0 TO 6 months rewards, a different perspective.

0 TO 6 months rewards, a different perspective.

Arthur’s primary idea for ramping up the delegation fees at the beginning was, in principle, to allow bakers to build a foundation on which decentralization can thrive. The bakers in return took months of work to prepare for the launch, testing and learning and trying and doing it again and again and again, we are talking about months of full-time effort to get the systems up for baking.   A number of people online are discussing that the bakers are taking too much during the ramp-up profits. Yes agree, you the people who is delegating their money to a baker should receive a profit but not it has to make economic sense for the bakers or else the network won’t be robust.  As it stands, a 10% dynamic fee on a 6 month period is not  enough to cover the cost of a well run delegating service, and certainly not to establish a decent foundation on which we can build a delegation business from which all of us can profit.

I have decided to  go with the 10% dynamic fee for the first 6 months, and my delegation base of 350,000 tz  will look oversubscribed but after 6 months will be in line with the amount of bonds required for the amount. Also, after those first 6 months I will be able to pay  a better return than the minimum of 5.5%, whereas if I oversubscribed significantly, after 6 months, people would be earning the minimum or less on their tz.  After the first 6 months have passed, we will get a clear sense of where we are standing in terms of returns and costs of running this business and I can foresee many people losing money and making less than the 5.5% per year that they feel they should have, just because of greed and the ramp up of the deposits.

To run a delegation service is not easy, you have to know the ins and outs of how to handle everything on a node, have to handle security, bandwidth, redundant systems, software and hardware, and this is not just something that everyone has the time or knowledge to do. As an example, how many of the bakers have accounted for holidays – are they running 24/7 as a professional business or as a hobby in the basement?  The list goes on an on.  All those pointing fingers at the “scammy over-delegated baker” should get and build a node and run it, because that will be the only way they will learn that being a baker is not as easy and profitable as it is shown to be in paper.

There are many people who will be affected by what happens next, and those affected won’t be the bakers but the peeps that just want to keep their holdings with the dilution of the network.   The key is in the ramp-up, don’t over-delegate and don’t delegate your tz to bakers who are over-delegated for the long run!