Author Topic: participants are guaranteed fair settlement regardless of the liquidity  (Read 1877 times)

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Offline Akado

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http://bitcoinist.net/crix-io-launches-private-beta/

Would it make sense and is it feasible to do this in bitshares? That way we could have bond marlets without worrying about liquidity
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Offline abit

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Re: participants are guaranteed fair settlement regardless of the liquidity
« Reply #1 on: February 26, 2016, 10:04:46 am »
http://bitcoinist.net/crix-io-launches-private-beta/

Would it make sense and is it feasible to do this in bitshares? That way we could have bond marlets without worrying about liquidity
You mean the force settlement feature which we already have?
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Offline Akado

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Re: participants are guaranteed fair settlement regardless of the liquidity
« Reply #2 on: February 26, 2016, 12:50:35 pm »
They also set price limits and margin requirements per 24h. In other words, is that what our witnesses do through feeds?

Btw i dont know the status of the settlement feature every since the Transwiser incident.

Só if this system is like the one we have, we have them on one side claiming there are no problems with liquidity and other side [member=5]bytemaster[/member] claiming we need liquidity.

So,  where do we stand? Can the settlement feature allow us to do this in a fair way? Or is BM right and we indeed need liquidity? Who is wrong and why? Or am i mixing up this stuff?
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Offline xeroc

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Re: participants are guaranteed fair settlement regardless of the liquidity
« Reply #3 on: February 26, 2016, 01:00:14 pm »
the margin call requirements and the delays for settlement are set in asset .. they could simply run a privatized asset and have the same flexibility.

Settlement in committee-owned Smartcoins works as it should but happens only rarely.

Settlement has nothing to do with liquidity (in core smartcoins like USD, EUR, CNY, etc..) IMHO
and we surely can implement a privatized bitasset form them that does what they need
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Offline sittingduck

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Re: participants are guaranteed fair settlement regardless of the liquidity
« Reply #4 on: February 26, 2016, 01:04:36 pm »
There are lies, damn lies, and statistics.   

Past performance is no guarantee of future performance. 

Online Xeldal

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Re: participants are guaranteed fair settlement regardless of the liquidity
« Reply #5 on: February 26, 2016, 02:03:27 pm »

Settlement has nothing to do with liquidity (in core smartcoins like USD, EUR, CNY, etc..) IMHO

maybe I misunderstand what you're saying.
Settlement has everything to do with liquidity.  That's its only purpose. 
It guarantees up to 2% (or whatever it's set to) of daily smartcoin supply is liquid at the settlement price.

It is in effect a standing order to buy that smartcoin. (with 24 hr delay)

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Re: participants are guaranteed fair settlement regardless of the liquidity
« Reply #6 on: February 26, 2016, 02:08:58 pm »

Settlement has nothing to do with liquidity (in core smartcoins like USD, EUR, CNY, etc..) IMHO

maybe I misunderstand what you're saying.
Settlement has everything to do with liquidity.  That's its only purpose. 
It guarantees up to 2% (or whatever it's set to) of daily smartcoin supply is liquid at the settlement price.

It is in effect a standing order to buy that smartcoin. (with 24 hr delay)
sure .. for that direction there is everything fine and we do have 2% of supply in instant buy orders for smartcoins ..
the liquidity issues are on the other side .. no one wants to sell his smartcoins .. not even for a 5-10% premium (depending on the actual asset) ..
simply because we don't have a big on/off ramp for bitassets ..
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Offline JonnyB

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Re: participants are guaranteed fair settlement regardless of the liquidity
« Reply #7 on: February 28, 2016, 03:40:37 pm »

Settlement has nothing to do with liquidity (in core smartcoins like USD, EUR, CNY, etc..) IMHO

maybe I misunderstand what you're saying.
Settlement has everything to do with liquidity.  That's its only purpose. 
It guarantees up to 2% (or whatever it's set to) of daily smartcoin supply is liquid at the settlement price.

It is in effect a standing order to buy that smartcoin. (with 24 hr delay)
sure .. for that direction there is everything fine and we do have 2% of supply in instant buy orders for smartcoins ..
the liquidity issues are on the other side .. no one wants to sell his smartcoins .. not even for a 5-10% premium (depending on the actual asset) ..
simply because we don't have a big on/off ramp for bitassets ..

