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: How are market pegged asset's handled by a black swan event?  (Read 415 times)

0 Members and 1 Guest are viewing this topic.

Offline Gentso1

How are market pegged asset's handled by a black swan event?
« on: January 01, 2015, 04:16:37 PM »

I was recently talking with a exchange about adding BTS and some of its market pegged assets. Adding BTS was of course a no brainier for them but the market pegged assets are a slightly trickier sell.With many 2.0's their has been a clear shift, from creating coins of different flavors to the creation of assets. Every one has a asset and we all want to explain why our asset is better then other players.

The idea that the MPA are backed by 300%bts was easy to understand and accepted by the exchange. Delegates, price feeds and the creation of the MPA's through the matching of shorts and longs were also easily understood by the exchange. The question then became, What happens to MPA's if BTS loses alot of value very quickly? How does the internal exchange handle the MPA's and how would this effect a external exchange that allows trading of these pairs?

Or am I completely off the mark and should be pushing a exchange to use UIA to trade IOU's of our MPA's? Thought's? 
« Last Edit: January 01, 2015, 05:21:08 PM by Gentso1 »

Offline bytemaster

Re: How are market pegged asset's handled by a black swan event?
« Reply #1 on: January 01, 2015, 04:25:18 PM »
Right now the code will simply result in a negative USD supply with no collateral.   The fall would have to be very sudden and long-lasting.   A slow fall is not a concern.

We should focus on gateways + IOUs  so the exchange has no risk.   
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 Gentso1

Re: How are market pegged asset's handled by a black swan event?
« Reply #2 on: January 01, 2015, 05:43:48 PM »
Right now the code will simply result in a negative USD supply with no collateral.   The fall would have to be very sudden and long-lasting.   A slow fall is not a concern.

We should focus on gateways + IOUs  so the exchange has no risk.

Ok. I have  looked over your document herehttps://docs.google.com/document/d/1S-tqmfGhxS3Myy83IvZfffoYDwc5kIv1n7GhXYq937I/edit

So under such a event because of using IOU's the exchange could:

Choose not to honor IOU's
Stop trading until event is over


Am I missing any other option's a exchange might have during this kind of event?

Offline toast

Re: How are market pegged asset's handled by a black swan event?
« Reply #3 on: January 01, 2015, 06:01:11 PM »
Right now the code will simply result in a negative USD supply with no collateral.   The fall would have to be very sudden and long-lasting.   A slow fall is not a concern.

We should focus on gateways + IOUs  so the exchange has no risk.

Ok. I have  looked over your document herehttps://docs.google.com/document/d/1S-tqmfGhxS3Myy83IvZfffoYDwc5kIv1n7GhXYq937I/edit

So under such a event because of using IOU's the exchange could:

Choose not to honor IOU's
Stop trading until event is over


Am I missing any other option's a exchange might have during this kind of event?

If the only thing the exchange is doing is gateway+IOU then "the event" is not applicable. It just doesn't affect them if they never touch bitassets.
Do not use this post as information for making any important decisions. The only agreements I ever make are informal and non-binding. Take the same precautions as when dealing with a compromised account, scammer, sockpuppet, etc.

Offline Gentso1

Re: How are market pegged asset's handled by a black swan event?
« Reply #4 on: January 01, 2015, 06:35:05 PM »
Right now the code will simply result in a negative USD supply with no collateral.   The fall would have to be very sudden and long-lasting.   A slow fall is not a concern.

We should focus on gateways + IOUs  so the exchange has no risk.

Ok. I have  looked over your document herehttps://docs.google.com/document/d/1S-tqmfGhxS3Myy83IvZfffoYDwc5kIv1n7GhXYq937I/edit

So under such a event because of using IOU's the exchange could:

Choose not to honor IOU's
Stop trading until event is over


Am I missing any other option's a exchange might have during this kind of event?

If the only thing the exchange is doing is gateway+IOU then "the event" is not applicable. It just doesn't affect them if they never touch bitassets.

