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Devcoin Normalized Division Proposal

–Hunterbunter, September 2014

The Devcoin mission is to support the proliferation of open source and creative commons work. Currently, all shares count towards the total for each round, and the total number of coins produced per round (180M after 10% to miners) are distributed without prejudice to those shares. One share of writing rewards the same number of devcoins as one share of programming, marketing, administration, and so on. Since Devtome has been so highly successful in generating shares, it has reduced the attractiveness of other disciplines, so development has stalled. This may be attributed to the fact that devtome works on a 'write your own bounty' system, compared to OS development's fulfill these approved bounties system, and is not a fault in itself, but something that needs to be rebalanced.It is possible to unlink the two using a normalized division system, which will allow each division to seek a market price per share independently, depending on the contributor's individual time valuation. The system will, in essence, cap each division's available devcoins to 30-36M each.

Currently, the share distribution can be broadly categorized under the following divisions:

With the following share distributions for the recent rounds:

Under the new division system, shares are earned as they are now, except at the end of the round, any division performing less than the top performer will have a modifier applied to every participant within, to have every divisions total shares equal to the top performer. This is a normalization process which improves the attractiveness of an under performing discipline, by rating it against the top performer.

Since there is also a long term need for a community fund, it will be seeded by creating the aural and visual divisions upon implementation, and sending those shares to the community fund. Once those new divisions are launched, the community fund can be used to supplement the needs of the developing divisions, as well as provide market support through a market fund. In total, there will be 5 initial divisions under this proposal, with each having a devcoin generation amount of 36M devcoins per round, and 6 after either the aural or visual are implemented, with 30M devcoins per division.

This means that there will be a drastic reduction in devcoins per share, for each of the current shares. To ease the change, especially for devtome, three rounds grace period will elapse before this goes into effect, to allow writers the chance to earn as much as they can in the current system before it switches over. The switchover will occur at the start of round 43, provided all of the code side of things have been taken care of and are ready to go. The time will be extended as necessary to ensure this.

The intention of this proposal is many-fold. First, it is to treat each discipline fairly. Currently devtome has been outperforming open source development by a massive margin, and we need to create an incentive for developers to return. It is expected that the developer division will find its own equilibrium division share price given time. Secondly, it sets up a more organized distribution system which can be better managed internally. Each division will have its own division lead, who will be responsible for ensuring progress in the division, and creating a satisfying experience for share seekers. These will be new positions with administrator + factotum pay, but will require that the administrator not be otherwise engaged in any other administration task.

The next thing it addresses is the flood of devcoins to market, when our market cap is dwindling. It is still expected that many share earner's coins will still go to market, but the 40% withheld by the community fund will go into productive usage for the market fund (anti-volatility measure), to set it up to better support prices long term, and for funding crypto related businesses in return for equity. While business funding will likely be sent to market by the recipients, since they are investments, there should be a return in devcoin buying support through dividends. The restriction of this supply is expected to reduce sell pressure on the market price, and combined with renewed interest from investors, increase the price to a point that developing is attractive again.

Lastly, the long term investors of devcoins need to know that we are not extending writing at the expense of OS development. OS dev was the primary mission of devcoins, and the others were added afterwards. To lose progress in the initial discipline would be to lose integrity, and with that loss comes the loss of confidence from many of our original tech-enthusiast investors. This proposal largely addresses this by limiting the total devcoins earnable by devtome from 100M+ to 36M, and increasing the set pool available for dev work to the same figure.

Division Mechanics

The plot points for this proposal are:

  • Create 5 divisions: OS, Writing, Aural, Visual, General, and add a 6th Community division once either Aural or Visual are active.
    • The community fund will receive 100% of aural and visual division funds until they are established.
  • Normalize shares per division at the end of round.
    • Writers now earn writing shares, developers earn OS shares, musicians earn Aural shares, artists/photographers earn Visual shares, Admin, marketing, raters all earn General shares.
    • At the end of a round, the most productive division (most shares produced) will set the benchmark for normalization. All other divisions will be brought up to match the leading producer.
    • The calculation for normalization is as follows:
      • division modifier = shares in highest producer / shares in this division
      • share earner's receiver lines = sum(division shares * division modifiers)

This means the receiver file will always have 5 or 6 times the shares produced by the most productive division. Below is an example of how the share distribution will look like before and after normalization. Devcoin distribution will reflect share distribution.