Forced settlement is guaranteed buy side liquidity at the peg.

I think we need some sort of guaranteed sell side liquidity at the peg+10%. This would have to come from the rerserve pool imo.
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Offline cylonmaker2053

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Re: participants are guaranteed fair settlement regardless of the liquidity
« Reply #8 on: February 28, 2016, 04:21:09 pm »

Settlement has nothing to do with liquidity (in core smartcoins like USD, EUR, CNY, etc..) IMHO

maybe I misunderstand what you're saying.
Settlement has everything to do with liquidity.  That's its only purpose. 
It guarantees up to 2% (or whatever it's set to) of daily smartcoin supply is liquid at the settlement price.

It is in effect a standing order to buy that smartcoin. (with 24 hr delay)
sure .. for that direction there is everything fine and we do have 2% of supply in instant buy orders for smartcoins ..
the liquidity issues are on the other side .. no one wants to sell his smartcoins .. not even for a 5-10% premium (depending on the actual asset) ..
simply because we don't have a big on/off ramp for bitassets ..

Forced settlement is guaranteed buy side liquidity at the peg.

I think we need some sort of guaranteed sell side liquidity at the peg+10%. This would have to come from the rerserve pool imo.

excellent idea, but maybe widen that spread bc we'd be forcing a 10% range where we tend to have much higher spreads in all of our markets. spreads are a source of profit for market makers and needed to bear risk, but of course risk to those traders drops significantly with a ceiling settlement option. purely a subjective guess, but i'd say 20% for starters...maybe roll it out for a single market (USD-BTS) as a test case?

Offline JonnyB

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Re: participants are guaranteed fair settlement regardless of the liquidity
« Reply #9 on: February 28, 2016, 05:28:08 pm »

Settlement has nothing to do with liquidity (in core smartcoins like USD, EUR, CNY, etc..) IMHO

maybe I misunderstand what you're saying.
Settlement has everything to do with liquidity.  That's its only purpose. 
It guarantees up to 2% (or whatever it's set to) of daily smartcoin supply is liquid at the settlement price.

It is in effect a standing order to buy that smartcoin. (with 24 hr delay)
sure .. for that direction there is everything fine and we do have 2% of supply in instant buy orders for smartcoins ..
the liquidity issues are on the other side .. no one wants to sell his smartcoins .. not even for a 5-10% premium (depending on the actual asset) ..
simply because we don't have a big on/off ramp for bitassets ..

Forced settlement is guaranteed buy side liquidity at the peg.

I think we need some sort of guaranteed sell side liquidity at the peg+10%. This would have to come from the rerserve pool imo.

excellent idea, but maybe widen that spread bc we'd be forcing a 10% range where we tend to have much higher spreads in all of our markets. spreads are a source of profit for market makers and needed to bear risk, but of course risk to those traders drops significantly with a ceiling settlement option. purely a subjective guess, but i'd say 20% for starters...maybe roll it out for a single market (USD-BTS) as a test case?

I agree, we should try this on USD:BTS  market first at +20%
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Offline tbone

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Re: participants are guaranteed fair settlement regardless of the liquidity
« Reply #10 on: February 29, 2016, 01:08:20 am »

Settlement has nothing to do with liquidity (in core smartcoins like USD, EUR, CNY, etc..) IMHO

maybe I misunderstand what you're saying.
Settlement has everything to do with liquidity.  That's its only purpose. 
It guarantees up to 2% (or whatever it's set to) of daily smartcoin supply is liquid at the settlement price.

It is in effect a standing order to buy that smartcoin. (with 24 hr delay)
sure .. for that direction there is everything fine and we do have 2% of supply in instant buy orders for smartcoins ..
the liquidity issues are on the other side .. no one wants to sell his smartcoins .. not even for a 5-10% premium (depending on the actual asset) ..
simply because we don't have a big on/off ramp for bitassets ..

Forced settlement is guaranteed buy side liquidity at the peg.

I think we need some sort of guaranteed sell side liquidity at the peg+10%. This would have to come from the rerserve pool imo.

One of the benefits of [member=32211]Empirical1.2[/member]'s idea is that yield can be directed not only to BitUSD longs, but also to BitUSD shorts.  Also, it stands to reason that a subset of the people buying BitAssets for yield would also be interested in participating in a liquidity pool to gain additional yield.  Funds from such a pool can then be used in conjunction with funds from the reserve pool to create liquidity on both sides of the peg.

