Author [EN] [ZH] [ES] [PT] [IT] [DE] [FR] [NL] [TR] [SR] [AR] [RU] [EN] [ZH] [ES] [PT] [IT] [DE] [FR] [NL] [TR] [SR] [AR] [RU] [EN] [ZH] [ES] [PT] [IT] [DE] [FR] [NL] [TR] [SR] [AR] [RU] Topic: Unwinding a BitAsset Market durring all stages of a life cycle.  (Read 1023 times)

0 Members and 1 Guest are viewing this topic.

Offline bytemaster


BitAsset markets can die slowly, never gain adoption, or suffer a black swan.   In these events delegates would like to stop publishing feeds but this would prevent margin calls and new shorts from setting a price.  In theory if delegates permanently stopped publishing feeds then the value of the BitAsset =  BitAssetCollateral/BitAssetSupply "on average" and it comes down to game theory on shorts/longs settling voluntarily. 

However, there is still the situation where some BitAsset holdouts refuse to sell (potentially lost their keys) which means that there are some Shorts that are unable to buy and then cover to free their collateral.   

In the interest of having a robust system that can handle all of these situations gracefully I would like to propose that with delegate approval (majority vote) a BitAsset can be "reset" and all longs/shorts have their positions closed at the price feed.     Some protections can be put in place such as requiring a 2 week waiting period during which delegates can be voted out before the close out becomes official. 

With this in place the result of a blackswan would be all BitUSD is converted to BTS funded by the collateral at a price that allows all shorts to fully cover.     

This will protect the BitAsset markets at all stages in their life cycle and allow the network to continue without hardforks.
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.

Offline pc

  • Hero Member
  • *****
  • Posts: 1013
    • View Profile
    • Bitcoin - Perspektive oder Risiko?
  • BTS: cyrano
  • Witness: cyrano
  • Payrate: 100%
Re: Unwinding a BitAsset Market durring all stages of a life cycle.
« Reply #1 on: November 14, 2014, 05:34:20 PM »
In the interest of having a robust system that can handle all of these situations gracefully I would like to propose that with delegate approval (majority vote) a BitAsset can be "reset" and all longs/shorts have their positions closed at the price feed.     Some protections can be put in place such as requiring a 2 week waiting period during which delegates can be voted out before the close out becomes official. 

I agree there needs to be a way to handle such situations cleanly.

HOWEVER, this is AFAIK so far the only case where delegates have the power to seriously mess with someone's possessions. (I. e. in a "normal" 51% attack you can modify history, but you cannot take away someone's money.) Therefore I suggest that more than a simple majority of delegates should be required.

Compare this to a squeeze-out in traditional companies. You can't do that with only 51% of the shares.
Please vote for my BitShares witness "cyrano" and for my STEEM witness "cyrano.witness"!
Bitcoin - Perspektive oder Risiko? ISBN 978-3-8442-6568-2 http://bitcoin.quisquis.de

Offline businiao

  • Newbie
  • *
  • Posts: 18
    • View Profile
Re: Unwinding a BitAsset Market durring all stages of a life cycle.
« Reply #2 on: November 14, 2014, 06:47:29 PM »
Sounds awful, The delegates should not have any rights except feeding the price.You can't touch any people's assets if there is one person doesn't agree .THAT'S THE BASELINE.(sorry for my poor English)

Offline luckybit

Re: Unwinding a BitAsset Market durring all stages of a life cycle.
« Reply #3 on: November 14, 2014, 06:55:21 PM »
Sounds awful, The delegates should not have any rights except feeding the price.You can't touch any people's assets if there is one person doesn't agree .THAT'S THE BASELINE.(sorry for my poor English)
+5%
https://metaexchange.info | Bitcoin<->Altcoin exchange | Instant | Safe | Low spreads

Offline void

  • Newbie
  • *
  • Posts: 15
    • View Profile
Re: Unwinding a BitAsset Market durring all stages of a life cycle.
« Reply #4 on: November 14, 2014, 07:01:09 PM »
How about a vote with all the shareholders to approve such a decision.

Offline businiao

  • Newbie
  • *
  • Posts: 18
    • View Profile
Re: Unwinding a BitAsset Market durring all stages of a life cycle.
« Reply #5 on: November 14, 2014, 07:07:04 PM »
How about a vote with all the shareholders to approve such a decision.
we touch the baseline, we lose everything.you can't vote to take other people’s assets.you just don't have the right.
« Last Edit: November 14, 2014, 07:10:17 PM by businiao »

Offline bytemaster

Re: Unwinding a BitAsset Market durring all stages of a life cycle.
« Reply #6 on: November 14, 2014, 07:09:17 PM »
Sounds awful, The delegates should not have any rights except feeding the price.You can't touch any people's assets if there is one person doesn't agree .THAT'S THE BASELINE.(sorry for my poor English)
+5%

I agree with the principle. 

We have a situation today where delegates can "stop publishing prices" at which point the market will automatically value all BitAssets in that market at about 50% of the collateral backing.     So inaction of the delegates forces a slow unwind that ultimately leaves some shorts holding the bag for longs that lost their private key.   
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.

