Why would anyone short a lot of any smartcoin into existence?

[cylonmaker2053]

Theres no reason to create bitassets right now. you lock up 300% in funds. you maybe force settled at a price you don't like.
You have zero guarantee you will be able to buy buy back your bitassets at a decent price and pay off your debts to retrieve your collateral.

This. We need documentation how to operate the bitasset market, how to provide liquidity. We have to describe how market participants can profit from the DEX, otherwise liquidity will stay as it is now. Shorting right now is a sure way to produce a monetary loss.

It's probably better to wait and just experiment with like $10k first. 

We're going to create a Smartcoin USD with no forced settlement.   As long as you eventually have liquidity, the bigger question is if people believe in BTS enough to maintain the collateral if BTS goes down.   You can always put more money in to maintain the collateral and not have to purchase Smartcoin USD to pay back the debt.  Also the best way to get liquidity is to fund arbitrage bots like what @clayop  has and bring market depth over from other markets to the internal one.

what sort of arb can we do on the DEX? i've been considering some schemes, but nothing seems obvious to me. Unless we're talking some stat arb, which i don't see happening here due to lack of options to exploit cross-sectional characteristics, we'd need the same asset to be trading at different prices in at least two different locations. i see plenty of options in the broader crypto space for both types of arb, i haven't yet identified a viable one withing our space.

[cylonmaker2053]

Pretend your pitching the idea of adding liquidity to bitUSD to a hedge fund and you're trying to convince them to short 1 million bitUSD into existence as a test run for significant future trading. What would you say?

I think it might be good to start using different words to describe the process of bitUSD/SmartcoinUSD creation.   Hedge fund guys would understand the idea of shorts, but it's easier and more accurate to explain it without it.   I would say to any business there is a way to create USD monetary assets that can't be frozen, limited, restricted and you can send it anywhere around the world instantly with negligible costs.  That's powerful.  You can also use it to trade cryptocurrencies, foreign currencies, and other assets with no counterparty risk.  That's powerful. 

How? You simply create a USD loan on BTS collateral and use that as money.   

Since the BTS collateral does fluctuate, you should start with well over twice the collateral on the platform and as a precaution have more USD collateral somewhere so you can eventually add to the collateral should BTS prices go down.  Hence if you're going to create $1,000,000 in bitUSD/SmartcoinUSD I would recommend at least getting $2,500,000 worth of BTS and then having another $1,000,000 in a bank just in case BTS prices go down and you want to increase your collateral more.    Of course you need to believe that BTS is secure and useful enough in the future to warrant whatever amount you purchase any given day.  That's going to be the key selling point.

i agree that using the term "short" synonymous with creating bitassets is confusing and should probably change. i don't see the benefit to a hedge fund to buy create bitUSD for those reasons you mentioned. they'd first need to trade USD-->BTC-->BTS-->bitUSD-->to whatever ...why not just go BTC-->whatever? we need more of a reason, likely something interest bearing

[cylonmaker2053]

The reserve pool can create the bitassets. The network can also sell a kinda bts bond that users can invest in. The bts bonds pays dividends from the fees it collects to the bond holders. It would be a Bitshares Treasury Bill.

Very interesting idea re: the Bitshares Treasury Bill! that would have to be a serious design consideration for future versions, but definitely something to consider. Hard wiring in some sort of fee return in the form of a bond is brilliant...

[cylonmaker2053]

Theres no reason to create bitassets right now. you lock up 300% in funds. you maybe force settled at a price you don't like.
You have zero guarantee you will be able to buy buy back your bitassets at a decent price and pay off your debts to retrieve your collateral.

This. We need documentation how to operate the bitasset market, how to provide liquidity. We have to describe how market participants can profit from the DEX, otherwise liquidity will stay as it is now. Shorting right now is a sure way to produce a monetary loss.

the only tangible benefit i can see at the moment to a trader shorting an asset into existence is to leverage long on BTS, but even then the lack of liquidity will make reversing the position difficult; impossible for larger trades.

[cylonmaker2053]

as @Pheonike says I think the reserve pool is gonna have to back bitassets.

Theres no reason to create bitassets right now. you lock up 300% in funds. you maybe force settled at a price you don't like.
You have zero guarantee you will be able to buy buy back your bitassets at a decent price and pay off your debts to retrieve your collateral.

all great points, and maybe the reserve pool is a good first solution. what are the down sides? is it possible the reserve pool funds can be permanently locked up and doing this would be a one-time bail out for those of us who have collateral locked up already?

[cylonmaker2053]

Borrowing bitAsset does not necessarily mean shorting.

what do you mean? until we have a bond market, it seems to me like all borrowing is shorting. are there other options?

[cylonmaker2053]

I think it would help if there would be documentation how to use the network as a speculator/shorter. I know that I can borrow a bitasset, sell it for a high markup and buy back at a lower rate in theory, but in reality it's almost impossible to buy back at a lower price due to missing liquidity.

We need tutorials for shorters (and other market participants) in a easy to understand language how to make a profit with BitShares. I'd love to provide liquidity, but I'm not sure how.. every time I tried, I ended up with a loss.

i feel exactly the same. i've tried to help out on the liquidity side many times and been burnt in most. very simple tutorials for shorting/speculating would be awesome.

