When can we say the peg is working? One perspective

[Riverhead]

If we're marketing bitUSD as a savings account than tony2k's post is quite valid. A person putting savings into bitUSD shouldn't have to stay abreast of current events any more than at a bricks and mortar.

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[xeroc]

We do not need dilution to make the market! We do not need to pay someone to help make 2-5% times their internal BTS hedge every few weeks. Any normal delegate can stick their float in a fund like this and then burn the profit.

That makes sense to me

What do I have to do?

[yellowecho]

We do not need dilution to make the market! We do not need to pay someone to help make 2-5% times their internal BTS hedge every few weeks. Any normal delegate can stick their float in a fund like this and then burn the profit.

That makes sense to me

[CLains]

I like it. Have been looking for an easy way to characterize why bitUSD is already working.

[toast]

We do not need dilution to make the market! We do not need to pay someone to help make 2-5% times their internal BTS hedge every few weeks. Any normal delegate can stick their float in a fund like this and then burn the profit.

[monsterer]

Delegates are supposed to add value so why not elect 2-3 delegates at 100% pay and boom goes the dynamite  8) you add self funding liquidity that grows with the system as it grows itself.

So, you're going to take the money inflated as delegate pay and put it back into the system? I can't see how you'll get anything over 1:1 out of that?

[Method-X]

That's easy - when there's liquidity, the peg is working.

Why don't we add liquidity and find out?

Great idea.

hmmm wait whos going to let us us 1-2 mill (hopefully more) to test this theory?

Seriously though I thought about pairing with someone to run a delegate at 100% pay(maybe more then one) and sure the pay as a market maker just to add liquidity.
Delegates are supposed to add value so why not elect 2-3 delegates at 100% pay and boom goes the dynamite  8) you add self funding liquidity that grows with the system as it grows itself.

+5% Great idea. Start with one and scale accordingly.

[Gentso1]

That's easy - when there's liquidity, the peg is working.

Why don't we add liquidity and find out?

Great idea.

hmmm wait whos going to let us us 1-2 mill (hopefully more) to test this theory?

Seriously though I thought about pairing with someone to run a delegate at 100% pay(maybe more then one) and sure the pay as a market maker just to add liquidity.
Delegates are supposed to add value so why not elect 2-3 delegates at 100% pay and boom goes the dynamite  8) you add self funding liquidity that grows with the system as it grows itself.

[luckybit]

That's easy - when there's liquidity, the peg is working.

Why don't we add liquidity and find out?

[bitmeat]

That's easy - when there's liquidity, the peg is working.

[sschechter]

The peg is working when someone going on a 15 year vacation to a place with no internet connection (do not ask me where is this place) does not see the need to move his bitUSD to his USD savings account....This is obviously different perspective.

Whether or not the peg is working is a matter of personal perspective.  If you aren't planning a 15 year vacation and instead want to hold bitUSD for a week to hedge against crypto-volitility, you're criteria is different than mine.  Once number 2 in my original post is true for everybody, then we can say that the peg works for everybody.

[zerosum]

The peg is working when someone going on a 15 year vacation to a place with no internet connection (do not ask me where is this place) does not see the need to move his bitUSD to his USD savings account....This is obviously different perspective.

[toast]

I think he meant that the USD/bitUSD ratio oscillates around a ratio of 1:1.  However, this doesn't factor in the volatility.  If today you get 1.10:1 and tomorrow its .90:1, that's a huge spread. It also doesn't imply that the average ratio is 1:1 - you need to calculate the price over time so see where its average is.  Even though most of the us here know the difference between the peg vs the spread, its a tricky thing to explain to outsiders.  Going with what toast has started, I think you can measure the effectiveness of the peg as following:

1. USD/bitUSD ratio that oscillates around a 1:1 ratio
2. An average price of $1.00 over any given slice of time (within reasonable min & max bounds...that the traders holding period fits inside)

If these conditions are met, the variance of the 1:1 ratio can be attributed to the spread - the size of which is determined by the liquidity of the market. Then what toast said about market making is true.  I think he missed my bolded point.

I was trying to say the requirement is even weaker than this. The time average of the ratio does not have to be 1.0 (a more complex volume-weighted price does though), and USD/bitUSD oscillating around 1:1 is a side effect of the peg which does not require bitUSD/BTS to oscillate around $1 of BTS.

[monsterer]

1. USD/bitUSD ratio that oscillates around a 1:1 ratio
2. An average price of $1.00 over any given slice of time (within reasonable min & max bounds...that the traders holding period fits inside)

3. USD/bitUSD ratio tends towards 1:1 in proportion to liquidity increases

[sschechter]

I think he meant that the USD/bitUSD ratio oscillates around a ratio of 1:1.  However, this doesn't factor in the volatility.  If today you get 1.10:1 and tomorrow its .90:1, that's a huge spread. It also doesn't imply that the average ratio is 1:1 - you need to calculate the price over time so see where its average is.  Even though most of the us here know the difference between the peg vs the spread, its a tricky thing to explain to outsiders.  Going with what toast has started, I think you can measure the effectiveness of the peg as following:

1. USD/bitUSD ratio that oscillates around a 1:1 ratio
2. An average price of $1.00 over any given slice of time (within reasonable min & max bounds...that the traders holding period fits inside)

If these conditions are met, the variance of the 1:1 ratio can be attributed to the spread - the size of which is determined by the liquidity of the market. Then what toast said about market making is true.  I think he missed my bolded point.