Offline ripplexiaoshan

  • Board Moderator
  • Hero Member
  • *****
  • Posts: 1957
    • View Profile
  • BTS: xiaoshan
Re: Unwinding a BitAsset Market durring all stages of a life cycle.
« Reply #7 on: November 14, 2014, 07:36:00 PM »
Quote
However, there is still the situation where some BitAsset holdouts refuse to sell (potentially lost their keys) which means that there are some Shorts that are unable to buy and then cover to free their collateral.   
This is an extreme case, which would hardly happen.
It's not a good idea to touch users asset, because someone might have reason to hold bitasset on hand, instead of put them in the market.
If the bitAsset in the market is insufficient for the shorts to cover, that means the market needs more bitasset, then people will issue more by new shorts.   
BTS ID:xiaoshan                   www.btsabc.org         www.openledger.info

Offline businiao

  • Newbie
  • *
  • Posts: 18
    • View Profile
Re: Unwinding a BitAsset Market durring all stages of a life cycle.
« Reply #8 on: November 14, 2014, 07:47:15 PM »
Quote
However, there is still the situation where some BitAsset holdouts refuse to sell (potentially lost their keys) which means that there are some Shorts that are unable to buy and then cover to free their collateral.   
This is an extreme case, which would hardly happen.
It's not a good idea to touch users asset, because someone might have reason to hold bitasset on hand, instead of put them in the market.
If the bitAsset in the market is insufficient for the shorts to cover, that means the market needs more bitasset, then people will issue more by new shorts.   
+5%, if it happens ,let it happen.is that hurt the system?

Offline bytemaster

Re: Unwinding a BitAsset Market durring all stages of a life cycle.
« Reply #9 on: November 14, 2014, 08:16:20 PM »
To be fair the purpose of this discussion is to tie up loose ends that people can use to attack the foundations of BTSX.   

All cases need to have a clean answer that is acceptable.

A short risks having his collateral tied up if a long loses their private key.  In large markets this turns into infinite demand for some of that BitAsset and is not a problem.   In thin markets it is a risk that shorts are exposed to.

People have long criticized our BitAsset system because it was "one sided" and BitUSD couldn't be called.   

There are cases where BitUSD needs to be called in extreme events to rebalance everyone.   

The question is only "who is the judge" and "how much harm" can that judge do and "how much freedom" does that judge have to act?

So the wind down process needs to have some steps to protect all parties:
1) Stop publishing feeds and let all parties settle voluntarily
2) Wait sufficient time passes without any trades in the market
3) Declare market dead and force settlement of remaining positions.

Under this process delegates would lack the power to harm traders... traders would have a high degree of confidence that the market will ultimately settle at a fair price set by the delegates and thus the voluntary trades will continue to track the real price given the conditions.  Once all voluntary settlement is done then the delegates clean up.

This process would protect large mature markets from the delegates having arbitrary power to shut them down and force settlement. 
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.

Offline Riverhead

Re: Unwinding a BitAsset Market durring all stages of a life cycle.
« Reply #10 on: November 14, 2014, 08:38:02 PM »

Eh, I guess if this event gets triggered the depositors are on the chopping block one way or the other and at least this way it's a controlled reboot rather than catastrophic failure.
« Last Edit: November 14, 2014, 08:46:33 PM by Riverhead »

Offline bytemaster

Re: Unwinding a BitAsset Market durring all stages of a life cycle.
« Reply #11 on: November 14, 2014, 08:44:50 PM »
Quote
Eh, I guess if this even gets triggered the depositors are on the chopping block one way or the other and at least this way it's a controlled reboot rather than catastrophic failure.

Yes... exactly.
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.

Offline starspirit

  • Hero Member
  • *****
  • Posts: 948
  • Financial markets pro over 20 years
    • View Profile
  • BTS: starspirit
Re: Unwinding a BitAsset Market durring all stages of a life cycle.
« Reply #12 on: November 14, 2014, 09:59:10 PM »

In the interest of having a robust system that can handle all of these situations gracefully I would like to propose that with delegate approval (majority vote) a BitAsset can be "reset" and all longs/shorts have their positions closed at the price feed.     Some protections can be put in place such as requiring a 2 week waiting period during which delegates can be voted out before the close out becomes official. 

With this in place the result of a blackswan would be all BitUSD is converted to BTS funded by the collateral at a price that allows all shorts to fully cover.     


I don't fully understand what this is saying. Assuming there is still a price feed, then in a black-swan event (under-collateralised bitUSD) any closing of longs and shorts at the price feed will result in early sellers getting full payment at the expense of remaining holders. Or are you saying that the delegates would lower the price feed below the peg to reflect the under-collateralisation in the pool?

Ggozzo

  • Guest
Re: Unwinding a BitAsset Market durring all stages of a life cycle.
« Reply #13 on: November 14, 2014, 10:19:12 PM »
Wouldn't theoretically someone see opportunity and make a low risk low probability trade with potential high return trade in that situation? If everyone stops trading then there's a bigger problem because they are onto a different platform/app.  Some of the best investors are opening positions when no one else is. You know how that famous Buffet quote goes.

Offline Agent86

  • Sr. Member
  • ****
  • Posts: 471
  • BTSX: agent86
    • View Profile
Re: Unwinding a BitAsset Market durring all stages of a life cycle.
« Reply #14 on: November 14, 2014, 11:16:56 PM »
I still think the best way to avoid a black swan event may be to prioritize by collateral and not interest rate.

In the hopefully unlikely occurance of a black swan event I could see an argument to force bitUSD to sell for BTSX.

I think the most fair way would be to force close the bitUSDs in an order determined by how much BTSX was originally paid for them (least amount of BTSX originally paid for the bitUSD is forced to sell first and are matched with the undercollateralized blown shorts).

Maybe it's a little computationally expensive to track and you could argue it makes bitUSD technically not totally fungible but I think it would be the most fair.  I also think it should be a very unlikely event.

 

Google+