[Empirical1.2]

The reserve pool can create the bitassets. The network can also sell a kinda bts bond that users can invest in. The bts bonds pays dividends from the fees it collects to the bond holders. It would be a Bitshares Treasury Bill.

So the buyer of bitusd puts in 101% and the network 100% collateral so the bitsud is 201% collateralize. The distributes that %1 as a dividend to the bond holders. 

People can still short, but they will be only short bts with bit assests.

I have not thought this all the way through but this should be close.

 

This is THE game-changer because a bridge can convert Alts-BitAlts/Fiat-BitFiat very easily and so BTS can become a real DEX.

The individual shorter gains no additional benefit from helping to create & provide collateral for Smartcoins however BTS benefits massively from the increased network effect and adoption of its core product, so it stands to reason that the party incentivized the most to provide the collateral at the lowest cost or with the desire to incentivize others is BTS itself, so I'm strongly in favour of using the reserve pool &/or using BitAsset fees and premium to incentivize BTS bond holders.

Because BTS is a volatile backing unit it needs more collateral to effectively provide it's service than centralized exchanges or banks and whether you're using the reserve pool or paying interest to BitAsset Shorts/BTS bondholders/BitAsset fixed deposits in my example  https://bitsharestalk.org/index.php/topic,21078.msg273103.html#msg273103 what you're really doing is paying for/incentivizing additional collateral & thus allowing BitAssets to be created & destroyed close to 1-1 less spread, when there is demand because waiting for an independent long and short to meet in order to create them in each market has proven ineffective. Correcting that is the game changer.

[merivercap]

Theres no reason to create bitassets right now. you lock up 300% in funds. you maybe force settled at a price you don't like.
You have zero guarantee you will be able to buy buy back your bitassets at a decent price and pay off your debts to retrieve your collateral.

This. We need documentation how to operate the bitasset market, how to provide liquidity. We have to describe how market participants can profit from the DEX, otherwise liquidity will stay as it is now. Shorting right now is a sure way to produce a monetary loss.

It's probably better to wait and just experiment with like $10k first. 

We're going to create a Smartcoin USD with no forced settlement.   As long as you eventually have liquidity, the bigger question is if people believe in BTS enough to maintain the collateral if BTS goes down.   You can always put more money in to maintain the collateral and not have to purchase Smartcoin USD to pay back the debt.  Also the best way to get liquidity is to fund arbitrage bots like what @clayop  has and bring market depth over from other markets to the internal one. 

[merivercap]

Pretend your pitching the idea of adding liquidity to bitUSD to a hedge fund and you're trying to convince them to short 1 million bitUSD into existence as a test run for significant future trading. What would you say?

I think it might be good to start using different words to describe the process of bitUSD/SmartcoinUSD creation.   Hedge fund guys would understand the idea of shorts, but it's easier and more accurate to explain it without it.   I would say to any business there is a way to create USD monetary assets that can't be frozen, limited, restricted and you can send it anywhere around the world instantly with negligible costs.  That's powerful.  You can also use it to trade cryptocurrencies, foreign currencies, and other assets with no counterparty risk.  That's powerful. 

How? You simply create a USD loan on BTS collateral and use that as money.   

Since the BTS collateral does fluctuate, you should start with well over twice the collateral on the platform and as a precaution have more USD collateral somewhere so you can eventually add to the collateral should BTS prices go down.  Hence if you're going to create $1,000,000 in bitUSD/SmartcoinUSD I would recommend at least getting $2,500,000 worth of BTS and then having another $1,000,000 in a bank just in case BTS prices go down and you want to increase your collateral more.    Of course you need to believe that BTS is secure and useful enough in the future to warrant whatever amount you purchase any given day.  That's going to be the key selling point.

[Pheonike]

The reserve pool can create the bitassets. The network can also sell a kinda bts bond that users can invest in. The bts bonds pays dividends from the fees it collects to the bond holders. It would be a Bitshares Treasury Bill.

So the buyer of bitusd puts in 101% and the network 100% collateral so the bitsud is 201% collateralize. The distributes that %1 as a dividend to the bond holders. 

People can still short, but they will be only short bts with bit assests.

I have not thought this all the way through but this should be close.

[mindphlux]

Theres no reason to create bitassets right now. you lock up 300% in funds. you maybe force settled at a price you don't like.
You have zero guarantee you will be able to buy buy back your bitassets at a decent price and pay off your debts to retrieve your collateral.

This. We need documentation how to operate the bitasset market, how to provide liquidity. We have to describe how market participants can profit from the DEX, otherwise liquidity will stay as it is now. Shorting right now is a sure way to produce a monetary loss.

[noisy]

This can be great when you will have to pay feature payment in different currency. Than you will have no risk at all.

https://www.youtube.com/watch?v=pbX4nt2UKP4&feature=youtu.be&t=6m55s

[JonnyB]

as @Pheonike says I think the reserve pool is gonna have to back bitassets.

Theres no reason to create bitassets right now. you lock up 300% in funds. you maybe force settled at a price you don't like.
You have zero guarantee you will be able to buy buy back your bitassets at a decent price and pay off your debts to retrieve your collateral.

[yvv]

Borrowing bitAsset does not necessarily mean shorting.