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Offline bytemaster

User Issued Asset Market Fees
« on: January 27, 2015, 09:40:31 PM »

We are going to allow gateways to set a market fee just like they do today on their internal exchange.  This fee will have a rate between 0.000% and 10.000% of every trade.  This will help us get gateways to issue IOUs on our chain because they could keep the SAME business model they have today. 

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Offline speedy

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Re: User Issued Asset Market Fees
« Reply #1 on: January 27, 2015, 09:59:34 PM »
Nice this will make it a much easier sell +5%

Offline ripplexiaoshan

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Re: User Issued Asset Market Fees
« Reply #2 on: January 27, 2015, 10:03:03 PM »
Good change. +5%

Which gateway will issue the first IOU?
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Offline clayop

Re: User Issued Asset Market Fees
« Reply #3 on: January 27, 2015, 10:12:23 PM »
Nice change.

BTW, where do the fees go? Burned or going to reserve fund?
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Offline BunkerChain Labs

Re: User Issued Asset Market Fees
« Reply #4 on: January 27, 2015, 10:13:27 PM »
Good change. +5%

Which gateway will issue the first IOU?

Beat me too it.. this was my question!  +5%
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Offline speedy

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Re: User Issued Asset Market Fees
« Reply #5 on: January 27, 2015, 10:14:25 PM »
Nice change.

BTW, where do the fees go? Burned or going to reserve fund?

No they go to the UIA issuer, i.e. the exchange/gateway. This incentivizes them to want to allow their deposits to be traded on the blockchain.

Offline arhag

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Re: User Issued Asset Market Fees
« Reply #6 on: January 27, 2015, 11:25:27 PM »
We are going to allow gateways to set a market fee just like they do today on their internal exchange.  This fee will have a rate between 0.000% and 10.000% of every trade.  This will help us get gateways to issue IOUs on our chain because they could keep the SAME business model they have today.

+5%

Just to clarify, UIA issuer only collects the percentage fee of the UIA, not of the other trading pair in BitAsset/UIA markets, correct?

And does that mean there could be two different percentage fees in a UIA-A/UIA-B market?
« Last Edit: January 27, 2015, 11:27:07 PM by arhag »

Offline ronpaulmoneyman

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Re: User Issued Asset Market Fees
« Reply #7 on: January 27, 2015, 11:38:10 PM »

Is there documentation that explains the range of features involved with these features?

I get that an exchange can use a UIA in BTS's DEX, but what is the mechanism that they tie that UIA to something of value?  Are there transactions where I can create an Asset and have it pegged to BTS. 

The part that is not clear to me is where is the collateral stored?  How do we know that the UIA can be redeemed?  Is there a quality in-depth example including the RPC calls that would walk through this process?  Can Bytemaster make such a document for his blog?  (Maybe it has been written?)

You will get adoption be either cold-contacting exchanges or by writing something quality that explains a typical usecase of how an exchange would create these assets. This serves as documentation which will help people implement things, but it can also be written in such a way to be spread on Social Media. I believe Bitshares.tv may have covered this but thats not my preferred media for technical things. There is no doubt there are others like me. (ie future potential partners of Bitshares)

Offline arhag

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Re: User Issued Asset Market Fees
« Reply #8 on: January 28, 2015, 01:07:21 AM »
I get that an exchange can use a UIA in BTS's DEX, but what is the mechanism that they tie that UIA to something of value?

The value of UIAs is based on trust in the issuer. UIA holders are exposed to counterparty risk with respect to the issuer who is backing their value.

The part that is not clear to me is where is the collateral stored?  How do we know that the UIA can be redeemed?

The collateral/reserve in the case of the UIA is stored off of the BitShares blockchain. If this is a UIA that is an IOU for some cryptocurrency, then the reserve will likely be stored in that cryptocurrencies' native blockchain (likely controlled through keys held by the UIA issuer). If the UIA is an IOU for fiat, then the reserve will likely be fiat held in their traditional bank accounts. Note that they do not have to have full 100% reserve backing their IOUs but customers should demand that they do (also it should at least be more transparent to check on the blockchains in the case of cryptocurrency IOUs). The UIA may also have no real reserves and just be a promise to pay back the UIA holders in the future with something of value. Again, you are trusting the UIA issuer who is backing the value of the UIA and there is no guarantee that you can redeem the full value promised. You just have to trust that they actually will pay it back to maintain their reputation and continue their business model (and also their jurisdiction will likely consider it a security and therefore they will have a legal obligation to make their customer's whole if possible).

The UIAs are interesting because we want gateways to use them as a way of getting fiat into and out of the BitShares system. The companies we would typically be targeting to act as gateways are exchanges that have already enabled bank transfers of fiat into and out of their existing system. These exchanges are used to making their money through percentage fees on each trade, so their revenue scales with the volume of trading of their assets. We are asking them to not focus on the exchange features (order books, matching bids and asks) and instead only focus on the fiat gateway portion. Some exchanges may not be comfortable with such a huge change in their business model. This new feature now allows these exchanges to use their same business model to make money except BitShares does all their order book work for them and also stores the cryptocurrency assets so that liability isn't on the exchange anymore.
« Last Edit: January 28, 2015, 01:09:41 AM by arhag »

Offline matt608

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Re: User Issued Asset Market Fees
« Reply #9 on: January 28, 2015, 02:35:57 AM »
We are going to allow gateways to set a market fee just like they do today on their internal exchange.  This fee will have a rate between 0.000% and 10.000% of every trade.  This will help us get gateways to issue IOUs on our chain because they could keep the SAME business model they have today.

