What are the incentives to use bitassets?

Started by BldSwtTrs, January 18, 2014, 08:28:55 PM

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bytemaster

Quote from: delulo on January 23, 2014, 02:15:40 PM
Quote from: bytemaster on January 22, 2014, 08:35:37 PM
Quote from: Bitcoinfan on January 22, 2014, 11:52:12 AM
No, a bit asset is collaterized with a long and 2 short bitshares.  Every 24 hours or so,  the short bitshares forego their dividends, so both of those bitshares dividends go to the long bitasser holder.  Thus holding a bit asset gives you twice more dividends then holding a noncollaterized bitshare

This was true as of the white paper; however, with the latest design enhancements and simplifications BitAssets now pay 5% no matter what, where as dividends fluctuate based upon demand for transactions on the network.   Your collateral continues to earn dividends; however, the amount of BitAsset you owe grows by 5% no matter what (because it is being paid to the BitAsset holder). 

Thus we can have a very simple and predictable return for BitAsset holders and for borrowers (shorts).   

How can the 5% be known when it depends on the degree to which the service this DAC provides is used?

Dividends depends upon transaction fees.  Shorts pay 5% and Longs earn 5% and the number is hard coded.
For the latest updates checkout my blog: [url="http://bytemaster.bitshares.org"]http://bytemaster.bitshares.org[/url]
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.

santaclause102

Quote from: bytemaster on January 22, 2014, 08:35:37 PM
Quote from: Bitcoinfan on January 22, 2014, 11:52:12 AM
No, a bit asset is collaterized with a long and 2 short bitshares.  Every 24 hours or so,  the short bitshares forego their dividends, so both of those bitshares dividends go to the long bitasser holder.  Thus holding a bit asset gives you twice more dividends then holding a noncollaterized bitshare

This was true as of the white paper; however, with the latest design enhancements and simplifications BitAssets now pay 5% no matter what, where as dividends fluctuate based upon demand for transactions on the network.   Your collateral continues to earn dividends; however, the amount of BitAsset you owe grows by 5% no matter what (because it is being paid to the BitAsset holder). 

Thus we can have a very simple and predictable return for BitAsset holders and for borrowers (shorts).   

How can the 5% be known when it depends on the degree to which the service this DAC provides is used?

bytemaster

Quote from: Bitcoinfan on January 22, 2014, 11:52:12 AM
No, a bit asset is collaterized with a long and 2 short bitshares.  Every 24 hours or so,  the short bitshares forego their dividends, so both of those bitshares dividends go to the long bitasser holder.  Thus holding a bit asset gives you twice more dividends then holding a noncollaterized bitshare

This was true as of the white paper; however, with the latest design enhancements and simplifications BitAssets now pay 5% no matter what, where as dividends fluctuate based upon demand for transactions on the network.   Your collateral continues to earn dividends; however, the amount of BitAsset you owe grows by 5% no matter what (because it is being paid to the BitAsset holder). 

Thus we can have a very simple and predictable return for BitAsset holders and for borrowers (shorts).   
For the latest updates checkout my blog: [url="http://bytemaster.bitshares.org"]http://bytemaster.bitshares.org[/url]
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.

Bitcoinfan

No, a bit asset is collaterized with a long and 2 short bitshares.  Every 24 hours or so,  the short bitshares forego their dividends, so both of those bitshares dividends go to the long bitasser holder.  Thus holding a bit asset gives you twice more dividends then holding a noncollaterized bitshare

BldSwtTrs

#21
Quote from: delulo on January 22, 2014, 09:07:20 AM
Quote from: BldSwtTrs on January 22, 2014, 08:57:57 AM
And does someone who buy Bitshares have to use BitAssets or can he just owns Bitshares and nothing else?

Sure. But the dividends are lower or don't exist (not sure which of both is right) when you hold bitshares. But you profit from the value increase due to adaption...
I thought dividends were in the form of bitshares destruction. So even if someone just holds bitshares he should gain as much dividends as someone holding BitAssets, no?

santaclause102

Quote from: BldSwtTrs on January 22, 2014, 08:57:57 AM
And does someone who buy Bitshares have to use BitAssets or can he just owns Bitshares and nothing else?

Sure. But the dividends are lower or don't exist (not sure which of both is right) when you hold bitshares. But you profit from the value increase due to adaption...

