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Offline bytemaster

What if the market-peg doesn't work?
« on: August 21, 2014, 05:30:02 PM »

There are many new people to BTSX that have their doubts about the market peg, and that is OK.  After all it is an economic experiment.   I have high confidence that it will work, but for those with less confidence I would like to present you with our backup plan:

*IF* the market peg doesn't hold well enough (insufficient liquidity, manipulation, etc) then we have a very simple fall back option:

1) The delegates publish a price feed (use the median)
2) All trades must be within X% of the price feed

If there is not enough liquidity it is also possible for the network to "print" BTSX necessary to make great deals relative to a trusted feed.  IE: if BitUSD bids are over 10% above the feed, print BTSX to short BitUSD and if it is under the feed by 10%, cover the short.   Simply knowing there is unlimited sell pressure at 10%+ and a large cover at -10% could also enhance the system.  The benefit of this "system trading" is that the profits from shorting high and covering low go to the shareholders. 

Bottom line, we are going with the most market-based solution first and have fall backs to feed based solutions if they prove necessary.  The fall back solutions remove all of the uncertainty about how trades will be executed in the future (for those who do not trust market pegs yet). 

The time to implement the backup system is less than 1 week if needed.
For the latest updates checkout my blog: http://bytemaster.bitshares.org
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 pgbit

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Re: What if the market-peg doesn't work?
« Reply #1 on: August 21, 2014, 05:34:28 PM »
Could you build these features into the system anyway, so that its an automatic fail-safe that kicks-in at a certain stage if necessary, to account for any future eventuality?

Offline twitter

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Re: What if the market-peg doesn't work?
« Reply #2 on: August 21, 2014, 05:43:50 PM »
Could you build these features into the system anyway, so that its an automatic fail-safe that kicks-in at a certain stage if necessary, to account for any future eventuality?

i think those features are already in the btsx platform.
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Offline bytemaster

Re: What if the market-peg doesn't work?
« Reply #3 on: August 21, 2014, 05:49:09 PM »
Could you build these features into the system anyway, so that its an automatic fail-safe that kicks-in at a certain stage if necessary, to account for any future eventuality?

i think those features are already in the btsx platform.

Publishing price feeds is already in there... implementing a trading bot relative to those price feeds is not.  Market actors are more efficient than a block-chain and can have tighter tolerances.  For this these features are more of a placebo effect that makes people feel good but ultimately do nothing.   
For the latest updates checkout my blog: http://bytemaster.bitshares.org
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 Empirical1

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Re: What if the market-peg doesn't work?
« Reply #4 on: August 21, 2014, 05:54:25 PM »
There are many new people to BTSX that have their doubts about the market peg, and that is OK.  After all it is an economic experiment.   I have high confidence that it will work, but for those with less confidence I would like to present you with our backup plan:

*IF* the market peg doesn't hold well enough (insufficient liquidity, manipulation, etc) then we have a very simple fall back option:

1) The delegates publish a price feed (use the median)
2) All trades must be within X% of the price feed

If there is not enough liquidity it is also possible for the network to "print" BTSX necessary to make great deals relative to a trusted feed.  IE: if BitUSD bids are over 10% above the feed, print BTSX to short BitUSD and if it is under the feed by 10%, cover the short.   Simply knowing there is unlimited sell pressure at 10%+ and a large cover at -10% could also enhance the system.  The benefit of this "system trading" is that the profits from shorting high and covering low go to the shareholders. 

Bottom line, we are going with the most market-based solution first and have fall backs to feed based solutions if they prove necessary.  The fall back solutions remove all of the uncertainty about how trades will be executed in the future (for those who do not trust market pegs yet). 

The time to implement the backup system is less than 1 week if needed.

 +5% Even with high certainty, I always love me some backups and insurance, nice!

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Re: What if the market-peg doesn't work?
« Reply #5 on: August 21, 2014, 06:00:44 PM »

Quote from: bytemaster/

For this these features are more of a placebo effect that makes people feel good but ultimately do nothing.

Placebos are proven to produce effects.

The above statement has a contradiction.  What is the objective truth?


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Offline liondani

Re: What if the market-peg doesn't work?
« Reply #6 on: August 21, 2014, 06:11:36 PM »
 +5% +5% +5%


...maybe you must give them the placebo pills, just in case  :)

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Offline bitmeat

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Re: What if the market-peg doesn't work?
« Reply #7 on: August 21, 2014, 06:14:12 PM »
Actually the feed is less of a placebo than the hope that the prediction market will work. It actually regulates and puts stops on bad behavior. That said the feed itself could be manipulated as well.