Offline JonnyB

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Re: participants are guaranteed fair settlement regardless of the liquidity
« Reply #11 on: February 29, 2016, 07:08:17 am »

Settlement has nothing to do with liquidity (in core smartcoins like USD, EUR, CNY, etc..) IMHO

maybe I misunderstand what you're saying.
Settlement has everything to do with liquidity.  That's its only purpose. 
It guarantees up to 2% (or whatever it's set to) of daily smartcoin supply is liquid at the settlement price.

It is in effect a standing order to buy that smartcoin. (with 24 hr delay)
sure .. for that direction there is everything fine and we do have 2% of supply in instant buy orders for smartcoins ..
the liquidity issues are on the other side .. no one wants to sell his smartcoins .. not even for a 5-10% premium (depending on the actual asset) ..
simply because we don't have a big on/off ramp for bitassets ..

Forced settlement is guaranteed buy side liquidity at the peg.

I think we need some sort of guaranteed sell side liquidity at the peg+10%. This would have to come from the rerserve pool imo.

One of the benefits of [member=32211]Empirical1.2[/member]'s idea is that yield can be directed not only to BitUSD longs, but also to BitUSD shorts.  Also, it stands to reason that a subset of the people buying BitAssets for yield would also be interested in participating in a liquidity pool to gain additional yield.  Funds from such a pool can then be used in conjunction with funds from the reserve pool to create liquidity on both sides of the peg.
What about BMS concerns about being long and short at the same time. It artificially increases supply but not liqidity? Also there's no need for reserve pool subsidies of the buy side because of forced settlement.
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Offline Empirical1.2

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Re: participants are guaranteed fair settlement regardless of the liquidity
« Reply #12 on: February 29, 2016, 07:25:51 am »

Settlement has nothing to do with liquidity (in core smartcoins like USD, EUR, CNY, etc..) IMHO

maybe I misunderstand what you're saying.
Settlement has everything to do with liquidity.  That's its only purpose. 
It guarantees up to 2% (or whatever it's set to) of daily smartcoin supply is liquid at the settlement price.

It is in effect a standing order to buy that smartcoin. (with 24 hr delay)
sure .. for that direction there is everything fine and we do have 2% of supply in instant buy orders for smartcoins ..
the liquidity issues are on the other side .. no one wants to sell his smartcoins .. not even for a 5-10% premium (depending on the actual asset) ..
simply because we don't have a big on/off ramp for bitassets ..

Forced settlement is guaranteed buy side liquidity at the peg.

I think we need some sort of guaranteed sell side liquidity at the peg+10%. This would have to come from the rerserve pool imo.

One of the benefits of [member=32211]Empirical1.2[/member]'s idea is that yield can be directed not only to BitUSD longs, but also to BitUSD shorts.  Also, it stands to reason that a subset of the people buying BitAssets for yield would also be interested in participating in a liquidity pool to gain additional yield.  Funds from such a pool can then be used in conjunction with funds from the reserve pool to create liquidity on both sides of the peg.
What about BMS concerns about being long and short at the same time. It artificially increases supply but not liqidity? Also there's no need for reserve pool subsidies of the buy side because of forced settlement.

Increasing BitUSD supply via yield harvesting is still a positive imo because...
 
- It removes BTS supply from centralized exchanges
- Converts many BTS holders in Smartcoin holders (the product we are trying to bootstrap)
- Converts many BTS holders into longer term yield seeking holders vs. speculators http://bytemaster.github.io/article/2016/01/04/The-Benefits-of-Proof-of-Work/
- Makes us the Crypto USD market leader by value and numbers of holders thereby making us the most lucrative market for merchants.
>70% of BTC is illiquid and hasn't moved in >6 months, but the number of holders and value of their holdings is the most lucrative crypto market and has attracted over 100 000 merchants. This utility increases liquidity and usage. http://www.ofnumbers.com/2014/11/22/approximately-70-of-all-bitcoins-have-not-moved-in-6-or-more-months/ (Whereas why would a lot of merchants want to make the effort to offer their product and services in a much smaller market with fewer users? Let's become the USD crypto market leader fast.)

