I propose we formalize the distribution of “Dev MSC”, to mirror the amount of Dev MSC generated each month. Further more that these Dev MSC be distributed in proportion to the amount of BTC won by participants in Mastercoin bounties that month. With the intension being, that this distribution process will be fully controlled by the Mastercoin community via the existing Bounty system and up coming Proof of Stake voting.
It seems a simple and elegant distribution curve, and is awarded in proportion to the the BTC anyone earns or wins as part of working on the Mastercoin implementations, competitions and bounties. That way everyone can be confident in how this gets distributed and earning some of the Exodus funds comes with an automatic bonus of earning a proportional amount of Dev MSC.
Lets talk some simple math here.
Simple Dev MSC Distribution Equation: A / B = C * D = E
(A) Amount of awards an individual earns in BTC during a 30 day period, divided by,
(B) the total amount of BTC awarded during that 30 day period, equals
(C) his or her individual award percentage, times
(D) the total Dev MSC generated during that 30 day period, equals
(E) the amount of Dev MSC awarded to the individual in addition to his BTC awards during the 30 day period.
Example #1 (using round numbers):
A (100 BTC) / B (1,000 BTC) = C (10%) * D (1,000 MSC) = E (100 MSC)
There are 56,316 Dev MSC that will ever be generated.
28,158 Dev MSC will be generated this year or 2,346 MSC each month.
So if a developer won 10% of the bounties this month he or she would earn 234.6 Dev MSC (worth 35.19 BTC / $24,633 USD at current MSC / BTC / USD prices).
The benefits of using this method should be obvious.
1. Market Confidence: Having a standard and predictable amount of Dev MSC coming onto the market each month removes any need to “guess” about the current amount of Mastercoins in circulation and removes any worries about a large number of Dev MSC being released into the market at unexpected times (the Fed watching / Ripple problem).
2. Simplicity: This mechanism removes the need for devising a complex system for how much Dev MSC should be vested and to whom, and any potential conflicts of interest that would come with developing such a complex system. We already have a bounty system rewarding those contributing value, they should also be vesting Dev MSC in proportion to the value they are contributing to the community via the existing bounty system.
3. Community Driven: The Exodus address BTC funds will be controlled by the community Bounty system and the Proof of Stake voting, so it seems logical that the Dev MSC should also be controlled by the community Bounty system and Proof of Stake voting and be vested to those adding value in proportion to their contributions.
4. Developer Confidence: A number of developers are spending more and more time contributing to the Mastercoin implementations and with a standard for the amount of Dev MSC to be distributed, they can have a strong level of confidence that investing their time, talents, and energy in Mastercoin will provide a predictable income stream for their work. Additionally as the value of MSC increases over time, (in conjunction with the increased demand for /utility of Mastercoin) the Dev MSC monthly rewards will increase in BTC / USD terms and thus attract more and more developers each month to participate in bounties and competitions. Already that monthly 2,346 Dev MSC is worth almost $250,000 USD at current MSC / BTC / USD prices. That’s $3,000,000 worth of Dev MSC to vest with Developers this year (at current prices).
I’ve discussed this proposal with the Mastercoin Foundation Board and I’m posting here to get feedback from the community on the best way to implement this as part of the Mastercoin Protocol Spec.
BACK GROUND FOR THOSE THAT HAVEN’T READ THE MASTERCOIN SPEC 1.2
There are two main types of Mastercoins. MSC and Dev MSC (there are also Test MSC, but I won’t get into those here). All original Mastercoins (MSC) were generated between August 1st and August 31st by all those that sent funds to the “Exodus Address”, these total 563,162. In addition the Mastercoin protocol generated 10% additional Dev MSC (originally termed Reward MSC) which total 56,316 Dev MSC. Combined you get all the Mastercoins that will ever exist 619,478.
Here is the reference from the Mastercoin Spec: https://github.com/mastercoin-MSC/spec
“For every 10 Mastercoins sold, an additional “dev Mastercoin” was also created,”
The generation of these Dev MSC is controlled by an algorithm described in the spec.
“Which are being awarded to the Exodus Address slowly over the years following the fundraiser. These delayed Mastercoins will ensure that we (the Mastercoin Foundation) have funding to complete the features desired by users. The reward is be structured so that we receive 50% of the reward by one year after the initial sale, 75% by a year later, 87.5% by a year later, and so on”. Here is a Google Doc that has been public since the beginning of the project simply calculates how many Dev MSC are available for Distribution each year. https://docs.google.com/spreadsheet/ccc?key=0AmR_eSvAkuXSdDI3Y1JnVjFvUDBXOWZiZl8zZ2Rkamc&usp=sharing
You can see the current total of the accumulating Dev MSC here: https://docs.google.com/a/bitangels.co/spreadsheet/ccc?key=0AtCyUJvk_IyNdGpVcnpBN2tOczFmbVRnck5TWjZuRFE#gid=1
8,080 MSC generated so far with 6,580 not yet Distributed via a bounty.
There isn’t a description in the protocol on how the Dev MSC are to be distributed or at what rate.
I look forward to everyone’s input.
David A. Johnston
Executive Director of BitAngels.co / Board Member of the Mastercoin Foundation