Maybe I am off base but the exchange is issuing IOU's based on market pegged assets it receives.

Example

I send 100bitUSD to XYZ exchange.
XYZ Issues me XYZUSD its very own UIA.
XYZ likes to use its own UIA for the reasons stated above.
I go about trading XYZUSD on the XYZ's external exchange
The price of BTS suddenly and sharply falls
XYZ has the 100bitUSD I traded to them for their XYZUSD so that I can trade on their external exchange.


"A BitShares gateway does the exact same process, the only difference is that the database that tracks the users’ deposits to the exchange is the BitSharesBiItShares blockchain.   When a user transfers fiat dollars or bitcoin to a gateway, the gateway responds by tranIsferring an IOU asset issued by the gateway back to the user.    When the user returns the IOU to the gateway the gateway sends fiat dollars or bitcoin back to the user."

If I understand the above correctly XYZ is holding bit(fill in the blank) MPA's and issuing their UIA's. The exchange has more control because it can stop trading or choose not to honor their UIA but they are still exposed because they have the bit(fill in the blank).

So my question I guess becomes How sudden of a fall and how long of a drop?

Offline Agent86

  • Sr. Member
  • ****
  • Posts: 471
  • BTSX: agent86
    • View Profile
Re: How are market pegged asset's handled by a black swan event?
« Reply #5 on: January 01, 2015, 06:51:42 PM »

Maybe I am off base but the exchange is issuing IOU's based on market pegged assets it receives.

Example

I send 100bitUSD to XYZ exchange.
XYZ Issues me XYZUSD its very own UIA.
XYZ likes to use its own UIA for the reasons stated above.
I go about trading XYZUSD on the XYZ's external exchange
The price of BTS suddenly and sharply falls
XYZ has the 100bitUSD I traded to them for their XYZUSD so that I can trade on their external exchange.


"A BitShares gateway does the exact same process, the only difference is that the database that tracks the users’ deposits to the exchange is the BitSharesBiItShares blockchain.   When a user transfers fiat dollars or bitcoin to a gateway, the gateway responds by tranIsferring an IOU asset issued by the gateway back to the user.    When the user returns the IOU to the gateway the gateway sends fiat dollars or bitcoin back to the user."

If I understand the above correctly XYZ is holding bit(fill in the blank) MPA's and issuing their UIA's. The exchange has more control because it can stop trading or choose not to honor their UIA but they are still exposed because they have the bit(fill in the blank).

So my question I guess becomes How sudden of a fall and how long of a drop?
The exchange/gateway is taking real USD (not bitUSD) and then issuing their "IOU USD" UIAs.

Offline Gentso1

Re: How are market pegged asset's handled by a black swan event?
« Reply #6 on: January 01, 2015, 07:16:12 PM »

Maybe I am off base but the exchange is issuing IOU's based on market pegged assets it receives.

Example

I send 100bitUSD to XYZ exchange.
XYZ Issues me XYZUSD its very own UIA.
XYZ likes to use its own UIA for the reasons stated above.
I go about trading XYZUSD on the XYZ's external exchange
The price of BTS suddenly and sharply falls
XYZ has the 100bitUSD I traded to them for their XYZUSD so that I can trade on their external exchange.


"A BitShares gateway does the exact same process, the only difference is that the database that tracks the users’ deposits to the exchange is the BitSharesBiItShares blockchain.   When a user transfers fiat dollars or bitcoin to a gateway, the gateway responds by tranIsferring an IOU asset issued by the gateway back to the user.    When the user returns the IOU to the gateway the gateway sends fiat dollars or bitcoin back to the user."

If I understand the above correctly XYZ is holding bit(fill in the blank) MPA's and issuing their UIA's. The exchange has more control because it can stop trading or choose not to honor their UIA but they are still exposed because they have the bit(fill in the blank).

So my question I guess becomes How sudden of a fall and how long of a drop?
The exchange/gateway is taking real USD (not bitUSD) and then issuing their "IOU USD" UIAs.

