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zerosum

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Proposal: Fast Firmly-Pegged Virtual bitUSD
« on: November 04, 2014, 10:48:24 PM »

OK it took me 3 days and I still have not found a simple way to put this. It has so many aspects that I do not even know where to begin.
So I just start somewhere...

Draft 1.0

1. 'Firmly Pegged bitUSD Fund' asset is the first user issued asset - that is non-for-profit fund. (Later on it can also become a Dapp on the BTS chain as the logic of its inner working are not too hard to put in rules easily code-able).
1.1. Non for profit is intended to mean that it main goal is to achieve a idealistic target first and foremost - namely much tighter peg of bitUSD. And provide profit for the donors to that fund second.
1.2 Firmly pegged bitUSD is a highly desirable for the BTS. The fund will greatly enhance the tightness of the peg by :
1.2.1
a.buying bitUSD at $1 and selling bitUSD at 1.0075 - by selling (offering to sell) VirtualbitUSD (also an user issued asset)  @ 1.0075 bitUSD/share  - the amount of so offered shares is the max/reasonable amount that satisfies the 'Firmly Pegged bitUSD Fund's' inner working criteria and ratios.
and
b. offering to by all of its outstanding VirtualbitUSD at $1.00 in BTS (per current fair peg price*)  *might be slightly deferent that the peg price!

c. The fund can also buy any available for sell (aka in open sell orders) bitUSD at below the peg price at any moment. Those operations are envisioned to be true and fairly regular occurrence at the early stage of the fund.
1.2.2
Selling bitUSD at (or insignificantly below) the feed price. In other words placing its order just belolow the short sellers price so the funds orders are executed before the shorts. And securing that it will fill all its sell bitUSD orders in 30 days or less.


// The Above is pretty obvious stuff for any slightly complicated investor somewhat familiar with how BTS market works, but I just
//needed to put it out there for clarity


2. Inner workings of the fund (also answerers partly to the question 'why donate to this fund')
//here is another point that I do not know how to explain best...

The general business modal is simple - buy bitUSD if it is undervalued (enough under the peg) or from people willing to pay 1.0075 for a dollar, and sell it in 30 days or less for 1.00 dollar.
The problem of course arises when BTS moves in unfavorable for you direction in the meantime (before you sell the bitUSD bought)

And we here we come to the core of the idea:
-If the investors/donors to the fund do not care about returns (as their #1 goal)
-Or they are ready to accept position in BTSX and a put option at the current price - we can use the funds provided by such donors/investors and give the they return that they desire...

/// I will keep it simple for this draft as I am getting tired.

Underlying asset + put option = synthetic call option.

synthetic call at the underlying asset is a 50% of the underlying asset

==>up to 50% of all proceeds from the sell of 'Firmly Pegged bitUSD Fund'  can be used to purchase bitUSD at the peg price from all willing sellers and the return for the 'Firmly Pegged bitUSD Fund'  investors will be as promised or better



.... end of Draft 1.0
« Last Edit: November 08, 2014, 05:22:01 AM by tonyk2 »

Offline Vizzini

Re: Proposal: Fast Firmly-Pegged Virtual bitUSD
« Reply #1 on: November 04, 2014, 11:11:34 PM »
Never go against a Sicilian when death is on the line.

Offline bytemaster

Re: Proposal: Fast Firmly-Pegged Virtual bitUSD
« Reply #2 on: November 04, 2014, 11:20:10 PM »
Forcing shorts to cover at a 10% above feed price would probably do it.
For the latest updates checkout my blog: http://bytemaster.bitshares.org
Anything said on these forums does not constitute an intent to create a legal obligation or contract between myself and anyone else.   These are merely my opinions and I reserve the right to change them at any time.

zerosum

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Re: Proposal: Fast Firmly-Pegged Virtual bitUSD
« Reply #3 on: November 04, 2014, 11:27:49 PM »

Ohh poor shorts... every decision tends to make their life even more miserable in one shape or another...

Offline bytemaster

Re: Proposal: Fast Firmly-Pegged Virtual bitUSD
« Reply #4 on: November 04, 2014, 11:42:38 PM »

Ohh poor shorts... every decision tends to make their life even more miserable in one shape or another...