BldSwtTrs

And does someone who buy Bitshares have to use BitAssets or can he just owns Bitshares and nothing else?

bytemaster

Quote from: BldSwtTrs on January 21, 2014, 04:36:45 PM
Quote from: bytemaster on January 18, 2014, 08:58:46 PM
Quote from: BldSwtTrs on January 18, 2014, 08:28:55 PM
The more I think about Bitshare, the more I understand it and the more I am excited about it. But one thing still comes to my mind that I am not sure about it.
Why someone would use bitassets to speculate or hedge against something instead of using what already exist to do so?

5% of interest  seems pretty high to me and even if it's good for bitshares holders it may be a barrier for using bitassets. I mean Bitcoin is adopted because it lower the costs of transfering and storing value. It wouldn't work if it would make the cost of doing these things higher. So I guess my question is what are the cost one paye to buy a future on gold on a centralized market place, more or less than 5%?

Holding BitAssets PAYS you 5% interest.   Shorting BitAssets costs you 5% so the borrowing costs are lower than etrade and the savings yield higher than your bank because there is no middle man.
Is someone who want to borrow BitAssets has to buy BitShares also?

Yes, you need collateral to borrow.
For the latest updates checkout my blog: [url="http://bytemaster.bitshares.org"]http://bytemaster.bitshares.org[/url]
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.

BldSwtTrs

Quote from: bytemaster on January 18, 2014, 08:58:46 PM
Quote from: BldSwtTrs on January 18, 2014, 08:28:55 PM
The more I think about Bitshare, the more I understand it and the more I am excited about it. But one thing still comes to my mind that I am not sure about it.
Why someone would use bitassets to speculate or hedge against something instead of using what already exist to do so?

5% of interest  seems pretty high to me and even if it's good for bitshares holders it may be a barrier for using bitassets. I mean Bitcoin is adopted because it lower the costs of transfering and storing value. It wouldn't work if it would make the cost of doing these things higher. So I guess my question is what are the cost one paye to buy a future on gold on a centralized market place, more or less than 5%?

Holding BitAssets PAYS you 5% interest.   Shorting BitAssets costs you 5% so the borrowing costs are lower than etrade and the savings yield higher than your bank because there is no middle man.
Is someone who want to borrow BitAssets has to buy BitShares also?

bytemaster

Quote from: delulo on January 20, 2014, 03:03:35 PM
Quote from: bytemaster on January 20, 2014, 02:41:49 PM
Quote from: voldemort628 on January 20, 2014, 11:27:54 AM
Quote from: bytemaster on January 19, 2014, 02:45:13 PM
The market will introduce a new chain and version 2 of bitshares will use a prediction market to set the rate. 


Sent from my iPhone using Tapatalk

Why dont we integrate a prediction market into bts in the first place?

Because it is another moving part and I want to walk before attempting to do more.   I will consider it.

Isn't bts a Prediction market?

It is but I still need to integrate the data into setting an interest rate.
For the latest updates checkout my blog: [url="http://bytemaster.bitshares.org"]http://bytemaster.bitshares.org[/url]
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.

santaclause102

Quote from: bytemaster on January 20, 2014, 02:41:49 PM
Quote from: voldemort628 on January 20, 2014, 11:27:54 AM
Quote from: bytemaster on January 19, 2014, 02:45:13 PM
The market will introduce a new chain and version 2 of bitshares will use a prediction market to set the rate. 


Sent from my iPhone using Tapatalk

Why dont we integrate a prediction market into bts in the first place?

Because it is another moving part and I want to walk before attempting to do more.   I will consider it.

Isn't bts a Prediction market?

bytemaster

Quote from: voldemort628 on January 20, 2014, 11:27:54 AM
Quote from: bytemaster on January 19, 2014, 02:45:13 PM
The market will introduce a new chain and version 2 of bitshares will use a prediction market to set the rate. 


Sent from my iPhone using Tapatalk

Why dont we integrate a prediction market into bts in the first place?

Because it is another moving part and I want to walk before attempting to do more.   I will consider it.
For the latest updates checkout my blog: [url="http://bytemaster.bitshares.org"]http://bytemaster.bitshares.org[/url]
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.

voldemort628

Quote from: bytemaster on January 19, 2014, 02:45:13 PM
The market will introduce a new chain and version 2 of bitshares will use a prediction market to set the rate. 


