and the final bloc is that the final bloc receives the AI's (or I's) these I's indicate to Basis that agents want to see that Bloc's future allocation increase. But an agent can choose to immediately reinvest in a Bloc if they choose not to cash out, the Bloc would see an immediate allocation increase and a much smaller future allocation increase.

Would this be supplemental to the regular UBI? Or do you envision would UBI AVs replace the current concept of UBI?

The tokens coming from shares would be supplemental to regular UBI.

So any gains in a bloc's performance are immediately realized in the UBI?

Basically, gains are realized as internal only tokens (not credits), the same as the tokens provided by UBI.

Would revoking also revoke the AIs?

Yes, revoking an AI's (or I's) would be a very careful decision since it removes future income potential for the agent and future allocation for the Bloc. It is purely meant to allow an agent to say that they no longer support a Bloc's actions.

Can you explain this a bit more? I kind of get the concept of AVs being able to be passed on, but how would a bank bloc gain benefit from passing on AVs? And how does an agent cashing out increase future allocation?

A bank Bloc would not inherently benefit from passing on AV's (or V's) but they would be doing a service to the system by assisting in guiding investments. There are a number of ways this could be implemented, for instance, an agent would not be able to pass their V's to a bank Bloc unless they are part of the Bloc and the agent would be taxed a small amount for using the bank Bloc's services. An agent cashing out increases future allocation by indicating to Basis that the Bloc invested in should attempt to receive a higher allocation in the future.

The growth of allocation in the system is still something I am trying to wrap my head around. Since the increase in allocation in the system would initially be capped by the amount of backed credits there are in the system. But at some point you could theoretically step away from backed credits and at that point you would be deciding what the economy growth rate is.

I hope you found this interesting, and sorry it has been so long between posts!

[LeeDAmato]

Hi @raynor11 and @orthecreedence,

I hope you're both doing well!

I've been diving into the Basis Protocol and its Universal Basic Income (UBI) system, and I'd like to share an idea that could enhance how UBI interacts with product pricing. Please note that I'm still getting up to speed with the intricacies of the Basis Protocol, so there might be some areas where I could improve my understanding. I warmly welcome any feedback or corrections!

Current Model Overview:

In the existing model, UBI covers only the non-currency costs of goods and services. Tokens (denoted as T) are used exclusively to acquire products fully produced within the network using internal resources. Goods or services that incur costs denominated in external currency—credits (denoted as ₡)—require the use of credits earned through labor or trade to cover these expenses. This ensures that all external currency costs are backed by equivalent value creation, safeguarding the network against insolvency. Credits are potentially pegged directly to the dollar or via Market-credits (₡M).

Proposed Dual Pricing Mechanism

I propose implementing a dual pricing mechanism that allows goods and services to be acquired using either tokens (T) or credits (₡), each governed by distinct cost structures.

Mechanism Details

Token Pricing (T):

The token price reflects the full internal cost, including adjustments for external dependencies like imports and external labor.
For products involving external inputs, the token cost increases proportionally with the degree of external dependency.

Benefits of the Dual Pricing System

Enhanced Flexibility: Allows network participants to access a broader range of goods and services, including those with external costs.
Incentivized Self-Sufficiency: Higher token costs for import-heavy products encourage the network to develop internal production capabilities over time.
Economic Stability: By primarily requiring credits (which are backed by value creation) for external expenditures and imposing a higher cost on tokens for such transactions, the system encourages the use of credits over tokens for purchases involving external inputs. This approach helps maintain economic balance and reduces the risk of network insolvency by ensuring that external costs are predominantly covered by value-backed credits while still providing flexibility for token usage when necessary.