Revision as of 11:05, 28 August 2024

Burning Men is the name given to Bisq contributors who choose to burn BSQ in order to receive bitcoin from Bisq trading activity: Trade fees and Delayed payout transactions. It's an evolution of the previous 'burning man' role. The change, implemented since January 2023 in this proposal aimed to increase Bisq's decentralization by distributing this role within many contributors. A single burning man could have gone missing, ran away with the BTC before trading them for BSQ and burning these BSQ, or could have been otherwise compromised.
As each burning men burns an undetermined amount of BSQ as a condition to receive a share of BTC from Trading fees and Delayed payout transactions, trust requirements and single points of failure are almost nonexistent.

Contributing as a Burningmen

Eligibility

There are two ways to contribute as a Burningmen. Since the system is not exempt of trust requirements, burningmen need to have provided value to Bisq in the past:

Contributors who received compensation for their contributions within the last 24 cycles.
Contributors who received a BSQ from the DAO genesis transaction.

After burning some BSQ (earned or bought in the BSQ market) they will get a share percentage in the distribution of BTC from Trading fees and Delayed payout transactions. The more value the've provided to Bisq, the more BSQ they are allowed to burn.

Considerations for Burningmen

Burningmen seek profit from burning BSQ, otherwise they would keep their BSQ or sell them for BTC at the market. But profit, coming from estimating the amount of BSQ to burn now to receive a share of future Trading fees and Delayed payout transactions, is not granted. There are many sources of uncertainty:

Trading volume: affected by BTC trend, Bisq competitors, mining fees, etc.
Changes to trade protocol: traders could burn more or less BSQ directly, Delayed payout transactions could be reduced considerably.
BSQ/BTC price volatility.
BSQ burnt by competing Burningmen.

Since the launch of the Burningmen protocol up to the moment of this writing (Cycle 61), more bitcoin has been distributed to the Burningmen than the bitcoin equivalent amount of BSQ that has been burnt. This means historically burning BSQ has been profitable for most contributors choosing to be Burningmen.
Although Bisq estimates the amount Burningmen should burn based in the past, each of the Burningmen should estimate their risk/reward scenarios based in their predictions for the future. Becoming a burning man is optional, so depending on how they value the BSQ they have now, the BTC they can obtain on the future, or even if they just want to help Bisq grow, they will not burn BSQ at all, burn all the BSQ from their compensation requests or even buy more BSQ to burn up to their limit.
The less competition between Burningmen there is, the more profitable it will be for each of them, and vice versa. The less profitable Burningmen role is, the better for the DAO, as more BSQ is burnt, reducing or containing BSQ supply and therefore pressuring its price up.

Burning BSQ

How to become a burning man

Current Contributors

If a contributor wants to be a burning man they should choose a bitcoin address to receive the funds to. Ideally an external wallet like, electrum or sparrow. Once they have chosen there address they should follow the instructions posted here.

The chosen bitcoin address can then be provided in their next compensation request. This is provided in the 'burningman receiver address (optional)' field.

Once their compensation request has been approved their chosen bitcoin address will also be used for any burning men payouts they receive up until they ever change it in a subsequent approved compensation request.

To burn BSQ for the BSQ burning man role the current contributor will see their assigned name 'contributor_name' in the Burning Men Protocol UI (DAO > Proof of Burn > Burning Men). They can then choose to burn an amount of BSQ and pressing burn.

Past Contributors

If a contributor wants to be a burning man they should open the Bisq application that has also been used to make a recent compensation request (at least in the last 2 years). They will see their assigned name 'contributor_name' in the Burning Men Protocol UI (DAO > Proof of Burn > Burning Men). They can then choose to burn an amount of BSQ and pressing burn.

Receivers of the genesis distribution

If a contributor has funds from the genesis output(s) in their Bisq wallet they will see their assigned name 'Bisq co founder XX' in the Burning Men Protocol UI (DAO > Proof of Burn > Burning Men).