Sent from my iPhone using Tapatalk

Why dont we integrate a prediction market into bts in the first place?

bytemaster

Quote from: Simulacra_and_Simulation on January 20, 2014, 05:47:10 AM
Quote from: bytemaster on January 20, 2014, 04:58:51 AM
Quote from: Simulacra_and_Simulation on January 20, 2014, 04:41:28 AM
Quote from: bytemaster on January 18, 2014, 08:58:46 PM
Quote from: BldSwtTrs on January 18, 2014, 08:28:55 PM
The more I think about Bitshare, the more I understand it and the more I am excited about it. But one thing still comes to my mind that I am not sure about it.
Why someone would use bitassets to speculate or hedge against something instead of using what already exist to do so?

5% of interest  seems pretty high to me and even if it's good for bitshares holders it may be a barrier for using bitassets. I mean Bitcoin is adopted because it lower the costs of transfering and storing value. It wouldn't work if it would make the cost of doing these things higher. So I guess my question is what are the cost one paye to buy a future on gold on a centralized market place, more or less than 5%?

Holding BitAssets PAYS you 5% interest.   Shorting BitAssets costs you 5% so the borrowing costs are lower than etrade and the savings yield higher than your bank because there is no middle man.

Not sure I follow you.

I trade options frequently and I don't get charged anything but a contract fee. When I go short on margin from a put contract getting exercised I don't get charged a fee other than a trade fee to buy the stock or sell it. I am Just required to have a certain amount in my account but never the full risk amount.

Can you explain what borrowing costs you are talking about? Do you mean lost interest or dividend risk?

Options are different that short sells.    If you borrow stocks or cash to buy or sell on margin you will pay 8.5% for anything less than $25K and over 5% for anything less than $500K with 4% being the lowest borrowing costs you can get from them.

We also have options contracts and these only charge a minimal transaction fee proportional to the bytes used in the blockchain.

That makes sense. I never naked sell stock or borrow to buy.

-

Will you be able to leverage and how will the margin requirements be? Will it be a bit for bit ratio or 2 to 1 etc.? 
I love the probabilities of options and am interested in how black-scholes will apply given that volatility is a big factor.  Very interesting. Can't wait.

About the market: will there be established Market makers guaranteeing liquidity or will it just be based on luck to find someone to take he opposite side of the trade?

I am sure market makers will find it profitable to operate on the chain, but we will not be performing that function.

Initial collateral requirements is 2x and maintenance is 1.5x the borrowed assets value.
For the latest updates checkout my blog: [url="http://bytemaster.bitshares.org"]http://bytemaster.bitshares.org[/url]
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.

Simulacra_and_Simulation

Quote from: bytemaster on January 20, 2014, 04:58:51 AM
Quote from: Simulacra_and_Simulation on January 20, 2014, 04:41:28 AM
Quote from: bytemaster on January 18, 2014, 08:58:46 PM
Quote from: BldSwtTrs on January 18, 2014, 08:28:55 PM
The more I think about Bitshare, the more I understand it and the more I am excited about it. But one thing still comes to my mind that I am not sure about it.
Why someone would use bitassets to speculate or hedge against something instead of using what already exist to do so?

5% of interest  seems pretty high to me and even if it's good for bitshares holders it may be a barrier for using bitassets. I mean Bitcoin is adopted because it lower the costs of transfering and storing value. It wouldn't work if it would make the cost of doing these things higher. So I guess my question is what are the cost one paye to buy a future on gold on a centralized market place, more or less than 5%?

Holding BitAssets PAYS you 5% interest.   Shorting BitAssets costs you 5% so the borrowing costs are lower than etrade and the savings yield higher than your bank because there is no middle man.

Not sure I follow you.

I trade options frequently and I don't get charged anything but a contract fee. When I go short on margin from a put contract getting exercised I don't get charged a fee other than a trade fee to buy the stock or sell it. I am Just required to have a certain amount in my account but never the full risk amount.

Can you explain what borrowing costs you are talking about? Do you mean lost interest or dividend risk?

