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Offline bytemaster

BitAssets 3.0 - For Community Review
« on: April 16, 2015, 07:48:38 PM »

#1 No explicit short sell price limit
#2 No pre-set expiration on short positions.
#3 Any time someone with USD is unhappy with the current internal market price, they can request settlement at the 99% of feed (a 1% fee) in X days, where X is more than 24 hours.
#4 On settlement day the least collateralized short position is forced to settle at 99% of feed (a 1% profit)
#5 At any time entire market can be settled at the feed price given 30 day notice to be executed only in the event that all USD holders are unwilling to sell anywhere near a fair price. (black swan protection), this settlement can be canceled if the market returns to normal voluntarily.
#6 200% collateral

In effect a short position is a "loan" that is callable based upon price or X day notice.

Expected Outcome:
1) The price feed should be irrelevant unless the current market price is below 99% the expected price feed in X days
2) No shorts would dare sell down the price much below the expected feed for long because longs can force settlement to call their bluff.
3) The market has a graceful escape valve where all parties have ample time to voluntarily settle to avoid being forced settled. 
4) Well collateralized shorts never have to cover
5) USD holders are guaranteed liquidity at 99% of the feed within X days (potentially as little as 24 hours).

All that is required is the threat of forced settlement to keep the market fair, by charging a fee for forced settlement longs that demand liquidity compensate the shorts who were forced out.  Over all the market rules are simpler, liquidity is much greater, and all parties are far more protected than they are today.

Thoughts?


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Offline Shentist

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Re: BitAssets 3.0 - For Community Review
« Reply #1 on: April 16, 2015, 08:02:33 PM »
#1 No explicit short sell price limit

I was always against the fixed pricefeed. We need just some orientation to let normal people know what price they could expect.

#2 No pre-set expiration on short positions.
- good!
#3 Any time someone with USD is unhappy with the current internal market price, they can request settlement at the 99% of feed (a 1% fee) in X days, where X is more than 24 hours.
- sound also better then the current system
#4 On settlement day the least collateralized short position is forced to settle at 99% of feed (a 1% profit)
#5 At any time entire market can be settled at the feed price given 30 day notice to be executed only in the event that all USD holders are unwilling to sell anywhere near a fair price. (black swan protection), this settlement can be canceled if the market returns to normal voluntarily.
#6 200% collateral
- i would like to reduce it to 100%, but force a cover by 50%, so the shorter needs less capital, but has to cover sooner if he gets on the wrong food

In effect a short position is a "loan" that is callable based upon price or X day notice.

Expected Outcome:
1) The price feed should be irrelevant unless the current market price is below 99% the expected price feed in X days
2) No shorts would dare sell down the price much below the expected feed for long because longs can force settlement to call their bluff.
3) The market has a graceful escape valve where all parties have ample time to voluntarily settle to avoid being forced settled. 
4) Well collateralized shorts never have to cover
5) USD holders are guaranteed liquidity at 99% of the feed within X days (potentially as little as 24 hours).

All that is required is the threat of forced settlement to keep the market fair, by charging a fee for forced settlement longs that demand liquidity compensate the shorts who were forced out.  Over all the market rules are simpler, liquidity is much greater, and all parties are far more protected than they are today.

Thoughts?

Offline bytemaster

Re: BitAssets 3.0 - For Community Review
« Reply #2 on: April 16, 2015, 08:08:09 PM »
#1 No explicit short sell price limit

I was always against the fixed pricefeed. We need just some orientation to let normal people know what price they could expect.

#2 No pre-set expiration on short positions.
- good!
#3 Any time someone with USD is unhappy with the current internal market price, they can request settlement at the 99% of feed (a 1% fee) in X days, where X is more than 24 hours.
- sound also better then the current system
#4 On settlement day the least collateralized short position is forced to settle at 99% of feed (a 1% profit)
#5 At any time entire market can be settled at the feed price given 30 day notice to be executed only in the event that all USD holders are unwilling to sell anywhere near a fair price. (black swan protection), this settlement can be canceled if the market returns to normal voluntarily.
#6 200% collateral
- i would like to reduce it to 100%, but force a cover by 50%, so the shorter needs less capital, but has to cover sooner if he gets on the wrong food

In effect a short position is a "loan" that is callable based upon price or X day notice.

