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Offline theoretical

Issuer-specified feed authority for market-based UIA's
« on: December 31, 2014, 04:17:40 PM »

If you like this proposal, please vote for my delegate dev0.theoretical which is currently hanging on at #101.

The BTS delegates have what I call feed authority which means the blockchain enforces margin call and short wall rules based on the median feed value produced by the BTS delegates.

I think anyone should be able to create a market-based UIA and optionally specify a feed authority other than the 101 BTS delegates.

This will democratize BitAsset creation -- instead of requiring all ideas for BitAssets to go through the BTS delegates in order to launch, anyone with an idea and access to a data source will be able to create a market-based BitAsset.

To pay the costs of publishing a feed, we should let the asset owner [1] specify a percentage of asset-denominated fees [2] to go to feed publishers.  Since publishing a feed will produce revenue, feed publishers will be able to sustainably pay their IT costs and transaction fees for publishing without diluting new BTS or touching BTS-denominated transaction fees.

There will probably a "long tail" of experiments and small-scale markets, and a few big winners that end up gaining traction and network effects.  All of them will provide value to BTS shareholders since these assets will tie up collateral BTS equal to the market cap times the required leverage ratio (and of course generate transaction fees from feeds and actual transactions as well).

[1] N.b. the asset owner is not the issuer; new asset quantities are issued in the market by shorting.

[2] Bid-ask overlap and short interest.  Even though this is a BTS-backed market-issued asset, we have to be careful about allowing users to pay tx fees with it.  In particular we must go by the actual collateral backing rather than feed price, because an attacker Eve would be able to create a private EVIL asset with herself as the feed issuer, publish an EVIL feed of 1 EVIL = 0.0001 BTS, short e.g. 100 EVIL into existence with a total of 0.03 BTS collateral, and then set the EVIL feed to e.g. 1 EVIL = 1,000,000 BTS.  If the blockchain uses the feed as the effective exchange rate for fees, Eve would be able to use 100 EVIL to pay 100,000,000 BTS worth of tx fees, even though the total BTS she invested to get to this point was only one UIA registration fee and a few tx fees.  Whereas using the collateral backing for the exchange rate, we know the exchange rate is based on real BTS that actually exist, not a fictional valuation based on a user-initiated black swan.
BTS- theoretical / PTS- PZxpdC8RqWsdU3pVJeobZY7JFKVPfNpy5z / BTC- 1NfGejohzoVGffAD1CnCRgo9vApjCU2viY / the delegate formerly known as drltc / Nothing said on these forums is intended to be legally binding / All opinions are my own unless otherwise noted / Take action due to my posts at your own risk

Offline fluxer555

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Re: Issuer-specified feed authority for market-based UIA's
« Reply #1 on: December 31, 2014, 05:01:11 PM »
I love this. Though I would re-post it in General Discussion, as not many people look in here ;)

Offline theoretical

Re: Issuer-specified feed authority for market-based UIA's
« Reply #2 on: December 31, 2014, 06:03:59 PM »
We should also make the issuer-specified authority a slate [1] instead of an account / address.  Then the median of the feed values will be used, and a positive majority [2] of the feed authority can update the effective slate [3].

The UIA owner should also have the right to set the feed authority slate to any value, but will be able to permanently relinquish that right by publishing a transaction [4].

The idea is to allow a UIA to function at small scale with a feed managed by a small group of enthusiasts or even a single individual person.  But when the market starts to gain traction and network effects, the manager should be able to hand off control to a decentralized collective.  Then the membership of that collective should be allowed to evolve over time by consensus of its members.  The power to select the feed authority should not be given to the long holders of the UIA, because they would have an incentive to elect a feed authority that artificially inflates feed prices (in the worst case simply setting the feed to a bogus enormous valuation to cause a black swan and allow the long holders to loot all of the short holders' collateral).

[1] Internally, a slate is just a set of up to 101 accounts.  This currently is simply a size optimization to de-duplicate multiple votes for the same set of delegates.  I'm simply re-purposing the existing "published set of up to 101 accounts" functionality.