Sure thats easy but doesn't apply this situation.
XYZ exchange does crypto to crypto only trading and does not accept fiat.

 

Offline toast

Re: How are market pegged asset's handled by a black swan event?
« Reply #7 on: January 01, 2015, 07:54:36 PM »

Maybe I am off base but the exchange is issuing IOU's based on market pegged assets it receives.

Example

I send 100bitUSD to XYZ exchange.
XYZ Issues me XYZUSD its very own UIA.
XYZ likes to use its own UIA for the reasons stated above.
I go about trading XYZUSD on the XYZ's external exchange
The price of BTS suddenly and sharply falls
XYZ has the 100bitUSD I traded to them for their XYZUSD so that I can trade on their external exchange.


"A BitShares gateway does the exact same process, the only difference is that the database that tracks the users’ deposits to the exchange is the BitSharesBiItShares blockchain.   When a user transfers fiat dollars or bitcoin to a gateway, the gateway responds by tranIsferring an IOU asset issued by the gateway back to the user.    When the user returns the IOU to the gateway the gateway sends fiat dollars or bitcoin back to the user."

If I understand the above correctly XYZ is holding bit(fill in the blank) MPA's and issuing their UIA's. The exchange has more control because it can stop trading or choose not to honor their UIA but they are still exposed because they have the bit(fill in the blank).

So my question I guess becomes How sudden of a fall and how long of a drop?
The exchange/gateway is taking real USD (not bitUSD) and then issuing their "IOU USD" UIAs.

Sure thats easy but doesn't apply this situation.
XYZ exchange does crypto to crypto only trading and does not accept fiat.

Then they'd only be a BTC gateway. There is no point in being a gateway for bitUSD - BM's point was that the exchange can avoid bitassets altogether if they don't like the risk.
Do not use this post as information for making any important decisions. The only agreements I ever make are informal and non-binding. Take the same precautions as when dealing with a compromised account, scammer, sockpuppet, etc.

Offline Gentso1

Re: How are market pegged asset's handled by a black swan event?
« Reply #8 on: January 03, 2015, 02:32:49 PM »

Maybe I am off base but the exchange is issuing IOU's based on market pegged assets it receives.

Example

I send 100bitUSD to XYZ exchange.
XYZ Issues me XYZUSD its very own UIA.
XYZ likes to use its own UIA for the reasons stated above.
I go about trading XYZUSD on the XYZ's external exchange
The price of BTS suddenly and sharply falls
XYZ has the 100bitUSD I traded to them for their XYZUSD so that I can trade on their external exchange.


"A BitShares gateway does the exact same process, the only difference is that the database that tracks the users’ deposits to the exchange is the BitSharesBiItShares blockchain.   When a user transfers fiat dollars or bitcoin to a gateway, the gateway responds by tranIsferring an IOU asset issued by the gateway back to the user.    When the user returns the IOU to the gateway the gateway sends fiat dollars or bitcoin back to the user."

If I understand the above correctly XYZ is holding bit(fill in the blank) MPA's and issuing their UIA's. The exchange has more control because it can stop trading or choose not to honor their UIA but they are still exposed because they have the bit(fill in the blank).

So my question I guess becomes How sudden of a fall and how long of a drop?
The exchange/gateway is taking real USD (not bitUSD) and then issuing their "IOU USD" UIAs.

Sure thats easy but doesn't apply this situation.
XYZ exchange does crypto to crypto only trading and does not accept fiat.

Then they'd only be a BTC gateway. There is no point in being a gateway for bitUSD - BM's point was that the exchange can avoid bitassets altogether if they don't like the risk.

Their does seem to be a demand for MPA's as a way for crypto to crypto only exchanges workaround not being able to accept fiat https://bitsharestalk.org/index.php?topic=12815.15;topicseen

IN order to gauge risk you have to know the answer to

How far and how fast?

"The fall would have to be very sudden and long-lasting."
« Last Edit: January 03, 2015, 03:38:32 PM by Gentso1 »

 

Google+