Nearly all other promotions and developments cause the BTS price to fall in the short term in the hopes of creating demand in the future, dilution for yield should increase the BTS price (via increase BitUSD (BTS) demand in the short and medium term) https://bitsharestalk.org/index.php/topic,21641.0.html

Incentivizing liquidity, incurs a constant cost but not necessarily constant net new demand for BTS. (Without yield many seek crypto USD only temporarily during BTC/Crypto declines.) By offering yield we have a higher probability of bootstrapping BitUSD and a BitUSD economy. (In a way that should actually increase the value of BTS from the outset and for a cost that can be mitigated by shareholders via yield harvesting.) 

So personally I think we should offer dilution for yield during the growth phase of the DEX as well as conservative liquidity subsidies.
« Last Edit: February 29, 2016, 07:38:11 am by Empirical1.2 »
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Offline JonnyB

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Re: participants are guaranteed fair settlement regardless of the liquidity
« Reply #13 on: February 29, 2016, 07:39:48 am »

Settlement has nothing to do with liquidity (in core smartcoins like USD, EUR, CNY, etc..) IMHO

maybe I misunderstand what you're saying.
Settlement has everything to do with liquidity.  That's its only purpose. 
It guarantees up to 2% (or whatever it's set to) of daily smartcoin supply is liquid at the settlement price.

It is in effect a standing order to buy that smartcoin. (with 24 hr delay)
sure .. for that direction there is everything fine and we do have 2% of supply in instant buy orders for smartcoins ..
the liquidity issues are on the other side .. no one wants to sell his smartcoins .. not even for a 5-10% premium (depending on the actual asset) ..
simply because we don't have a big on/off ramp for bitassets ..

Forced settlement is guaranteed buy side liquidity at the peg.

I think we need some sort of guaranteed sell side liquidity at the peg+10%. This would have to come from the rerserve pool imo.

One of the benefits of [member=32211]Empirical1.2[/member]'s idea is that yield can be directed not only to BitUSD longs, but also to BitUSD shorts.  Also, it stands to reason that a subset of the people buying BitAssets for yield would also be interested in participating in a liquidity pool to gain additional yield.  Funds from such a pool can then be used in conjunction with funds from the reserve pool to create liquidity on both sides of the peg.
What about BMS concerns about being long and short at the same time. It artificially increases supply but not liqidity? Also there's no need for reserve pool subsidies of the buy side because of forced settlement.

Increasing BitUSD supply via yield harvesting is still a positive imo because...
 
- It removes BTS supply from centralized exchanges
- Converts many BTS holders in Smartcoin holders (the product we are trying to bootstrap)
- Converts many BTS holders into longer term yield seeking holders vs. speculators http://bytemaster.github.io/article/2016/01/04/The-Benefits-of-Proof-of-Work/
- Makes us the Crypto USD market leader by value and numbers of holders thereby making us the most lucrative market for merchants.
>70% of BTC is illiquid and hasn't moved in >6 months, but the number of holders and value of their holdings is the most lucrative crypto market and has attracted over 100 000 merchants. This utility increases liquidity and usage. http://www.ofnumbers.com/2014/11/22/approximately-70-of-all-bitcoins-have-not-moved-in-6-or-more-months/
(Whereas why would a lot of merchants want to make the effort to offer their product and services in a much smaller market with fewer users? Let's become the USD crypto market leader fast.)

Nearly all other promotions and developments cause the BTS price to fall in the short term in the hopes of creating demand in the future, dilution for yield should increase the BTS price (via increase BitUSD (BTS) demand in the short and medium term) https://bitsharestalk.org/index.php/topic,21641.0.html

Incentivizing liquidity, incurs a constant cost but not necessarily constant net new demand for BTS. (Without yield many seek crypto USD only temporarily during BTC/Crypto declines.) By offering yield we will bootstrap BitUSD (in a way that should actually increase the value of BTS from the outset and be a cost that can be mitigated by shareholders if they engage in the network beneficial behaviour of yield harvesting.) 

So personally I think we should offer dilution for yield during the growth phase of the DEX as well as conservative liquidity subsidies.