My point is placebo is the wrong term, as it refers to something that is not designed to work. Enforcing feeds would have direct impact on the stability.

Offline thisisausername

Re: What if the market-peg doesn't work?
« Reply #8 on: August 21, 2014, 06:15:38 PM »
The placebo point is that the fallback mechanism has the action of increasing confidence in the market even if it is never activated.

(I think.)
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Offline blahblah7up

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Re: What if the market-peg doesn't work?
« Reply #9 on: August 21, 2014, 07:02:55 PM »

If there is not enough liquidity it is also possible for the network to "print" BTSX necessary to make great deals relative to a trusted feed. 


BTSX might become "printable"?  Could someone EILI5?  As a holder of BTSX this doesn't sound so good on the surface.

Offline bytemaster

Re: What if the market-peg doesn't work?
« Reply #10 on: August 21, 2014, 07:13:25 PM »

If there is not enough liquidity it is also possible for the network to "print" BTSX necessary to make great deals relative to a trusted feed. 


BTSX might become "printable"?  Could someone EILI5?  As a holder of BTSX this doesn't sound so good on the surface.

We will not make BTSX "printable" in this chain... it will be a new chain to test new features such as this.  IE:  this is a *backup plan* that we don't expect to have to implement.
For the latest updates checkout my blog: http://bytemaster.bitshares.org
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 Agent86

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Re: What if the market-peg doesn't work?
« Reply #11 on: August 21, 2014, 10:42:10 PM »
Hi BM,  Can you clarify is the current market trading restricted by price feeds or only restricted by a moving average of prior trading activity?
Sorry I didn't keep up with this.

Offline bytemaster

Re: What if the market-peg doesn't work?
« Reply #12 on: August 21, 2014, 10:43:27 PM »

Hi BM,  Can you clarify is the current market trading restricted by price feeds or only restricted by a moving average of prior trading activity?
Sorry I didn't keep up with this.

Moving avg. 


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For the latest updates checkout my blog: http://bytemaster.bitshares.org
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 xeroc

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Re: What if the market-peg doesn't work?
« Reply #13 on: August 21, 2014, 10:45:57 PM »
There are many new people to BTSX that have their doubts about the market peg, and that is OK.  After all it is an economic experiment.   I have high confidence that it will work, but for those with less confidence I would like to present you with our backup plan:

*IF* the market peg doesn't hold well enough (insufficient liquidity, manipulation, etc) then we have a very simple fall back option:

1) The delegates publish a price feed (use the median)
2) All trades must be within X% of the price feed

If there is not enough liquidity it is also possible for the network to "print" BTSX necessary to make great deals relative to a trusted feed.  IE: if BitUSD bids are over 10% above the feed, print BTSX to short BitUSD and if it is under the feed by 10%, cover the short.   Simply knowing there is unlimited sell pressure at 10%+ and a large cover at -10% could also enhance the system.  The benefit of this "system trading" is that the profits from shorting high and covering low go to the shareholders. 

Bottom line, we are going with the most market-based solution first and have fall backs to feed based solutions if they prove necessary.  The fall back solutions remove all of the uncertainty about how trades will be executed in the future (for those who do not trust market pegs yet). 

The time to implement the backup system is less than 1 week if needed.
If this can be achieved with a flip switch i guess most investors will feel MUCH more comfortable with the bitasset ... although i'd call it unecessary
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Offline Agent86

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Re: What if the market-peg doesn't work?
« Reply #14 on: August 21, 2014, 10:51:27 PM »

Hi BM,  Can you clarify is the current market trading restricted by price feeds or only restricted by a moving average of prior trading activity?
Sorry I didn't keep up with this.
Moving avg. 

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Why do it that way?  I think the price feeds are more reliable and more difficult to manipulate.  If delegates decide to base their feed on a moving average they are free to do so.  With the feeds it's not possible for it to drift and there can be more assurance of control.  Delegates can make smarter decisions to accommodate the market without being manipulated.

I agree with the new tighter tolerances but I think it's better to use feeds.  I think the feeds can be very reliable, even if we have to demand that delegates stay on top of their sh*t.

 

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