Expected Outcome:
1) The price feed should be irrelevant unless the current market price is below 99% the expected price feed in X days
2) No shorts would dare sell down the price much below the expected feed for long because longs can force settlement to call their bluff.
3) The market has a graceful escape valve where all parties have ample time to voluntarily settle to avoid being forced settled. 
4) Well collateralized shorts never have to cover
5) USD holders are guaranteed liquidity at 99% of the feed within X days (potentially as little as 24 hours).

All that is required is the threat of forced settlement to keep the market fair, by charging a fee for forced settlement longs that demand liquidity compensate the shorts who were forced out.  Over all the market rules are simpler, liquidity is much greater, and all parties are far more protected than they are today.

Thoughts?

I did reduce it.. 100% from buyer 100% from seller = 200% total, vs 300% today.   So it looks like you like everything.
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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 Shentist

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Re: BitAssets 3.0 - For Community Review
« Reply #3 on: April 16, 2015, 08:08:58 PM »
#1 No explicit short sell price limit

I was always against the fixed pricefeed. We need just some orientation to let normal people know what price they could expect.

#2 No pre-set expiration on short positions.
- good!
#3 Any time someone with USD is unhappy with the current internal market price, they can request settlement at the 99% of feed (a 1% fee) in X days, where X is more than 24 hours.
- sound also better then the current system
#4 On settlement day the least collateralized short position is forced to settle at 99% of feed (a 1% profit)
#5 At any time entire market can be settled at the feed price given 30 day notice to be executed only in the event that all USD holders are unwilling to sell anywhere near a fair price. (black swan protection), this settlement can be canceled if the market returns to normal voluntarily.
#6 200% collateral
- i would like to reduce it to 100%, but force a cover by 50%, so the shorter needs less capital, but has to cover sooner if he gets on the wrong food

In effect a short position is a "loan" that is callable based upon price or X day notice.

Expected Outcome:
1) The price feed should be irrelevant unless the current market price is below 99% the expected price feed in X days
2) No shorts would dare sell down the price much below the expected feed for long because longs can force settlement to call their bluff.
3) The market has a graceful escape valve where all parties have ample time to voluntarily settle to avoid being forced settled. 
4) Well collateralized shorts never have to cover
5) USD holders are guaranteed liquidity at 99% of the feed within X days (potentially as little as 24 hours).

All that is required is the threat of forced settlement to keep the market fair, by charging a fee for forced settlement longs that demand liquidity compensate the shorts who were forced out.  Over all the market rules are simpler, liquidity is much greater, and all parties are far more protected than they are today.

Thoughts?

I did reduce it.. 100% from buyer 100% from seller = 200% total, vs 300% today.   So it looks like you like everything.

ok :D 200% for both - great!

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Re: BitAssets 3.0 - For Community Review
« Reply #4 on: April 16, 2015, 08:34:49 PM »
#1 No explicit short sell price limit
#2 No pre-set expiration on short positions.
#3 Any time someone with USD is unhappy with the current internal market price, they can request settlement at the 99% of feed (a 1% fee) in X days, where X is more than 24 hours.
#4 On settlement day the least collateralized short position is forced to settle at 99% of feed (a 1% profit)
#5 At any time entire market can be settled at the feed price given 30 day notice to be executed only in the event that all USD holders are unwilling to sell anywhere near a fair price. (black swan protection), this settlement can be canceled if the market returns to normal voluntarily.
#6 200% collateral

In effect a short position is a "loan" that is callable based upon price or X day notice.

Expected Outcome:
1) The price feed should be irrelevant unless the current market price is below 99% the expected price feed in X days
2) No shorts would dare sell down the price much below the expected feed for long because longs can force settlement to call their bluff.
3) The market has a graceful escape valve where all parties have ample time to voluntarily settle to avoid being forced settled. 
4) Well collateralized shorts never have to cover
5) USD holders are guaranteed liquidity at 99% of the feed within X days (potentially as little as 24 hours).

