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Offline matt608

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I'm just wondering why exchanges such as BTER don't use the data from the bitshares decentralized exchange and trade with that so the order book from the decentralized exchange appears on their order books?  Rather than how it is now with them each having a really thin order book that harms the peg.  When someone buys bitUSD from an exchange it's best if its bought from the main market to strengthen the peg by increasing liquidity. 

I thought there are some bitcoin exchanges that use the bitstamp order book somehow to provided liquidity, I'm not sure how it works.  Can that be done with Bitshares?

Offline toast

Re: API for central exchanges to allow them use the decentralised market?
« Reply #1 on: November 19, 2014, 05:28:42 PM »
Nothing stopping them from using BTS like this. The exchanges seem to have enough volume to not want to make the market like that themselves.
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Offline matt608

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Re: API for central exchanges to allow them use the decentralised market?
« Reply #2 on: November 19, 2014, 05:43:07 PM »
Nothing stopping them from using BTS like this. The exchanges seem to have enough volume to not want to make the market like that themselves.

Ok, in that case in future exchanges/on ramps should be encouraged to use the Bitshares market like this. 

What happens for currency pairs that don't yet exist such as bitUSD/ARS (argentinian peso)?  We don't want each exchange opening their own market, a market should be opened on Bitshares and all the exchanges use that same market. 

Or would the exchange buy bitUSD themselves on demmand from the Bitshares exchange and sell it at a fixed rate for ARS?  That is different from what an exchange would do...  They would need a bank account in Argentina to receive ARS, which may be shut down, in which case a localbitUSD website selling for cash could be very useful?
« Last Edit: November 19, 2014, 05:50:15 PM by matt608 »

Offline toast

Re: API for central exchanges to allow them use the decentralised market?
« Reply #3 on: November 19, 2014, 05:51:09 PM »
Well BTS as a DAC can't trade against ARS, do you mean bitARS? Did you mean the opposite in the OP?
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Offline sschechter

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Re: API for central exchanges to allow them use the decentralised market?
« Reply #4 on: November 19, 2014, 07:06:13 PM »
You do raise interesting possibilities.  However, each exchange would need to build their own adapter that fit into their system. The perceived benefit to doing this must outweigh the cost. Its easier for them to create a parallel market using their existing market technology.  Unfortunately low liquidity attracts lower liquidity, so creating a parallel market can satisfy this 'perceived' niche but it also sends out a false indicator of customer demand, reaffirming their position to not want to build their own BitShares market adapter.

A high share price fixes all problems 8)
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Offline matt608

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Re: API for central exchanges to allow them use the decentralised market?
« Reply #5 on: November 27, 2014, 09:46:57 PM »
I want to re-clarify what the problem is I'm talking about with Argentina as the example location.  It's important and a bit of a rabbit hole.

An end user of bitUSD shouldn't have any contact with a market and placing a buy order in an order book, they should just be able to deposit ARS and have a market order created for them, offering them an exchange rate and asking them if they want to proceed with it.  Then their bitUSD would be sent to their wallet they downloaded from a local language bitUSD portal.

How this can be done is complicated requires an entire exchange to be customized for bitUSD end users.

1.  Exchange runs a ARS/bitUSD market. 
2.  User discovers bitUSD portal and downloads lightweight wallet 'you've got a wallet, now you need to fill it up!'
3.  User is directed to sign up the exchange, without feeling they are going to a whole new site (same graphics style)
4.  User deposits ARS into the exchange and are offered an exchange rate (market order). Subsidised Market makers needed!
5.  User is directed to withdraw the funds to their wallet to earn yield.

I'm just thinking about the end user experience of bitUSD.  Users buying it or not depends entirely on exchanges.  Getting wallet downloads is easy, getting bitUSD purchased by end users is much harder.  Do we want Bitshares to be dependant on exchanges run by other businesses? 

I'm not actually sure if thats the best way to do it.  Maybe having exchanges run an ARS/BTS market is better, then the BTS could be used to buy bitUSD from the decentralised exchange to strengthen the peg there.  I'm not sure which way round is best.  ARS/BTS on central exchange or ARS/bitUSD?  Both would need market makers subsidised by dilution.

What I think I can conclude from all this is that a localbitcoins style website for bitUSD or mycellium app for bitUSD to facilitate cash trade will be very useful as that skips the whole hassle of integrating with an exchange.  Thousands of 'illiquid' 1 person markets would form a consensus market price... maybe? That could still be a bit of a muddle without having at least 1 central exchange to take a price from.

Basically bitshares needs to tightly partner with an Argentinian exchange to create a seemless user experience. 

Incentives for the exchange:

 - bitUSD portal owned and marketed by Bitshares directs users to the exchange.  Exchange earn from trading fees bitshares marketing work specifically generated.  Marketing the portal is marketing the exchange.
 - Market maker incentives offered by bitshares encourage yet more trade at the exchange.
 - If that's not enough, the exchange could get affiliate rewards of some kind!

This could definitely be enough incentive for an exchange to provide a basic implementation if well pitched.  But at some point a seamless integration would be needed for mainstream users and this would be a major time investment from Bitshares funded devs who would need to work closely with the exchange.

It would be great if Bitshares could run its own local exchanges by either buying out existing local exchanges or funding a startup exchange.  Take coinmelon.com for example, a startup bitcoin exchange in Argentina.  Perfect exchange to partner with.  Is it better to offer the owners a small handful of BTS to ensure motivations are aligned?  What else can be offered to them, dev help with integration?  How much?  When?  Now is the time to make contact.

Bitshares can't fund a delegate to startup his own local exchange (or buy out existing exchanges when we have higher market cap) because the bank accounts would get shut down straight away due to no regulatory clarity on Bitshares making it a 'high risk' business for bank.  Even if it was defined as a bitcoin exchange, who would it be owned by?  Bitshares, which wont be allowed.

A  centralised Bitshares, bitUSD or general bitasset exchange with a bank account cannot exist.  Unless there are some protected locations?

But bitcoin exchanges are (beginning to be) allowed to exist, so a bitcoin exchange which also did Bitshares exchange stuff too, that could be allowed and it could be owned or partially owned by Bitshares, giving us the control of the on-ramps we need. 

But not without a legal definition of Bitshares, which makes me bring up luckybits proposal of forming a Bitshares co-operative to allow for this kind of thing to be possible. 

Any thoughts on any of these issues?  Especially, what exactly can be offered to exchanges as incentive to form partnerships?  I can offer marketing of bitUSD portal that directs users to their exchange, what about market maker subsidies, should that happen? + dev help to get a basic integration is available I assume?
« Last Edit: November 27, 2014, 10:08:16 PM by matt608 »

 

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