Author Topic: BitUSD is not an interest bearing bond.  (Read 8611 times)

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Offline Fox

I think implementing the price feed will stabilize the price at $1 pretty quickly as long as it is done reasonably soon. 
I appreciate the necessity to maintain an accurate peg, both quickly and to term.  I am failing to make the connection between the influence the price feed has on the creation/issuance of the bond you reference. 
-Respectfully
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Offline Agent86

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@Agent86
Does the current discrepancy in the peg (purported to be ~5-15%) represent anything beyond bitUSD market risk?  Are you proposing to convert this risk into a new bond instrument (perhaps bitUSDbond) to stabilize the peg?  How does (re)implementing a bitUSD price feed impact the bond instrument pricing movement over time?
I think implementing the price feed will stabilize the price at $1 pretty quickly as long as it is done reasonably soon.  If we wait too long and too much undervalued bitUSD is brought into existence it could take a long time (if ever) for the price to recover.

Offline Fox

@Agent86
Does the current discrepancy in the peg (purported to be ~5-15%) represent anything beyond bitUSD market risk?  Are you proposing to convert this risk into a new bond instrument (perhaps bitUSDbond) to stabilize the peg?  How does (re)implementing a bitUSD price feed impact the bond instrument pricing movement over time?
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Offline Empirical1

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I also think it is a little early to give up on this.

 +5% I personally think the current pegging system is working very well. 

There are so many BTSX bulls and very few trader atm. Once you add in traders, bots, particularly CNY profit taking as BitCNY, people taking advantage of interest on their BTC in BitBTC and a stable version. I expect it, even within a month to trade a lot closer to the peg. Within 3 months I think it will peg very closely to BitUSD in a fairly tight range. Hopefully tight enough to appeal to consumers and retailers.

I am interested in understanding what Agent86 is proposing though.

Offline puppies

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I also think it is a little early to give up on this.
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Offline MrJeans

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Agent86, In your system, lets say I have BitUSD to sell but there are currently no buyers at 0.9 vs. the dollar. Who do I sell to?
You'll generally have no problem finding buyers if you are selling BitUSD under the value of a dollar.  The shorts have to close out their position to get their shares back sometime and they'll see bitUSD selling for less than the price of USD as a great opportunity to close out their position profitably.  Also, no more bitUSD will come into existence until the market has corrected and people have scooped up the bitUSD.

We currently do have a problem finding buyers for BitUSD under the value of a dollar?
Yes, we currently have a problem of not enough buyers because we are allowing shorts to sell newly minted USD onto the market under the value of a dollar.
Yes but we need to allow for a free market and trust that prediction markets will allow for pegging to occur. We cant force, that defeats the hypothesis of this awesome experiment.

Offline Empirical1

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Ok so you would move the current market into a separate vehicle on BTSX as an 'interest bearing bond'
Quote
Interest bearing bonds require a separate market and implementation from the core BitUSD market.
I think you are confused about what I'm proposing…

Yes, apologies, I think this is the problem. I don't really understand what you are proposing and I have trouble understanding some of this stuff in general.

Quote
The method to fix the peg is to use the price feed to limit the creation of new bitUSD by preventing shorts from shorting below the USD price.

In the current system new BitUSD is created whenever a short meets a long.

In your system

1.You would use a decentralised price feed system to only allow new BitUSD to be created at 1-1?

2.If I own BitUSD that has already been created I can sell it any price I want though, even if that's lower than 1-1?

3. People who have already shorted can buy that USD at say $0.98 too, by 'covering', they just can't short at that level and create new USD?

Another way to look at it is this: People who want to short USD really bad to get the more upside exposure to BTSX will either have to compete to short at $1 or they will have to pay interest via issuing a bond.  They can't just screw up the peg.

 +5% Thanks for that simple explanation that sounds very good.


Offline Agent86

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Another way to look at it is this: People who want to short USD really bad to get the more upside exposure to BTSX will either have to compete to short at $1 or they will have to pay interest via issuing a bond.  They can't just screw up the peg.

Offline Agent86

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Ok so you would move the current market into a separate vehicle on BTSX as an 'interest bearing bond'
Quote
Interest bearing bonds require a separate market and implementation from the core BitUSD market.
I think you are confused about what I'm proposing…
I am not proposing to move current market into a separate vehicle…  I'm saying implement bitUSD correctly so that it actually tracks.  Doing so opens up the door to the creation of an interest bearing bond market.  This bond market is what allows people to deposit dollars into the bank of BTSX and get a market based return on their deposits.

However if I'm a BitUSD buyer.

Will I prefer to buy at 0.9 on your price fixed market, where I may not be able to find a seller at times because the price is fixed  and people may at times not want to buy within that range. 
Under my proposal you'd be very lucky to buy a bit USD for 0.9 and will have no trouble selling it for more if you do.  I'm also not proposing using a "range."