I think this method may help but will likely be too expensive. It doesn't guarantee liquidity either. I much prefer the idea of providing guaranteed sell side liquidity at feed +20% funded by the reserve pool.
I run the @bitshares twitter handle
twitter.com/bitshares

Offline Empirical1.2

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Re: participants are guaranteed fair settlement regardless of the liquidity
« Reply #14 on: February 29, 2016, 07:58:50 am »

Settlement has nothing to do with liquidity (in core smartcoins like USD, EUR, CNY, etc..) IMHO

maybe I misunderstand what you're saying.
Settlement has everything to do with liquidity.  That's its only purpose. 
It guarantees up to 2% (or whatever it's set to) of daily smartcoin supply is liquid at the settlement price.

It is in effect a standing order to buy that smartcoin. (with 24 hr delay)
sure .. for that direction there is everything fine and we do have 2% of supply in instant buy orders for smartcoins ..
the liquidity issues are on the other side .. no one wants to sell his smartcoins .. not even for a 5-10% premium (depending on the actual asset) ..
simply because we don't have a big on/off ramp for bitassets ..

Forced settlement is guaranteed buy side liquidity at the peg.

I think we need some sort of guaranteed sell side liquidity at the peg+10%. This would have to come from the rerserve pool imo.

One of the benefits of [member=32211]Empirical1.2[/member]'s idea is that yield can be directed not only to BitUSD longs, but also to BitUSD shorts.  Also, it stands to reason that a subset of the people buying BitAssets for yield would also be interested in participating in a liquidity pool to gain additional yield.  Funds from such a pool can then be used in conjunction with funds from the reserve pool to create liquidity on both sides of the peg.
What about BMS concerns about being long and short at the same time. It artificially increases supply but not liqidity? Also there's no need for reserve pool subsidies of the buy side because of forced settlement.

Increasing BitUSD supply via yield harvesting is still a positive imo because...
 
- It removes BTS supply from centralized exchanges
- Converts many BTS holders in Smartcoin holders (the product we are trying to bootstrap)
- Converts many BTS holders into longer term yield seeking holders vs. speculators http://bytemaster.github.io/article/2016/01/04/The-Benefits-of-Proof-of-Work/
- Makes us the Crypto USD market leader by value and numbers of holders thereby making us the most lucrative market for merchants.
>70% of BTC is illiquid and hasn't moved in >6 months, but the number of holders and value of their holdings is the most lucrative crypto market and has attracted over 100 000 merchants. This utility increases liquidity and usage. http://www.ofnumbers.com/2014/11/22/approximately-70-of-all-bitcoins-have-not-moved-in-6-or-more-months/
(Whereas why would a lot of merchants want to make the effort to offer their product and services in a much smaller market with fewer users? Let's become the USD crypto market leader fast.)

Nearly all other promotions and developments cause the BTS price to fall in the short term in the hopes of creating demand in the future, dilution for yield should increase the BTS price (via increase BitUSD (BTS) demand in the short and medium term) https://bitsharestalk.org/index.php/topic,21641.0.html

Incentivizing liquidity, incurs a constant cost but not necessarily constant net new demand for BTS. (Without yield many seek crypto USD only temporarily during BTC/Crypto declines.) By offering yield we will bootstrap BitUSD (in a way that should actually increase the value of BTS from the outset and be a cost that can be mitigated by shareholders if they engage in the network beneficial behaviour of yield harvesting.) 

So personally I think we should offer dilution for yield during the growth phase of the DEX as well as conservative liquidity subsidies.

I think this method may help but will likely be too expensive. It doesn't guarantee liquidity either. I much prefer the idea of providing guaranteed sell side liquidity at feed +20% funded by the reserve pool.

(I don't think the cost is high as it creates more demand that it costs from the outset and can be phased out if it doesn't and the cost can be easily mitigated by yield harvesting.)  I don't mind using the reserve pool for things, but I'm not a big fan of making it the buyer of last resort and hence over-exposing BTS to risk. So it should have limits imo. I suppose 20% is pretty wide though.

I don't know if the following is true, but given most agree yield harvesting would create millions of BitUSD,  it may make liquidity easier as with all that BitUSD already created and only a small amount needed for liquidity operations we may be able to incentivize a good amount of daily liquidity participation in a tight range for a low cost like NuBits liquidity pools? http://cybnate.github.io/index-liquidbits.html (Vs. now where we're trying to incentivize the creation of initial BitUSD as opposed to the buying and selling of already created BitUSD?)

« Last Edit: February 29, 2016, 08:00:23 am by Empirical1.2 »
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