They should then choose a bitcoin address to receive the funds to. Ideally an external wallet like, electrum or sparrow. Once they have chosen there address they should follow the instructions posted here.

Burning Men Protocol UI

All the information about the current and past state of the burning men protocol can be found in the Bisq application: DAO > Proof of Burn > Burning Men

Terminology

The burningmen section contains a number of terms that is it helpful for someone interested in the protocol to understand.

The burningmen section can be found in the Bisq application DAO > Proof of Burn > Burningmen

Contributor name

Pretty obvious, but worth noting that founder contributors are given an extra level of pseudonymity by being referred to as 'Bisq co founder XX'.

Burn target

You can click the ? to get more info. I take these numbers with a pinch of salt. Take these numbers as broad estimates. Do not make decisions based on what to burn on these numbers alone.

Receiver share

This is an important number. It gives you the following information:

- The percentage chance you have of receiving a bitcoin trade fee. - The percentage amount of any delayed payout transaction you will receive.

The receiver share percentage is updated every block. Your receiver share changes based on who burns BSQ AND the decay over time of the burns made by the burning men.

The maximum a contributors receiver share can be is 11%. This is to protect the DAO from an attack from a malicious contributor that wants to self trade and send their trades to arbitration. Limiting the receiver share to 11% mitigates this attack.

Issuance share

The issuance share is basically the amount of BSQ compensation each contributor has received over the last 24 cycles. More weight is given to compensation received recently. BSQ compensation received decays linearly over 24 cycles.

The issuance share also has a bearing to what someone's maximum receiver share can be. A contributor can get a receiver share of up to 10 times their issuance share amount, up to a maximum of 11%.

Burned amount

This is the total amount of BSQ burned by contributor over time.

Decayed burn amount

This is the total amount of BSQ burned by the contributor when taking into account the decay their burns have over time. Each time you burn it decays linearly to zero over 12 cycles. Due to this decay the decayed burn reduces changes each block. The decayed burn amount is essentially represented in percentage terms by the 'issuance share' value.

Issued amount

This is the total amount of BSQ issued to a contributor over time.

Decayed issued amount

This is the total amount of BSQ issued to a contributor when taking into account the decay over time. Each compensation request decays linearly to zero over 24 cycles. The decayed issued amount is essentially represented in percentage terms by the 'receiver share' value.

Balance for DAO

This section gives an overview of all the BSQ burning and bitcoin that has taken place.

Total amount of burned BSQ

This is the all time amount of BSQ that has been burnt by all contributors acting as burning men.

Total amount of distributed BTC/BSQ

This is the all time amount of bitcoin that has been distributed to all contributors acting as burning men. For ease of comparison this figure is also given as a BSQ amount.

Generally if the amount of BSQ being distributed is greater than the amount being burnt then the burning men are in profit from their activities.

Export to CSV

If someone wants to see the results by month rather than all time then they can choose to export to csv to get more granular data.

