Author Topic: Inert versus volatile currencies - pondering an attack on BitUSD  (Read 1476 times)

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Offline Permie

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Under normal conditions, the futures market should be stable. You might see some spikes every now and then and perhaps some margin calls being made on an infrequent basis, but the market should track the proper values.

However, it is also possible that a market might have a tipping point - a price at which a snowball effect might take place. Lets say the current market is like this:

    The current price is 100 BTS per BitUSD
    It takes:
        10k BTS to move the price from 100 to 200 BTS per BitUSD
        10k BTS to move the price from 200 to 300 BTS per BitUSD
        10k BTS to move the price from 300 to 400 BTS per BitUSD
    When the price:
        Reaches 200, 5k BTS will be used on margin calls
        Reaches 300, 15k BTS will be used on margin calls
        Reaches 400, 25k BTC will be used on margin calls

If we throw 5k BTS into the market, not much happens - we moved the price a bit. If we throw 10k BTS, we force the market to spend another 5k BTS. We moved the price by 100, and the margin calls moved it further, multiplying the strength of our move by 1.5.
Excerpt from the blog, I hope that's ok

Dan discussed this in the dev hangout yesterday.
From what I understand; in the new system there will be several price feeds that take the liquidity available at a particular price into account.
So if you want to sell a large amount of bitUSD on the market you will not have the same 'snowball effect' power as in the current bitAsset design.
So the 'attack' described against bitUSD in Piachu's blog should be fixed in the new release.
JonnyBitcoin votes for liquidity and simplicity. Make him your proxy?
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Offline kenCode

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« Last Edit: May 23, 2015, 03:26:28 pm by cass »
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