Babbitt Column | How to use options to motivate cryptocurrency developers? Take BCH as an example

Editor's Note: The original title was "Use Options to Inspire Developers."

Encouraging the development of encrypted digital currencies has always been a difficult problem, and now almost all coins and chains are facing the status quo of developers being ineffective.

BCH hopes to solve this problem early this year, and wants to share a portion of the coins from the mining rewards to developers. At present, it seems that there is no following, everyone is in a deadlock. I think that as the price of currency drops further, the issue of development rewards will only get worse.

This article attempts to give a solution that is right for the current plunge. We use options to motivate developers. Take BCH as an example.

The current price of BCH is 180 $ / BCH. The community set up a fundraising organization, initiated a fundraising, and aimed to raise 10,000 BCH.

Set an option for the fundraising donation. After one year or more, the designated developer is allowed to exercise at the price of 1000 $ / BCH.

Specify a number of developers in the form of a whitelist to subscribe for the option. Confirm the subscription share and exercise price by contract. The contract also needs to specify at least some tasks of the developer, such as completing the development of the roadmap and the like.

If the final option is exercised by the developer, the entire fundraising will receive $ 10 million in revenue, that is, the developer will buy $ 10,000 / BCH to buy this 10,000 BCH. The $ 10 million received will be returned to donors 100% of the original donation.

If the final option is not exercised, that is, at the expiration, the price of BCH does not exceed 1000 $ / BCH. The fundraising agency will return all the donated BCH to the source address. That's it, that's it. Everything else is detail. What good is this?

The first is the low cost of fundraising. Now 10,000 BCH, only 1.8 million US dollars, and still donate by currency. And if the final option is exercised, the donor also receives an additional 820 $ / BCH. This is equivalent to selling a bear option at 1000 $ / BCH when the donor makes a donation. If it expires, it will have a profit of 820 $ / BCH. If it is not exercised, it will cost 0 to hold the option. Option, the principal can be returned.

In this way, fundraising will be much smaller.

The second is that funds do not need to be managed after fundraising, at least the management cost is quite low.

Even the incentive effect can be monitored without supervision. But the premise that is effective is that we assume that the developer's code work has driven the price.

If the developer works very hard, when the exercise expires, the market price of BCH reaches 2000 $ / BCH, then when he exercises, he can get a profit of 1000 $ / BCH. In order to obtain greater profits, developers have the incentive to complete more features to meet market demand and push up market prices.

If the market price of BCH is less than 1000 $ / BCH when the option expires, the developer can give up the exercise. The fund-raising organization can return all the collected BCH to the source address of the donation. This is a win-win situation, and even the original donors can make a profit.

The third is to provide a market buy signal. If the donation is established, it will give the market a group of enthusiasts of BCH, there is a signal to see up to 1000 $. This will naturally form a buy signal for other buyers. So what's wrong with this?

This is a delayed incentive. If developers want to spend money now, such as renting an office or buying pizza, where does their money come from?

Delayed incentives will not motivate developers who have no money now, but only those developers who have money to claim options. This approach determines that developers are more solo. A great developer may claim an option on his own, with zero income to develop before expiration, but he is more likely to have no funds to hire other developers to help him work together. Therefore, it may need to be supplemented by other funding schemes.

There is another drawback. No one knows whether the market price is due to the features completed by developers. That is, it may cause incentive dislocation.

But all in all, this is a good solution. Especially under the premise that the community does not have a good plan, it is worth trying. The specific implementation method can be done as follows:

People with credibility in the community, such as Big V xxx and xxx, stood up and publicly issued a statement to set up a fund-raising institution and release details. In addition, it is necessary to draw on a legal and compliant third-party impartial agency to conduct contract justice externally to improve credibility.

Then go to fundraising, and make public donations.

Then talk to the developer, hoping that they will claim the option.

The last is to wait until the exercise date. Nothing else needs to be done.