Author Topic: Unwinding a BitAsset Market durring all stages of a life cycle.  (Read 6062 times)

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Offline speedy

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This wouldn't be for the main markets, it would be for less popular markets such as BitBTC after BTC dies ;)

I dont want the BitBTC market to die, I wish it was more popular. Its a great way of winning over Bitcoin users.

Offline Shentist

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could we not handle it, if a black swan occured?

i don't like the idea to give the delegates more power.

in my understanding we want still remove the pricefeeds for the liquid markets?

in my opinion we should take the price feed as orientation and allow the shorts to make a trade below the feed. the difference to the feedprice pay as yield for the bitasset holders. maybe in the beginning we get not a perfect peg price, but the yield would be so much higher.

Offline starspirit

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In the event of a "black swan" collapse of collateral value:
I would suggest that all BitAssets be settled at a price equal to the least collateralized position on the books.   This would mean that all margin positions can be covered on equal terms.    Considering all positions started at 3x and the "least collateralized positions" were the first to face normal margin calls we can assume that the margin positions that remain use to be relatively highly collateralized and now are not.


Wouldn't this give BitAsset owners the minimum possible outcome, and favour the shorts who get out at a much more favourable BTS liquidation price?

Offline joele

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In the even of black swan, the Delegates should help cover/guarantee all losses by traders so the traders will have full confidence to the market bitAssets.

Offline biophil

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This is a great theoretical discussion. My opinion? This is a minor issue, aka just put in place some kind of solution.

Speaking of dead markets, I have a story and a question (personal preference - my question answered without a need do read 100K lines of code. code that can change tomorrow)

So the story first. I added a collateral to one of my short positions today, obviously my aim was to increase the call price ( for BM and A86 benefit - I/this means the price stated as BTS/BitAsset). Funny enough said price went down instead of up... very amusing experience....

The question is:
Is there still a 10% safety net... i.e. if my cover is triggered at 25,000 BTS/bitBTC is there an upper bond of the price my cover will be filled.  And if yes how is this calculated. Thanks.

I've been watching margin calls closely, and I've never seen one execute above (in BTS/asset) the price feed. This is just from my observations; I'd also like to have clarification on this from BM.
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Offline bytemaster

At the end of the day all BitAssets represent a claim on a fraction of the collateral backing them. 
Winding down a BitAsset means forced liquidation of the BitAsset for the collateral.

In the event of a "black swan" collapse of collateral value:
I would suggest that all BitAssets be settled at a price equal to the least collateralized position on the books.   This would mean that all margin positions can be covered on equal terms.    Considering all positions started at 3x and the "least collateralized positions" were the first to face normal margin calls we can assume that the margin positions that remain use to be relatively highly collateralized and now are not.

In the event of a market fails to attract sufficient demand then simply settle at the feed price because everyone is fully collateralized:

The question becomes "when" do we allow this to happen if at all?

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Offline starspirit

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I'm still unsure what is being proposed in this thread in the case of a black-swan, where a bitAsset becomes under-collateralised. In this case you cannot close everyone out at the price-feed. Would somebody mind spelling out the proposed steps of a wind-down for me?

Also, it may not be that a black-swan event necessarily means we want to wind down that bitAsset market. If we want to preserve it, what is the approach being proposed?

Offline alt

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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.

This wouldn't be for the main markets, it would be for less popular markets such as BitBTC after BTC dies ;)
lol  :D

zerosum

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This is a great theoretical discussion. My opinion? This is a minor issue, aka just put in place some kind of solution.

Speaking of dead markets, I have a story and a question (personal preference - my question answered without a need do read 100K lines of code. code that can change tomorrow)

So the story first. I added a collateral to one of my short positions today, obviously my aim was to increase the call price ( for BM and A86 benefit - I/this means the price stated as BTS/BitAsset). Funny enough said price went down instead of up... very amusing experience....

The question is:
Is there still a 10% safety net... i.e. if my cover is triggered at 25,000 BTS/bitBTC is there an upper bond of the price my cover will be filled.  And if yes how is this calculated. Thanks.

Offline Markus

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2) Wait sufficient time passes without any trades in the market


I don't think this will ever happen. Anybody can do a riskless trade by opening and then covering a short position with himself thereby resetting the waiting period.

Actually they can't.   As soon as someone opens up an order to "trade with themselves" they will find they have opened the door for someone else to "exit" and then they will run out of capital.

The dead state of the market is, I assume, lots of expired shorts waiting to buy at the feed and no supply, right?
(or if there is no feed anymore then there will still be one highest buy order)

An example:
highest buy order 1 BitBTC at 10000 BTS/BitBTC, no sell orders. It has been like this for more than a week.

Now I post an order to buy 0.0001 BitBTS at 10001 BTS/BitBTC.
Nobody will find this order very exciting so I can assume it will not be matched within the next minute.

I am also one of the last holders of a bag of BitBTS dust and I sell myself 0.0001 BitBTS at 10001 BTS/BitBTC.

A trade happened. The risk to myself and the size of the exit door are negligible.

clout

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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.

This wouldn't be for the main markets, it would be for less popular markets such as BitBTC after BTC dies ;)

 +5%

Offline bytemaster

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.

This wouldn't be for the main markets, it would be for less popular markets such as BitBTC after BTC dies ;)
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 Thom

Pls forgive these newbie questions and my lack of knowledge about the markets. I am apparently still a bit foggy on some of the basics of BitAssets.

1) It is my understanding there's nothing very complicated about price feeds, and that most delegates use scripts to create the feeds they publish by aggregating commonly available public prices for assets like gold, silver, oil, dollars etc.  If delegates simply stopped their scripts (and thus the feed), why can't the sources be used directly? Isn't the delegate feed just a trusted convenience?

If the script is functioning honestly and without manipulation and is open source, is it unreasonable to expect someone somewhere will be using it to publish an accurate feed, and in that case can't all such script outputs be used to check validity of a particular feed (script) output?

2) Is a "blackswan" event simply the halting of price feed data, and would that be due only b/c all sources being aggregated to produce the feed have stopped making that data available (for example the price of gold after the London fix is closed, like during the weekend)?

Not long ago I posted some questions about BitAssets, with special attention to what price feeds are and how they are set. But this thread leads me to believe the answers I got must have been more conceptual and missing important practical details.

Since BitAssets are extremely important in the BitShares ecosystem, it is imperative I understand them well, and this thread leads me to believe I don't.
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Offline bytemaster


2) Wait sufficient time passes without any trades in the market


I don't think this will ever happen. Anybody can do a riskless trade by opening and then covering a short position with himself thereby resetting the waiting period.

Actually they can't.   As soon as someone opens up an order to "trade with themselves" they will find they have opened the door for someone else to "exit" and then they will run out of capital.
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

If someone cares enough to do that is the market dead?

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