Author Topic: Margin Call Explanation & Beware of Illiquid Markets with Low Margin  (Read 13774 times)

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Offline maqifrnswa

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If you make it closer to the SWAN than the FEED then you lose the benefit of outside information provided by the price feed.  Namely, someone with high collateral already has a very low CALL price (derived from SWAN) .  It would also have the effect of disabling any possibility of doing a margin call between SWAN and SQP.

I'm not saying it should be closer to SWAN than FEED, just that SQP should be in units of SWAN, not FEED. That is because the amount of SQP you want is a function of market collateralization, not FEED. This way if collateralization changes, but feed price stays the same, SQP should also change.
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Offline Troglodactyl

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Cool, so now how do we vote on these parameters?

Currently by voting for witnesses who support the values you want.  But there's a pretty solid case for moving that to committee members and leaving the witness role more purely technical and neutral.  Moving those parameters to the committee would of course require an update.

Offline Troglodactyl

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Market competition will cause sellers of usd to move closer to feed.   Why let someone else pocket 1.5 when you are still happy with 1.4.   If you want to go short now you must sell at a price people will but

This is not how the system works.  There is no reason to compete to sell assets cheaper than the MSSR level as long as there are active margin calls because orders will be matched at MSSR.  If MSSR is 150% as it was before, that guarantees that there will never be liquidity near the feed, which then causes ridiculously high collateral requirements because the market is illiquid.  Then those additional margin calls caused by the inflated collateral requirement flood the market with BTS at prices no one would sell at by choice and crash the price, causing a cascade of additional margin calls.

Offline Chronos

Market competition will cause sellers of usd to move closer to feed.   Why let someone else pocket 1.5 when you are still happy with 1.4.
In theory, yes.

In practice, why pocket 1.5 when you could pocket 1.6? There is no enforcing mechanism for an upper bound to bitUSD, as far as I know.

Offline sittingduck

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Market competition will cause sellers of usd to move closer to feed.   Why let someone else pocket 1.5 when you are still happy with 1.4.   If you want to go short now you must sell at a price people will but

Offline alt

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transwiser is the best gateway for bitCNY, bitcrab borrow bitCNY with BTS from blockchian to support the gateway,
now maybe he will meet a big problem, he can't get enough bitCNY to cover short position, and his BTS will sell to others at price 1/1.5
why he need to take this risk? he never buy BTS with bitCNY, he just do business between bitCNY and CNY,
I tell him this is a business with tiny risk, but now, I found that  I have cheat him much.
 is this the stable peg asset you want?
« Last Edit: October 17, 2015, 04:48:56 am by alt »

Offline topcandle

If we required 3 times collateral wouldn't this all be irrelevant?
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Offline Troglodactyl

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What is the solution?  If we had more buy side pressure would that help?
no one will buy BTS with bitUSD at feed price when you know the reserve BTS is sell at price /1.5
the solution is to adjust the sell price for reserve to a reasonable premium, I think it should more than 1/1.1

I get that no one is going to buy it.  I guess I am still just unsure about what is going wrong.  I have a hard time believing that the system was designed to make bitusd $1.5

Yeah.  That's a major design flaw.  Setting the SQP to 1 or near 1 may stop the hemorrhaging and stabilize the market long enough to have a chance of fixing it.

EDIT: That or stop publishing feeds entirely.
« Last Edit: October 17, 2015, 02:34:09 am by Troglodactyl »

Offline Moon

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Offline puppies

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What is the solution?  If we had more buy side pressure would that help?
no one will buy BTS with bitUSD at feed price when you know the reserve BTS is sell at price /1.5
the solution is to adjust the sell price for reserve to a reasonable premium, I think it should more than 1/1.1

I get that no one is going to buy it.  I guess I am still just unsure about what is going wrong.  I have a hard time believing that the system was designed to make bitusd $1.5
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Offline liondani

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look what they are posting on poloniex trollbox!

londonwhale: mindphlux, is dumping: http://imgur.com/du63Pkl

Offline liondani

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in the meanwhile we are already  @ 0.00001500 BTC ...

Offline alt

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What is the solution?  If we had more buy side pressure would that help?
no one will buy BTS with bitUSD at feed price when you know the reserve BTS is sell at price /1.5
the solution is to adjust the sell price for reserve to a reasonable premium, I think it should more than 1/1.1

Offline puppies

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What is the solution?  If we had more buy side pressure would that help?
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Offline alt

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you fear about black swan, what will happen when black swan? 1 bitusd=0.5 usd?
look at the market now, bid1 price is 209BTS/USD, ask1 price is 333BTS/USD, how much will you sold your BITUSD?
1bitUSD=1.5USD now.
it's much worse than black swan.
bitUSD will die, bitCNY will die.