@@ Line 1: / Line 1: @@
-'''Burning Men''' is the name given to Bisq contributors who choose to burn BSQ in order to receive bitcoin in the form of trade fees and delayed payout transactions. The reason for the proposal was to increase Bisq's decentralization by replacing what was previously a sole '[[Donation Address Owner|burning man]]' (with a single point of failure and a requirement of trust) with multiple burning men without the need for trust.
+'''Burning Men''' is the name given to Bisq contributors who choose to burn BSQ in order to receive bitcoin from Bisq trading activity: [[Trading_fees|Trade fees]] and Delayed payout transactions. It's an evolution of the previous '[[Donation Address Owner|burning man]]' role. The change, implemented since January 2023 in this [https://github.com/bisq-network/proposals/issues/390 proposal] aimed to increase Bisq's decentralization by distributing this role within many contributors. A single burning man could have gone missing, ran away with the BTC before trading them for BSQ and burning these BSQ, or could have been otherwise compromised.<br>
+As each burning men burns an undetermined amount of BSQ as a condition to receive a share of BTC from Trading fees and Delayed payout transactions, trust requirements and single points of failure are almost nonexistent.
-Background discussion can be found on [https://github.com/bisq-network/proposals/issues/390 this proposal], approved the 22nd Oct 2022 and implemented the 1st Jan 2023.
 __TOC__
-= Overview =
+= Contributing as a Burningmen =
-A simplified explanation of the burning men protocol is as follows.
-Traders using Bisq can choose to pay their trading fees in BTC. Previously, trade fees were paid to a role holder called the [[Donation Address Owner|Burning Man]], who was responsible for spending these funds, at each cycle, to buy BSQ from the public offerbook, and burn it. This created a centralization risk for Bisq, for example in case the single Burning Man went missing, ran away with the funds, or was otherwise compromised.
-In October 2022 Bisq approved a proposal to mitigate this risk, by paying BTC trading fees to multiple contributors who burnt BSQ upfront, to get a chance to receive such fees, while removing the centralization risk at the same time.
-Other than BTC from trade fees, burning men also share the BTC output of the delayed payout transactions published to enter arbitration.
-= Basics =
-== Who can be a burning man? ==
-Any Bisq contributor who has received compensation for their contributions within the last 24 cycles (approximately 2 years) can be be a Burning Man, as well as anyone who contributed prior to the DAO being launched, and received a payout from the DAO genesis transaction.
-== Why do some contributors choose to be burning men? ==
-Burningmen receive BTC as an incentive, but this in turn also helps the DAO by increasing BSQ price and reducing BSQ stock.
-== Burning Men Protocol goals ==
-The main goal is to decentralize the burning man role.
-A secondary goal is to create better incentives for contributors to work on Bisq.
-== Burning Men Protocol UI ==
-All the information about the current and past state of the burning men protocol can be found in the Bisq application: DAO > Proof of Burn > Burning Men
-= Risks of burning =
-When burning BSQ, its value is immediately lost for the chance to receive a percentage of the BTC trade fees and delayed payout transactions. The risk comes from the amount of future trade fees and delayed payout transactions being unknown, which means no guarantee of future payments. Things that could negatively effect the bitcoin payments could be any of the following:
-== Decrease in trade volume ==
-If the trade volume on Bisq decreases, BTC payouts will decrease proportionally. Trade volume can be affected by things such as market cycles, high BTC transaction fees, competition from other services, etc.
-== Change to trade protocol ==
-If there was to be a change to how the trade protocol works, this could result in a reduction or cessation of payouts to burning men. For example changes to the dispute process, trade fee model, trade limits, or multi-sig protocol could all result in less payouts going to the burning men.
-== Uncertainty on future BSQ/BTC price ==
-When burning, a contributor is choosing to burn one asset, BSQ, to receive the chance to be paid in another, BTC. The price of BSQ and BTC will change over this period, and this variable creates an additional factor some contributors may wish to consider.
-== Unknown amount of future burns by other contributors ==
+== Eligibility ==
-As a contributors receiver share is based both on what they burn and what others have burnt, it is not possible to predict their receiver share over time. Generally, the less competition there is, the more profitable it will be, and the more competition there is, the less profitable it will be.
-= Benefits of burning =