Options are different that short sells.    If you borrow stocks or cash to buy or sell on margin you will pay 8.5% for anything less than $25K and over 5% for anything less than $500K with 4% being the lowest borrowing costs you can get from them.

We also have options contracts and these only charge a minimal transaction fee proportional to the bytes used in the blockchain.

That makes sense. I never naked sell stock or borrow to buy.

-

Will you be able to leverage and how will the margin requirements be? Will it be a bit for bit ratio or 2 to 1 etc.? 
I love the probabilities of options and am interested in how black-scholes will apply given that volatility is a big factor.  Very interesting. Can't wait.

About the market: will there be established Market makers guaranteeing liquidity or will it just be based on luck to find someone to take he opposite side of the trade?

bytemaster

Quote from: Simulacra_and_Simulation on January 20, 2014, 04:41:28 AM
Quote from: bytemaster on January 18, 2014, 08:58:46 PM
Quote from: BldSwtTrs on January 18, 2014, 08:28:55 PM
The more I think about Bitshare, the more I understand it and the more I am excited about it. But one thing still comes to my mind that I am not sure about it.
Why someone would use bitassets to speculate or hedge against something instead of using what already exist to do so?

5% of interest  seems pretty high to me and even if it's good for bitshares holders it may be a barrier for using bitassets. I mean Bitcoin is adopted because it lower the costs of transfering and storing value. It wouldn't work if it would make the cost of doing these things higher. So I guess my question is what are the cost one paye to buy a future on gold on a centralized market place, more or less than 5%?

Holding BitAssets PAYS you 5% interest.   Shorting BitAssets costs you 5% so the borrowing costs are lower than etrade and the savings yield higher than your bank because there is no middle man.

Not sure I follow you.

I trade options frequently and I don't get charged anything but a contract fee. When I go short on margin from a put contract getting exercised I don't get charged a fee other than a trade fee to buy the stock or sell it. I am Just required to have a certain amount in my account but never the full risk amount.

Can you explain what borrowing costs you are talking about? Do you mean lost interest or dividend risk?

Options are different that short sells.    If you borrow stocks or cash to buy or sell on margin you will pay 8.5% for anything less than $25K and over 5% for anything less than $500K with 4% being the lowest borrowing costs you can get from them.

We also have options contracts and these only charge a minimal transaction fee proportional to the bytes used in the blockchain. 
For the latest updates checkout my blog: [url="http://bytemaster.bitshares.org"]http://bytemaster.bitshares.org[/url]
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.

Simulacra_and_Simulation

#9
Quote from: bytemaster on January 18, 2014, 08:58:46 PM
Quote from: BldSwtTrs on January 18, 2014, 08:28:55 PM
The more I think about Bitshare, the more I understand it and the more I am excited about it. But one thing still comes to my mind that I am not sure about it.
Why someone would use bitassets to speculate or hedge against something instead of using what already exist to do so?

5% of interest  seems pretty high to me and even if it's good for bitshares holders it may be a barrier for using bitassets. I mean Bitcoin is adopted because it lower the costs of transfering and storing value. It wouldn't work if it would make the cost of doing these things higher. So I guess my question is what are the cost one paye to buy a future on gold on a centralized market place, more or less than 5%?

Holding BitAssets PAYS you 5% interest.   Shorting BitAssets costs you 5% so the borrowing costs are lower than etrade and the savings yield higher than your bank because there is no middle man.

Not sure I follow you.

I trade options frequently and I don't get charged anything but a contract fee. When I go short on margin from a put contract getting exercised I don't get charged a fee other than a trade fee to buy the stock or sell it. I am Just required to have a certain amount in my account but never the full risk amount.

Can you explain what borrowing costs you are talking about? Do you mean lost interest or dividend risk?

BldSwtTrs

#8
Quote from: bytemaster on January 20, 2014, 12:17:23 AM
Quote from: Markus on January 19, 2014, 10:25:54 PM
Quote from: bytemaster on January 19, 2014, 02:45:13 PM
The market will introduce a new chain and version 2 of bitshares will use a prediction market to set the rate. 

If a successor chain like this is introduced, will the genesis block recognise the version 1 holders to 100 % at launch date or will you (have to) stick to your published social contract and acknowledge PTS/AGS with 10 %, leaving max 80 % for version 1 holders?

