With the recent update I assume the “no dust” applies when doing a pure BTC dividend distribution as well?
Previously it was limited to the dust limit. If the distribution amount was 1 satoshi per token, a user needed at least 5430 tokens to receive the dust amount of 5430 satoshis. If the user didn’t have enough tokens they simply didn’t get anything. Dividend issues / questions
No, I don’t think so. Pure BTC dividends are not actually a Counterparty protocol feature. It’s just a regular BTC multi-send, with the addresses and amounts calculated based off current token holders. So the dust limit still applies. The way I have gotten around it in the past is to create a BTC “proxy token” (BITCOINEX in my case) which is redeemable at a 1:1 ratio. Then the normal dividend function can be used with no dust limit at all, and users redeem as necessary. The downside is that it creates an extra step, and of course you have to trust whoever is providing the proxy token redemption.
Okay, thanks for clearing that up!
Hope the dust limit gets lowered, guess it would have to if bitcoin prices continue to increase.
The best workaround for my case I think would be to choose another Counterparty token as the currency to distribute if too many token holders are missing out on an eventual BTC payment.
@cryptonaut I’m slightly curious and wondering about a few things.
Is BITCOINEX active? If i’ve understood it correctly, shouldn’t the swapbot/exchange address have the equivalent amount of BTC in it as the outstanding amount of BITCOINEX? Currently that would be ~1.7BTC?
As for trusting the redemption service, could a smart contract be applicable to the vending machine/swapbot part of the process? If so, how would that work? (In layman terms if that’s possible)
@willH your correct on how BITCOINEX should work normally. The project is in somewhat of a hiatus. The automated bot (wasn’t using swapbot, uses an earlier prototype) was being glitchy and causing problems, so I took it down. Since nobody is actively using the token much at all (just some people still collecting free payments from one of my other projects which is also not very active), I’ve since been manually handling BTC redemptions by request and have the funds in a different wallet. If/when I start doing more with BITCOINEX or see more interest in it, I’l work on reviving the fully automated 1CoinEX redemption address.
As for trusting the redemption service, could a smart contract be applicable
I think it probably could yeah. You could have it so the reserve funds are permanently locked into the contract and can only be released when valid proxy tokens are deposited.
That would be pretty neat. With a smart contract one could basically create a decentralised bitcoin ETF. I have no idea how traditional ETFs actually work, but if tokens and BTC can be locked in a contract and released whenever they’re deposited, such a DETF would be like a transparent Fort Knox.
Or maybe the better comparison for such a proxy token would be cash when it was backed by gold. The value proposition for “meta-bitcoin” would be the same as bitcoin itself thanks to the contract.
Bitcoin backed by bitcoin.
Oh so meta.
Not an expert myself, but there are active and passive; active are managed (by people, mostly) while passive are what could work well here too - for example ETF1 would hold a fixed number of tokens of 3 currencies, ETF2 would hold 85% BTC, 15% LTC, etc. Of course here we could have “tokens” as shares and currencies as … well, currencies.
ETFs rebalance, so a question is what happens if one of the components tanks… If you hold a fixed amount by quantity, the answer is nothing. If you hold by value, then you have to rebalance, i.e. sell other stuff and buy the crashing coin… It’d be quite risky (and/or expensive) because crypto markets are open 24x7 and volatility is high, so if the “manager” takes a day off and some major component implodes during a long weekend, there is nothing to save the holders.
Appreciate the summary! I’m a little more wiser.