Or would I prefer to buy my BitUSD on the other market at a better rate or interest rate, where I also know I can always find a buyer.

It seems BitUSD buyers would gravitate to the free market which is also paying them a better price to buy.
Buyers will gravitate away from the "free market" (current implementation) specifically because it doesn't work and doesn't guarantee a buyer.

(I don't know if this makes sense, but for me, another way of looking at the current price is that if you price fixed at exactly 1-1 via price feed. BitUSD Shorts today would be willing to short at 1-1 and give the person going long a few BTSX per dollar as bonus to take the other side because they want to leverage their BTSX position that much. Longs would always choose the biggest bonus. Hence any other market on the same system wouldn't attract the longs.)
You might have lost me here but to clarify: The market matches your buy orders with the lowest priced bitUSD so you don't have the option to not buy the lower priced bitUSD in order to buy the higher priced bitUSD that the shorts are selling.

Offline Empirical1

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Agent86, In your system, lets say I have BitUSD to sell but there are currently no buyers at 0.9 vs. the dollar. Who do I sell to?
You'll generally have no problem finding buyers if you are selling BitUSD under the value of a dollar.  The shorts have to close out their position to get their shares back sometime and they'll see bitUSD selling for less than the price of USD as a great opportunity to close out their position profitably.  Also, no more bitUSD will come into existence until the market has corrected and people have scooped up the bitUSD.

We currently do have a problem finding buyers for BitUSD under the value of a dollar?
Yes, we currently have a problem of not enough buyers because we are allowing shorts to sell newly minted USD onto the market under the value of a dollar.

Ok so you would move the current market into a separate vehicle on BTSX as an 'interest bearing bond'
Quote
Interest bearing bonds require a separate market and implementation from the core BitUSD market.

However if I'm a BitUSD buyer.

Will I prefer to buy at 0.9 on your price fixed market, where I may not be able to find a seller at times because the price is fixed  and people may at times not want to buy within that range. 

Or would I prefer to buy my BitUSD on the other market at a better rate or interest rate, where I also know I can always find a buyer.

It seems BitUSD buyers would gravitate to the free market which is also paying them a better price to buy.

(I don't know if this makes sense, but for me, another way of looking at the current price is that if you price fixed at exactly 1-1 via price feed. BitUSD Shorts today would be willing to short at 1-1 and give the person going long a few BTSX per dollar as bonus to take the other side because they want to leverage their BTSX position that much. Longs would always choose the biggest bonus. Hence any other market on the same system wouldn't attract the longs.)

Edit: Never mind I'm confusing myself here...

« Last Edit: August 28, 2014, 04:43:36 pm by Empire »

Offline Agent86

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Agent86, In your system, lets say I have BitUSD to sell but there are currently no buyers at 0.9 vs. the dollar. Who do I sell to?
You'll generally have no problem finding buyers if you are selling BitUSD under the value of a dollar.  The shorts have to close out their position to get their shares back sometime and they'll see bitUSD selling for less than the price of USD as a great opportunity to close out their position profitably.  Also, no more bitUSD will come into existence until the market has corrected and people have scooped up the bitUSD.

We currently do have a problem finding buyers for BitUSD under the value of a dollar?
Yes, we currently have a problem of not enough buyers because we are allowing shorts to sell newly minted USD onto the market under the value of a dollar.

Offline Empirical1

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Agent86, In your system, lets say I have BitUSD to sell but there are currently no buyers at 0.9 vs. the dollar. Who do I sell to?
You'll generally have no problem finding buyers if you are selling BitUSD under the value of a dollar.  The shorts have to close out their position to get their shares back sometime and they'll see bitUSD selling for less than the price of USD as a great opportunity to close out their position profitably.  Also, no more bitUSD will come into existence until the market has corrected and people have scooped up the bitUSD.

We currently do have a problem finding buyers for BitUSD under the value of a dollar that's why the BitUSD price is lower.



« Last Edit: August 28, 2014, 04:16:32 pm by Empire »

Offline Agent86

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Agent86, In your system, lets say I have BitUSD to sell but there are currently no buyers at 0.9 vs. the dollar. Who do I sell to?
You'll generally have no problem finding buyers if you are selling BitUSD under the value of a dollar.  The shorts have to close out their position to get their shares back sometime and they'll see bitUSD selling for less than the price of USD as a great opportunity to close out their position profitably.  Also, no more bitUSD will come into existence until the market has corrected and people have scooped up the bitUSD.

Offline Empirical1

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Agent86, In your system, lets say I have BitUSD to sell but there are currently no buyers at 0.9 vs. the dollar. Who do I sell to?

Offline liondani

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I hope bitUSD is not only an indicator of what we believe about BTSX (oversold/overbought) instead of what we believe compared vs USD...  (sorry maybe I am confused) :-\
« Last Edit: August 28, 2014, 03:52:33 pm by liondani »