All that is required is the threat of forced settlement to keep the market fair, by charging a fee for forced settlement longs that demand liquidity compensate the shorts who were forced out.  Over all the market rules are simpler, liquidity is much greater, and all parties are far more protected than they are today.

Thoughts?

 I have more or less given up hope one ever seen ONLY #6. But all of them points?

for( a=0 a<65536 a++)  +5%  next

PS
I have never heard/read before but a smart way to make sure the longs get fair price, virtually at all times.  +5%
« Last Edit: April 16, 2015, 08:41:54 PM by tonyk2 »

Offline Bitcoinfan

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Re: BitAssets 3.0 - For Community Review
« Reply #5 on: April 16, 2015, 08:38:08 PM »
Margin call is now determined by the market price rather than the feed?  It works because there is a threat of forced settlement at the price feed.  This is really clever. 

Also does forced settlement at feed price trigger margin calls as well?  If so, this could be part of a black swan attack.  A whale could drive the price direction opposite of the price feed, and then perform a forced settlement in another account; collapsing the entire market into a black swan trigger. 
« Last Edit: April 16, 2015, 08:55:48 PM by Bitcoinfan »

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Re: BitAssets 3.0 - For Community Review
« Reply #6 on: April 16, 2015, 09:13:14 PM »
#3 Any time someone with USD is unhappy with the current internal market price, they can request settlement at the 99% of feed (a 1% fee) in X days, where X is more than 24 hours.
#4 On settlement day the least collateralized short position is forced to settle at 99% of feed (a 1% profit)

Someone with a lot of USD *and* BTS could

1. request settlement of their USD tomorrow
2. buy lots of new USD with their BTS, driving the price up
3. settle their old USD at the higher price.

If they manage to drive the price up by more than 1% they have an instant profit. Rinse, repeat.
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zerosum

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Re: BitAssets 3.0 - For Community Review
« Reply #7 on: April 16, 2015, 09:14:08 PM »
Also does forced settlement at feed price trigger margin calls as well?  If so, this could be part of a black swan attack.  A whale could drive the price direction opposite of the price feed, and then perform a forced settlement in another account; collapsing the entire market into a black swan trigger.

If a whale (or anyone) sell bitAsset below the reasonable price (generally about feed) - you just buy the bitAsset and immediate request settlement/liquidation - pocketing the money and punishing the attacker. works real nice actually.

Offline bytemaster

Re: BitAssets 3.0 - For Community Review
« Reply #8 on: April 16, 2015, 09:17:24 PM »
Also does forced settlement at feed price trigger margin calls as well?  If so, this could be part of a black swan attack.  A whale could drive the price direction opposite of the price feed, and then perform a forced settlement in another account; collapsing the entire market into a black swan trigger.

If a whale (or anyone) sell bitAsset below the reasonable price (generally about feed) - you just buy the bitAsset and immediate request settlement/liquidation - pocketing the money and punishing the attacker. works real nice actually.

The attacker isn't who is punished unless he happens to be least collateralized.   The 24 hour+ delay means you cannot depend upon errors in the price feed to guarantee a profit.   But use, this basically means that the market has "infinite" liquidity for BitUSD at ~1% of the feed price.
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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 Bitcoinfan

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Re: BitAssets 3.0 - For Community Review
« Reply #9 on: April 16, 2015, 09:28:03 PM »
Also does forced settlement at feed price trigger margin calls as well?  If so, this could be part of a black swan attack.  A whale could drive the price direction opposite of the price feed, and then perform a forced settlement in another account; collapsing the entire market into a black swan trigger.

If a whale (or anyone) sell bitAsset below the reasonable price (generally about feed) - you just buy the bitAsset and immediate request settlement/liquidation - pocketing the money and punishing the attacker. works real nice actually.

The attacker isn't who is punished unless he happens to be least collateralized.   The 24 hour+ delay means you cannot depend upon errors in the price feed to guarantee a profit.   But use, this basically means that the market has "infinite" liquidity for BitUSD at ~1% of the feed price.