+There are two ways to contribute as a Burningmen. Since the system is not exempt of trust requirements, burningmen need to have provided value to Bisq in the past:
-Burning can be of benefit to both the DAO and the individual burning men.
-== Burning is a benefit to the DAO ==
+* Contributors who received compensation for their contributions within the last 24 cycles.
-Burning BSQ is a benefit for the DAO. When contributors burn their BSQ they reduce the BSQ supply by the burnt amount. This benefits all BSQ holders (the DAO). BSQ holders do not benefit directly from trade fees or delayed payout transaction payouts. Instead they benefit from BSQ burnt in trade fees from traders and the BSQ burnt by contributors performing the role of Burning Men.
+* Contributors who received a BSQ from the DAO genesis transaction.
-== Burning BSQ can be profitable for the individual contributor ==
+After burning some BSQ (earned or bought in the BSQ market) they will get a share percentage in the distribution of BTC from Trading fees and Delayed payout transactions. The more value the've provided to Bisq, the more BSQ they are allowed to burn.
-Since the launch of the burning men protocol more bitcoin has been distributed to the burning men than the bitcoin equivalent amount of BSQ that has been burnt. This means historically burning BSQ has been profitable for most contributors choosing to be Burning Men.
-= I am a Bisq contributor should I become a burning man? =
+== Considerations for Burningmen ==
-Becoming a burning man is entirely optional. It is up to each contributor to weigh up the pros and cons of burning and for them to decide what is best for them.
+Burningmen seek profit from burning BSQ, otherwise they would keep their BSQ or sell them for BTC at the market. But profit, coming from estimating the amount of BSQ to burn now to receive a share of future Trading fees and Delayed payout transactions, is not granted. There are many sources of uncertainty:
+* Trading volume: affected by BTC trend, Bisq competitors, mining fees, etc.
+* Changes to trade protocol: traders could burn more or less BSQ directly, Delayed payout transactions could be reduced considerably.
+* BSQ/BTC price volatility.
+* BSQ burnt by competing Burningmen.
-It is easy to try out burning some BSQ and then decide if you want to burn more or not. Burning BSQ generally suits contributors that are happy to push their remuneration into the future with the hope of gaining more value for their BSQ by burning it than by either holding it or selling it upon receipt.
-Questions that might be useful for contributors to ask themselves are:
+Since the launch of the Burningmen protocol up to the moment of this writing (Cycle 61), more bitcoin has been distributed to the Burningmen than the bitcoin equivalent amount of BSQ that has been burnt. This means historically burning BSQ has been profitable for most contributors choosing to be Burningmen. <br>
+Although Bisq estimates the amount Burningmen should burn based in the past, each of the Burningmen should estimate their risk/reward scenarios based in their predictions for the future. Becoming a burning man is optional, so depending on how they value the BSQ they have now, the BTC they can obtain on the future, or even if they just want to help Bisq grow, they will not burn BSQ at all, burn all the BSQ from their compensation requests or even buy more BSQ to burn up to their limit.  <br>
+The less competition between Burningmen there is, the more profitable it will be for each of them, and vice versa. The less profitable Burningmen role is, the better for the DAO, as more BSQ is burnt, reducing or containing BSQ supply and therefore pressuring its price up.
-* Am I looking to increase the amount of BSQ I have?
+== Burning BSQ ==
-* Am I looking to increase the amount of bitcoin I have?
-* Would I prefer to be paid in bitcoin or BSQ?
-* Is it better for me to trade BSQ for bitcoin or to burn BSQ to hopefully receive more bitcoin in the future than I would get for trading it now?
-= I am a burning man should I buy BSQ to burn? =
-Once someone becomes a burning man they might at some point consider buying BSQ to burn. This helps the DAO, and potentially is profitable for the contributor but it does require additional speculation on some of the factors discussed above. It is mentioned here as an option for someone already burning to consider.
 = How to become a burning man =
@@ Line 91: / Line 51: @@
 They should then choose a bitcoin address to receive the funds to. Ideally an external wallet like, electrum or sparrow. Once they have chosen there address they should follow the instructions [https://github.com/bisq-network/proposals/issues/390#issuecomment-1306075295 posted here].
+== Burning Men Protocol UI ==
+All the information about the current and past state of the burning men protocol can be found in the Bisq application: DAO > Proof of Burn > Burning Men
 = Terminology =

Difference between revisions of "Burning Men"

Revision as of 11:05, 28 August 2024

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