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Offline bitsapphire

Privatized Smartcoin questions
« on: June 24, 2015, 05:34:02 PM »

@bytemaster

  • Will it be possible for the Private Smartcoin (PSC) creator to specify which assets can be used for collateralization?
  • Will the PSC feed issuer need to supply a price feed for all assets which can be used as collateral?
  • Could the price feed for each collateral be set as the last trading price of that asset/PSC pair on the decentralized exchange? That way you only need an initializer and then the price feed becomes blockchain endogenous.

If the above is possible than PSC creators/providers would have exclusively a certification authority function rather than an information providing function. Certifying for use certain gateway IOUs as well as IDs which can hold the PSCs. Legally this would shield them a lot and the users could hold a stable asset without needing to be exposed to the counterparty risk of the individual gateway issuers.

The exchange rate between those gateway IOUs and and the PSC would effectively represent the counterparty risk of the gateway (as assessed through the market) together with with order book depth between the individual gateway IOUs and the PSC. Effectively, this would function like an insurance for users.

We've been working on a similar system (Pactum) for some time at Bitsapphire. If this is possible it could open up a new business model in the Bitshares ecosystem.
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Offline arhag

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Re: Privatized Smartcoin questions
« Reply #1 on: June 24, 2015, 06:01:12 PM »
  • Will it be possible for the Private Smartcoin (PSC) creator to specify which assets can be used for collateralization?

I'm curious. Do you mean to say that a single PSC asset would be backed by multiple different types of collateral? So that someone holding the PSC could choose to redeem any of the collateral types they want from the margin positions?

  • Could the price feed for each collateral be set as the last trading price of that asset/PSC pair on the decentralized exchange? That way you only need an initializer and then the price feed becomes blockchain endogenous.

Would such a self-referential price feed really even work? I can understand perhaps only specifying one price feed (between the PSC and one of the collateral types) and having the other ones mathematically determined using the price at which the different collateral asset pairs are trading at on the DEX (assuming you believe the volume of the DEX markets for those trading pairs greatly overwhelms that of any other external market). But I would imagine there would be serious issues if you didn't specify any price feed at all (unless the price feed was a mathematical function of some other price feed(s) already existing in the system that you trusted, e.g. a price feed defined to be the product of a USD/BTS price feed and a EUR/USD price feed).


If the above is possible than PSC creators/providers would have exclusively a certification authority function rather than an information providing function.

This could also be achieved by just separating out the roles of the PSC managers and price feed providers. The PSC creator could specify a price feed provider already existing on the blockchain (I suppose in theory it could be the price from a particular DEX market, assuming you avoid the self-reference issue). They could change the source with some delay (e.g. a 2-week delay) to allow people to settle out of it if they didn't like the change (maybe there would need to be a way to allow a super majority of the shorts the option to trigger a force settlement whenever the creator called for a change in the price feed provider, since there is no other mechanism to guarantee enough liquidity in the market for the shorts to settle their debts). Other than that, the PSC creator wouldn't be responsible for providing price feeds. That role would belong to the price feed provider. Obviously, some profit sharing mechanism needs to also be devised to incentivize the price feed providers to properly do their job.

Offline bytemaster

Re: Privatized Smartcoin questions
« Reply #2 on: June 24, 2015, 06:33:45 PM »
Only one type of collateral per bitasset, but that type can by any other asset including other BitAssets.  This is done because of the collateral type effects fungibility and there is no way to settle a blackswan when only one collateral type goes bad. 

Setting a price feed to represent the internal market trading of IOUs exposes the BitAsset to the same risk as the IOUs.   

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Offline monsterer

Re: Privatized Smartcoin questions
« Reply #3 on: June 24, 2015, 07:30:39 PM »
Only one type of collateral per bitasset, but that type can by any other asset including other BitAssets.  This is done because of the collateral type effects fungibility and there is no way to settle a blackswan when only one collateral type goes bad. 

Setting a price feed to represent the internal market trading of IOUs exposes the BitAsset to the same risk as the IOUs.

Can the collateral be privatised bitAssets?
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Offline bytemaster

Re: Privatized Smartcoin questions
« Reply #4 on: June 24, 2015, 07:32:18 PM »
Only one type of collateral per bitasset, but that type can by any other asset including other BitAssets.  This is done because of the collateral type effects fungibility and there is no way to settle a blackswan when only one collateral type goes bad. 

Setting a price feed to represent the internal market trading of IOUs exposes the BitAsset to the same risk as the IOUs.

Can the collateral be privatised bitAssets?

Yes, any asset may be used as collateral.
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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 starspirit

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Re: Privatized Smartcoin questions
« Reply #5 on: June 26, 2015, 10:39:26 AM »
Only one type of collateral per bitasset, but that type can by any other asset including other BitAssets.  This is done because of the collateral type effects fungibility and there is no way to settle a blackswan when only one collateral type goes bad. 

What if the black swan mechanism created a reserve by taking collateral tokens from each individual short in a pre-defined sequence of preference, until the debt is covered, and returning the excess collateral tokens to the short. The reserve will then be comprised of mixed assets in a known mix of quantities, and subsequent settlements by longs would receive exactly the same pro-rata mix of quantities. Although the rules are more sophisticated, isn't such a settlement scheme feasible without losing fungibility?


 

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