So its doing away with the concept of margin calls and replacing it with forced settlement.  Unlike a margin call, which is triggered whenever the spot price (feed price in this case) moves beyond collateral amt, a forced settlement needs to meet two conditions: 1) authorization by a long holder and 2) being an account with least collateralize amt. 


Offline davidpbrown

Re: BitAssets 3.0 - For Community Review
« Reply #10 on: April 16, 2015, 09:32:14 PM »
My reaction with disclaimer that I know little about the nature of financial markets and I've had too much beer .. is that a lot of this appears rather arbitrary, which is perhaps ok but prompted a thought: who is BitShares principal customer likely to be in the future and can we be more deliberate about ensuring that what is offered is appealing to them? If it's financially savvy individuals then perhaps there is more flex; if it's orgs, perhaps we need to be more cautious and check that what is available does match what they will be looking for, relative to what they are familiar with. That is, do we know the people we are building for enough to be sure their opinion? From what I've seen the core dev team is very alert to these issues but then I see choice and wonder about where the limits of that really are. Some of us have less clue than you might credit us??.. There's a risk of playing up to early investors rather than the mainstream market???
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Offline monsterer

Re: BitAssets 3.0 - For Community Review
« Reply #11 on: April 16, 2015, 09:35:16 PM »
Someone with a lot of USD *and* BTS could

1. request settlement of their USD tomorrow
2. buy lots of new USD with their BTS, driving the price up
3. settle their old USD at the higher price.

If they manage to drive the price up by more than 1% they have an instant profit. Rinse, repeat.

Wouldn't they need to drive the feed price up, not the market price?

Otherwise, that's just plain market manipulation, like exists on all crypto exchanges.
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Offline Bitcoinfan

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Re: BitAssets 3.0 - For Community Review
« Reply #12 on: April 16, 2015, 09:39:20 PM »
Someone with a lot of USD *and* BTS could

1. request settlement of their USD tomorrow
2. buy lots of new USD with their BTS, driving the price up
3. settle their old USD at the higher price.

If they manage to drive the price up by more than 1% they have an instant profit. Rinse, repeat.

Wouldn't they need to drive the feed price up, not the market price?

Otherwise, that's just plain market manipulation, like exists on all crypto exchanges.

Same thoughts I had monsterer.  Its really not a vulnerability.

I feel like the threat of forced settlement is enough to keep the market price at 99% parity.  Its like a random checkpoint that keeps things honest.  And it gets rid of that black swan function that the team was working on before. What do you think?

« Last Edit: April 16, 2015, 09:42:01 PM by Bitcoinfan »

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Re: BitAssets 3.0 - For Community Review
« Reply #13 on: April 16, 2015, 09:41:48 PM »
Also does forced settlement at feed price trigger margin calls as well?  If so, this could be part of a black swan attack.  A whale could drive the price direction opposite of the price feed, and then perform a forced settlement in another account; collapsing the entire market into a black swan trigger.

If a whale (or anyone) sell bitAsset below the reasonable price (generally about feed) - you just buy the bitAsset and immediate request settlement/liquidation - pocketing the money and punishing the attacker. works real nice actually.

The attacker isn't who is punished unless he happens to be least collateralized.   The 24 hour+ delay means you cannot depend upon errors in the price feed to guarantee a profit.   But use, this basically means that the market has "infinite" liquidity for BitUSD at ~1% of the feed price.
By punished I mean he would be selling below the real price, before the rest of the market corrects the price in relatively short order. Even though it is not necessarily attackers shorts closed upon/liquidated.

2 more broader points:
- It seems that one big sure negative is the yield is gone for good. I understand you have more or less given up on it as it is but just saying.
- I can definitely see positives  the  settlement price to be 99% of the feed price at request time ,even if it takes 24h or so for the BTS to be actually received. Going a step further  - how about using the average of price at request and actual settlement times.

Offline Bitcoinfan

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Re: BitAssets 3.0 - For Community Review
« Reply #14 on: April 16, 2015, 09:46:57 PM »
Its fine if yield goes away.  It can be re-introduced with loans and leveraging like in Bitfinex.  I'm sure that's the aim.  And yield in this matter would be much larger. 

 

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