Not a decision, just a guess of what the idea would be.
For the latest updates checkout my blog: http://bytemaster.bitshares.org
Anything said on these forums does not constitute an intent to create a legal obligation or contract between myself and anyone else.   These are merely my opinions and I reserve the right to change them at any time.

zerosum

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Re: Proposal: Fast Firmly-Pegged Virtual bitUSD
« Reply #5 on: November 04, 2014, 11:58:56 PM »

Ohh poor shorts... every decision tends to make their life even more miserable in one shape or another...

Not a decision, just a guess of what the idea would be.

No, in its current form it does not make shorts life shorter (or more miserable) :)
However in order to work, at its finest, certain amount of re-donation might make the proposal more powerful.

 (that's all, I am allowed to say for now)

Offline fluxer555

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Re: Proposal: Fast Firmly-Pegged Virtual bitUSD
« Reply #6 on: November 05, 2014, 12:00:14 AM »
What is 're-donation'?

zerosum

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Re: Proposal: Fast Firmly-Pegged Virtual bitUSD
« Reply #7 on: November 05, 2014, 12:16:08 AM »
« Last Edit: November 05, 2014, 05:13:04 AM by tonyk2 »

Offline monsterer

Re: Proposal: Fast Firmly-Pegged Virtual bitUSD
« Reply #8 on: November 05, 2014, 09:43:09 AM »
Monopolistic market-maker?
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zerosum

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Re: Proposal: Fast Firmly-Pegged Virtual bitUSD
« Reply #9 on: November 08, 2014, 05:22:38 AM »
[UPDATE]
Draft 1.0
... kind of put up there in the OP.
« Last Edit: November 08, 2014, 05:33:16 AM by tonyk2 »

Offline starspirit

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Re: Proposal: Fast Firmly-Pegged Virtual bitUSD
« Reply #10 on: November 08, 2014, 05:39:39 AM »
[UPDATE]
Draft 1.0
... kind of put up there in the OP.
tonyk2, at first glance this reads to me like a market-making strategy in bitUSD, funded by an investor group. I'm assuming the trading operation would be implemented by a bot. This would help bitUSD pegging but still hold risk for the market-maker.
I was a bit confused by the option part, perhaps you could explain the intent and procedure there a bit more.

zerosum

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Re: Proposal: Fast Firmly-Pegged Virtual bitUSD
« Reply #11 on: November 08, 2014, 05:49:35 AM »
[UPDATE]
Draft 1.0
... kind of put up there in the OP.
tonyk2, at first glance this reads to me like a market-making strategy in bitUSD, funded by an investor group. I'm assuming the trading operation would be implemented by a bot. This would help bitUSD pegging but still hold risk for the market-maker.
I was a bit confused by the option part, perhaps you could explain the intent and procedure there a bit more.
Yes, I know it is bare-bone... I am probably trying to do something impossible - explain it in a way that is understandable for everyone.
But yes, I intend to put far more info in that regard, as well as a few other areas, I personally find very important.
(Sorry for the messy draft btw)

Offline monsterer

Re: Proposal: Fast Firmly-Pegged Virtual bitUSD
« Reply #12 on: November 08, 2014, 11:27:00 AM »
Since there is no bitUSD/USD market, how do you propose to tell when bitUSD is undervalued or overvalued?
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Offline fuzzy

Re: Proposal: Fast Firmly-Pegged Virtual bitUSD
« Reply #13 on: November 08, 2014, 04:47:25 PM »
 +5%

Keep it up tony.. someday I'm sure you will find bitTony's on bitshares platform.  Imma short the hell out of them  8)
WhaleShares==DKP; BitShares is our Community! 
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zerosum

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Re: Proposal: Fast Firmly-Pegged Virtual bitUSD
« Reply #14 on: November 08, 2014, 05:02:49 PM »
+5%

Keep it up tony.. someday I'm sure you will find bitTony's on bitshares platform.  Imma short the hell out of them  8)

I was about to post a 'funny' response... Then I realized it might be better to make sure you know what you are saying. So
You realize that shorting any of my assets is actually strongly believing it is going no where, and you are even ready to put your money behind this distrust...

 

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