Calculating an individual's earnings

Following is an example of the normalization in action. Let's say there's a round where each division produced, respectively:

  • OS 100
  • Writing 400
  • Aural 50
  • Visual 500
  • General 200

Visual was the most productive division this hypothetical round, with 500 shares.

Earner 1:

Michael Buble earned 20 Aural shares this round, deciding to release some songs through one of our mechanisms under creative commons. The number of receiver lines he would receive would be:

division modifier (aural) = shares in highest producer (visual) / shares in this division (aural)
= 500 / 50 = 10
He would get 10 receiver lines for every aural division share he earned. Since he earned 20, and didn't earn in any other divisions, he'll get 20 * 10 = 200 receiver lines.

Earner 2:

Satoshi Nakamoto also came back to the crypto world this round, and claimed an os bounty, as well as wrote a manual on devtome about it. He earned 30 OS shares for the bounty, and 10 writing shares for the manual. The number of receiver lines he would receive would be:-

The modifiers for each division:

division modifier(os) = shares in highest producer (visual) / shares in this division (os)
= 500 / 100 = 5 os modifier 

division modifier(writing) = shares in highest producer (visual) / shares in this division (writing)
= 500 / 400 = 1.25 writing modifier

*so multiply each os share by 5 to get the number of receiver lines per os share, and multiply each writing share by 1.25 to get the number of receiver lines per writing share.

Satoshi would get 5 receiver lines for every OS share, and 1.25 receiver lines for every writing share. His total number of receiver lines would be:

division shares (os) * division modifier (os) + division shares (writing) * division modifier (writing) 
= 30 * 5 + 10 * 1.25 
= 150 + 12.5 
= 162.5 receiver lines.

As you can hopefully see, Michael only earned 20 Aural shares, but received 200 receiver lines because very few people added to the Aural division. Satoshi earned 40 shares total, but only received 162.5 receiver lines. A Visual producer would have had to earn 200 visual shares to earn the equivalent amount. People who earned shares in under-productive divisions will be better paid, and so this normalization process encourages more work in the under-utilized divisions. Currently, we have a huge number of writing shares, but close to zero developer shares, but even both might be dwarfed by for example visual in the future. Normalization should address this, by making os shares worth a lot more than writing shares, until developers are enticed to come back and start coding for devcoins again, and reach their own stable share generation rate.

While the calculations might seem complicated at first glance, they are really quite simple once you understand them. Running tallies will also be provided by dvccountdown to make it easier to see the current round situation.

Introduction of the Aural and Visual Divisions

Aural and visual related content released under creative commons licensing follows the spirit of open source development, in that the creator gives their work up to the world at large to share, re-use and improve as they see fit. The long term plan set by Unthinkingbit was to include these under our umbrella, and I intend on the same. While the divisions will be created with the rest of this implementation, the sole share earner will be the community fund until the devcoin price can support another working division. Our focus will still be on Developing and Writing and especially making devtome more profitable. If we ever reach the point of sustainability, then, and only then, will we be able to add another division (aural or visual) in a way similar to devtome. Until then, 100% of visual and aural division funds (72M dvc) will go into the community fund, with function described below. This will result in up to a 40% reduction of dvc to market for at least the next year, and will likely last until the next great speculator frenzy.

Devcoin Community Fund

The purpose of the community fund is to:

  • Provide market support, through a market fund managed by market making bots. This is to ensure spikes in price translate to better long term pay for devcoin earners when they actually convert to btc.
  • Private business incubator support. This is to establish a mechanism for crypto oriented businesses to seek funding in exchange for business equity, and dividend profit. Funding would be subject to requirements that the business must accept devcoins, and dividends must be paid in btc or dvc.
  • Provide management of community generated profits (incoming btc/dvc from business incubation)
  • Aural/Visual division support when they appear. The community fund will provide subsidy support, if necessary, when setting up Aural and Visual divisions in the future. Until these two are established, the community fund will be earning what these two divisions would have been earning if they were active today. This is to reduce the time required for the community fund to become effective as a market maker, and it will be obliged to support those two divisions when we are ready for them.
  • Converting private software rights into an open source equivalent. In the distant future, should the fund have enough capital to actually purchase private software and release the rights as open source for the public good, it will be within our mission to do so. The same goes for private works of art from private ownership into creative commons licensing.

For the first 3 months, 100% of community share income (72M dvc from visual and aural division shares) will go into the market fund, after which it will be split 50/50 (36M each) with the business incubator.