 +5%


Is there documentation that explains the range of features involved with these features?

I get that an exchange can use a UIA in BTS's DEX, but what is the mechanism that they tie that UIA to something of value?  Are there transactions where I can create an Asset and have it pegged to BTS. 

The part that is not clear to me is where is the collateral stored?  How do we know that the UIA can be redeemed?  Is there a quality in-depth example including the RPC calls that would walk through this process?  Can Bytemaster make such a document for his blog?  (Maybe it has been written?)

You will get adoption be either cold-contacting exchanges or by writing something quality that explains a typical usecase of how an exchange would create these assets. This serves as documentation which will help people implement things, but it can also be written in such a way to be spread on Social Media. I believe Bitshares.tv may have covered this but thats not my preferred media for technical things. There is no doubt there are others like me. (ie future potential partners of Bitshares)

 +5%

Offline ronpaulmoneyman

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Re: User Issued Asset Market Fees
« Reply #10 on: January 28, 2015, 05:07:47 AM »
I get that an exchange can use a UIA in BTS's DEX, but what is the mechanism that they tie that UIA to something of value?

The value of UIAs is based on trust in the issuer. UIA holders are exposed to counterparty risk with respect to the issuer who is backing their value.

The part that is not clear to me is where is the collateral stored?  How do we know that the UIA can be redeemed?

The collateral/reserve in the case of the UIA is stored off of the BitShares blockchain. If this is a UIA that is an IOU for some cryptocurrency, then the reserve will likely be stored in that cryptocurrencies' native blockchain (likely controlled through keys held by the UIA issuer). If the UIA is an IOU for fiat, then the reserve will likely be fiat held in their traditional bank accounts. Note that they do not have to have full 100% reserve backing their IOUs but customers should demand that they do (also it should at least be more transparent to check on the blockchains in the case of cryptocurrency IOUs). The UIA may also have no real reserves and just be a promise to pay back the UIA holders in the future with something of value. Again, you are trusting the UIA issuer who is backing the value of the UIA and there is no guarantee that you can redeem the full value promised. You just have to trust that they actually will pay it back to maintain their reputation and continue their business model (and also their jurisdiction will likely consider it a security and therefore they will have a legal obligation to make their customer's whole if possible).

The UIAs are interesting because we want gateways to use them as a way of getting fiat into and out of the BitShares system. The companies we would typically be targeting to act as gateways are exchanges that have already enabled bank transfers of fiat into and out of their existing system. These exchanges are used to making their money through percentage fees on each trade, so their revenue scales with the volume of trading of their assets. We are asking them to not focus on the exchange features (order books, matching bids and asks) and instead only focus on the fiat gateway portion. Some exchanges may not be comfortable with such a huge change in their business model. This new feature now allows these exchanges to use their same business model to make money except BitShares does all their order book work for them and also stores the cryptocurrency assets so that liability isn't on the exchange anymore.

Ok, so there is nothing here I am missing. My thought was would it somehow might be possible to issue UIA's on RPM's blockchain which then go to the gateway and thus not force people to risk their deposit. Without other transactions that don't exist this would do nothing more than add an extra gateway. So these gateway programs will always have a certain level of centralized risk, there is no way to avoid it ?

My question boils down to "Can a gateway be made that never exposes a person to risk ?". It seems any cross chain transaction utilizing a off chain gateway will force the gateway runner to hold the balances of both sides.

Offline donkeypong

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Re: User Issued Asset Market Fees
« Reply #11 on: January 28, 2015, 05:50:08 AM »
Good! We need to incentivize the heck out of this. We should be at least as profitable for them as anything else available.

Offline monsterer

Re: User Issued Asset Market Fees
« Reply #12 on: January 28, 2015, 12:37:59 PM »
Has this change has been bought about to allow exchanges to provide a withdraw option for their fiat currencies which doesn't require involving the banking system?

edit: Hmmm, but how does work come claim time? I withdraw my bitstamp USD IOUS, trade them with someone - how do they claim their actual fiat?
« Last Edit: January 28, 2015, 12:41:42 PM by monsterer »
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Offline xeroc

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Re: User Issued Asset Market Fees
« Reply #13 on: January 28, 2015, 01:00:37 PM »
Has this change has been bought about to allow exchanges to provide a withdraw option for their fiat currencies which doesn't require involving the banking system?

edit: Hmmm, but how does work come claim time? I withdraw my bitstamp USD IOUS, trade them with someone - how do they claim their actual fiat?
In your case bitstamp would ask you to deposit X bitstampIOUs into on of their addresses and credit them to you in their database ..
or alternatively .. you authenticate your balance_id against them (signature) and they withdraw them from your account (super-admin rights over the IOUs)
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Offline bitsapphire

Re: User Issued Asset Market Fees
« Reply #14 on: January 28, 2015, 03:25:39 PM »
Thank you bytemaster. This was one of the most requested features by most exchanges.
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