[2] "Positive majority" means "more than 50%", in other words exactly 50% is not enough.

[3] Letting a majority of the current authority slate vote for a new authority slate is not really giving them any powers they don't already have de facto, since a positive majority would be able to collude to set the median to any value anyway.

[4] Code which implements revocable UIA owner rights already exists in the develop branch and is planned for inclusion in the 1.0 hardfork.
« Last Edit: December 31, 2014, 06:22:04 PM by theoretical »
BTS- theoretical / PTS- PZxpdC8RqWsdU3pVJeobZY7JFKVPfNpy5z / BTC- 1NfGejohzoVGffAD1CnCRgo9vApjCU2viY / the delegate formerly known as drltc / Nothing said on these forums is intended to be legally binding / All opinions are my own unless otherwise noted / Take action due to my posts at your own risk

Offline theoretical

Re: Issuer-specified feed authority for market-based UIA's
« Reply #3 on: December 31, 2014, 06:37:51 PM »
I love this. Though I would re-post it in General Discussion, as not many people look in here ;)

I'm asking bytemaster to look at it and tear it apart, see if there's any room for improvement.  If we put it on the roadmap, I'm thinking a guest post on bytemaster blog would be a better way to get it to a wide audience.
BTS- theoretical / PTS- PZxpdC8RqWsdU3pVJeobZY7JFKVPfNpy5z / BTC- 1NfGejohzoVGffAD1CnCRgo9vApjCU2viY / the delegate formerly known as drltc / Nothing said on these forums is intended to be legally binding / All opinions are my own unless otherwise noted / Take action due to my posts at your own risk

Offline bytemaster

Re: Issuer-specified feed authority for market-based UIA's
« Reply #4 on: December 31, 2014, 08:13:03 PM »
I think this is a great idea and would welcome its addition to BitShares.

I am avoiding adding NEW ideas on version 1.0 of the protocol. 
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 arhag

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Re: Issuer-specified feed authority for market-based UIA's
« Reply #5 on: December 31, 2014, 09:38:02 PM »
I don't get this. Is this a user-issued asset (UIA) or a market-issued asset (BitAsset)?

It sounds like it is market-issued since you are talking about price feeds (meaning shorting the BitAsset into existence using BTS tied up as collateral). If it is market-issued that means it is not user-issued, correct? Meaning there is no entity that can just print more tokens into existence at will. In this case, you shouldn't be using the confusing phrase "market-based UIA".

Or do you want an issuer to coexist with shorting? What purpose would that serve?

I like your idea of an authority slate associated with a BitAsset which can be changed by a positive majority of the authorities in the slate. This authority slate also publishes feed prices (from which the median feed price is determined) and could even change the description of the asset. A special case of the authority slate would be the current 101 active delegates (think of this as the null slate). The entity that creates the BitAsset gets to define the initial authority slate for the BitAsset, but they have no further control over the BitAsset.

Furthermore, I think there should be a mechanism for the shorts and longs to come to a consensus on a change in the authority slate. I think short positions and longs should optionally be able to specify an authority slate with their transaction (similar to how BTS transactions specify a delegate slate). The blockchain can calculate the fraction L(A, B) of the supply of BitAsset B that are BitAsset longs voting in favor of a particular authority slate A. The blockchain also can calculate the fraction S(A, B) of the supply of BitAsset B (measured by dividing the BitAsset debt owed by the short position with the total BitAsset supply) that are the BitAsset shorts voting in favor of a particular authority slate A. If S(A, B) > 0.5 and L(A, B) > 0.5 for a given authority slate A and BitAsset B, the blockchain should automatically change the BitAsset B's authority slate to A.
« Last Edit: December 31, 2014, 09:42:46 PM by arhag »

Offline fluxer555

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Re: Issuer-specified feed authority for market-based UIA's
« Reply #6 on: January 01, 2015, 07:03:33 AM »
Perhaps I'm off-base, but I feel that an implementation of Truthcoin (prediction markets) into BitShares would go hand-in-hand with this.

 

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