Any chain that inherits a chain that honored AGS and PTS is still valid as this is the means by which chains 'upgrade'.   However, upgrading the chain requires funding and thus will consume *new* capital to build and therefore it should be allocated proportional to those who funded it and thus AGS and PTS should be honored 50/50 in the new chain.  Of course, to get people to move over to the upgraded chain it might be wise marketing to do 33/33/33.   

In other words, I don't have an answer for you just yet other than that all of the above strategies would be legitimate.
Btw, technically PTS doesn't fund the infrascture only AGS does.

So is it possible that someone following this reasoning would honor only AGS and not PTS?

Markus

So I gather that anything between 10/10/80 and 50/50/0 is possible, right?

I think you will need to allocate a major share to the holders of the old chain.
Otherwise the mere threat of a chain upgrade will undermine the value of chain version 1.

bytemaster

Quote from: Markus on January 19, 2014, 10:25:54 PM
Quote from: bytemaster on January 19, 2014, 02:45:13 PM
The market will introduce a new chain and version 2 of bitshares will use a prediction market to set the rate. 

If a successor chain like this is introduced, will the genesis block recognise the version 1 holders to 100 % at launch date or will you (have to) stick to your published social contract and acknowledge PTS/AGS with 10 %, leaving max 80 % for version 1 holders?

Any chain that inherits a chain that honored AGS and PTS is still valid as this is the means by which chains 'upgrade'.   However, upgrading the chain requires funding and thus will consume *new* capital to build and therefore it should be allocated proportional to those who funded it and thus AGS and PTS should be honored 50/50 in the new chain.  Of course, to get people to move over to the upgraded chain it might be wise marketing to do 33/33/33.   

In other words, I don't have an answer for you just yet other than that all of the above strategies would be legitimate. 
For the latest updates checkout my blog: [url="http://bytemaster.bitshares.org"]http://bytemaster.bitshares.org[/url]
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.

Markus

Quote from: bytemaster on January 19, 2014, 02:45:13 PM
The market will introduce a new chain and version 2 of bitshares will use a prediction market to set the rate. 

If a successor chain like this is introduced, will the genesis block recognise the version 1 holders to 100 % at launch date or will you (have to) stick to your published social contract and acknowledge PTS/AGS with 10 %, leaving max 80 % for version 1 holders?

bytemaster

The market will introduce a new chain and version 2 of bitshares will use a prediction market to set the rate. 


Sent from my iPhone using Tapatalk
For the latest updates checkout my blog: [url="http://bytemaster.bitshares.org"]http://bytemaster.bitshares.org[/url]
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.

heropzy

I have a question, if many years later, the 5% interest is not suitable for the economy system. Who has the right to change the "5%" since BTS X is Pos and consensus, is it the over 51% shareholder of BTS X?

bytemaster

Quote from: BldSwtTrs on January 18, 2014, 08:28:55 PM
The more I think about Bitshare, the more I understand it and the more I am excited about it. But one thing still comes to my mind that I am not sure about it.
Why someone would use bitassets to speculate or hedge against something instead of using what already exist to do so?

5% of interest  seems pretty high to me and even if it's good for bitshares holders it may be a barrier for using bitassets. I mean Bitcoin is adopted because it lower the costs of transfering and storing value. It wouldn't work if it would make the cost of doing these things higher. So I guess my question is what are the cost one paye to buy a future on gold on a centralized market place, more or less than 5%?

Holding BitAssets PAYS you 5% interest.   Shorting BitAssets costs you 5% so the borrowing costs are lower than etrade and the savings yield higher than your bank because there is no middle man.
For the latest updates checkout my blog: [url="http://bytemaster.bitshares.org"]http://bytemaster.bitshares.org[/url]
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.

BldSwtTrs

#1
The more I think about Bitshare, the more I understand it and the more I am excited about it. But one thing still comes to my mind that I am not sure about it.
Why someone would use bitassets to speculate or hedge against something instead of using what already exist to do so?

5% of interest  seems pretty high to me and even if it's good for bitshares holders it may be a barrier for using bitassets. I mean Bitcoin is adopted because it lower the costs of transfering and storing value. It wouldn't work if it would make the cost of doing these things higher. So I guess my question is what are the cost one paye to buy a future on gold on a centralized market place, more or less than 5%?