The community fund coins will be sent to a publicly known address initially managed by myself and another administrator assigned to the purpose. Both will have access to the private keys of this fund, and we will look into multi-sig solutions for this long term. Better yet, when we have made some progress in DACs (Distributed Autonomous Corporations), this fund will be managed by those machines and algorithms in the future.

Devcoin Market Fund Proposal

Here are the rules of engagement for the market fund portion of the general community fund to be shortly created.

The market fund, funded by the community fund, will behave as a market maker. It will never cause the price to go down, through its own sell action, but instead use long term averages to provide btc support when it has it, and volatility resistance when it has dvc. The following illustration describes the general process:

The goals of this fund are:

  • To give coins a better use than being destroyed
  • To provide resistance against spikes in price, to
    • Reduce the effect of pump and dump schemes, harming legitimate investors
    • Provide market ready liquidity for potential investors
  • Increase buying support for devcoins using long term averages.
  • To reduce exchange risk for devcoin earners waiting for the right price to sell their coins at
  • Act on multiple exchanges to spread the risk of exchange failure

Since the fund is going to primarily be funded with dvc and not btc, this fund will essentially be ineffective until investors or speculators start buying dvc. These coins will never directly drive down the price, and will simply sit idle until the market demands them. Once btc have been earned, they will be placed under various short/medium/long term averages to provide a cushion against a rapid sell off of devcoins (pump and dumps). This also gives long term investors the assurance that should they invest in devcoins, there is a greater chance that they will be able to recoup a larger portion of their investments should they choose to withdraw support. The market fund will be obliged to make a monthly report on its condition and dvc/btc amounts, published on devtome and/or forums.

Timelines

This proposal is ready for critical discussion and feedback, and assuming no catastrophic failures or oversights, will go into effect at the start of round 43. Until then, everything will continue as it does now, giving both the community a chance to absorb the coming changes, and for the groundwork to start being lain. There will be three new division roles created soon (OS, Writing, Community), who will be responsible for the general operations for their respective division, ensuring things run smoothly. I will have a heavy hand in the community section until that's established, and that will also become the responsibility of the community lead to manage. The overall devcoin leader (currently me, Hunterbunter) will be responsible for making sure they are doing their jobs in keeping share earners in their divisions well catered for, and appoint new ones as necessary.

By about round 55 or so, we will be able to assess what effect these changes have had, and judge the success or failure of them. Should our market cap improve we will look at establishing the Aural and/or Visual divisions then, and until then, the community fund will support the market and start investing in devcoin friendly micro businesses.

What I hope to achieve with this proposal

Ultimately, I believe we have lost a lot of investor confidence in our ability to produce open source code, or provide a fair method of earning shares. I believe that in implementing the above, we will show the general public (both crypto and non), that we are still staunchly committed to supporting all facets of open source/creative commons equally. Devtome has been heavily subsidized by developers for these last 14 months, and it is time to let it float on its own merits. It will be up to the writing leads to look at ways to make it profitable (PG / advertising friendly devtome version, https, etc). There is a wealth of content there now, and we need to find a way to commercialize it for the sake of sustainability. Investors may very well be supporting devcoins from the goodness of their hearts, but it is in our best interests as a community to become self-propelling, not only in order to provide long term stability and success, but to also reward early investors for their belief in us. Devtome will take a hit in pay and the ability to produce content, but it will be temporary. A more balanced output should mean greater external interest.

With more open source development, more devcoin friendly micro-businesses, and better market support I expect us to start being taken seriously by a different group of investors than the first. Many crypto-investors are speculative investors, but we want to attract value investors. Buying devcoins is much like buying shares in a virtual country, as opposed to buying any other crypto-coin. We have no physical land, no physical presence, but instead just the minds of the community working as one. I'm a believer that the most valuable work is the one which provides the means for others to live happier, more fulfilled and successful lives, be it through entertainment, or providing tools and content for people to use for their own benefit. Devcoins are primed to make that happen in the new world of blockchain technology, and I can't imagine dedicating this much time to any other coin right now.

I envision a world where people can make a realistic choice as to whether they commit their time to create for the common good (releasing open source/cc works), or to get a regular job in a regular company. I believe it's possible that devcoins can work, and become a global name, showing the world that it's possible to do something useful with all this new-fangled bitcoin technology. We still need investors to make all this happen, but I believe that as long as we stay focused on our mission, and produce valuable results with what we have, they will come. It's never easy being a trailblazer, but once momentum begins, some things are simply unstoppable.

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