Author Topic: BitUSD Market Maker - Proposal for Discussion  (Read 34101 times)

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Offline GaltReport

The primary utility for BitUSD within our community is hedging against bubbles.
The secondary utility (longer term) is as a means of payment.

I agree, but I think there are more bulls than bears which creates a bit of an issue in regards to providing buy support for bitUSD.

Still even with that in mind, I think the market peg could hold given the proper variables. I don't think we can judge the experiment as failed until bitUSD has utility as payment, as we only have half of the empirical evidence of the experiment. Even worse, the half of the empirical evidence that we do have is flawed in that the past couple days since the update a lot of people haven't had access to their BTSX. I have been trying all day long for 2 days to get my balance from 0 to what it was before.. there is something really messed up this update with syncing and/or connecting. I think a lot of these people that don't have access to their BTSX would have been buying bitUSD the past couple days as the price was falling. I know I would have myself if I could of got access to it.

Half of the empirical evidence is flawed and half of it is non-existent (and likely will be for some time.) I think it is too early to tell if the original market functions work or not. If you want to make temporary changes to reach market parity, then I guess I am OK with that, but the original formula should still be tested when we are able to have more fair of a test. I believe the original plan for bitassets and how the market should function will work when all the variables that are needed fall into place. It is unfortunately at this point a flawed experiment that was setup to fail because the evidence is flawed and impartial.

I guess now I am just repeating myself (even within this post haha). That is just my opinion, I trust BM and co to do whatever is good for Bitshares, so whatever you decide I will support it.

I want to echo that sentiment.  As many others have mentioned, BM sometimes seems to have the patience of Job in explaining everything, sometimes over and over and he is often the first one to chime in when someone thinks they lost their wallet/password/funds.  I have no doubt the guy would spends days, weeks and probably months trying to help someone recover any funds lost inadvertently.   :)

« Last Edit: August 29, 2014, 11:59:20 pm by GaltReport »

Offline CoinHoarder

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The primary utility for BitUSD within our community is hedging against bubbles.
The secondary utility (longer term) is as a means of payment.

I agree, but I think there are more bulls than bears which creates a bit of an issue in regards to providing buy support for bitUSD.

Still even with that in mind, I think the market peg could hold given the proper variables. I don't think we can judge the experiment as failed until bitUSD has utility as payment, as we only have half of the empirical evidence of the experiment. Even worse, the half of the empirical evidence that we do have is flawed in that the past couple days since the update a lot of people haven't had access to their BTSX. I have been trying all day long for 2 days to get my balance from 0 to what it was before.. there is something really messed up this update with syncing and/or connecting. I think a lot of these people that don't have access to their BTSX would have been buying bitUSD the past couple days as the price was falling. I know I would have myself if I could of got access to it.

Half of the empirical evidence is flawed and half of it is non-existent (and likely will be for some time.) I think it is too early to tell if the original market functions work or not. If you want to make temporary changes to reach market parity, then I guess I am OK with that, but the original formula should still be tested when we are able to have more fair of a test. I believe the original plan for bitassets and how the market should function will work when all the variables that are needed fall into place. It is unfortunately at this point a flawed experiment that was setup to fail because the evidence is flawed and impartial.

I guess now I am just repeating myself (even within this post haha). That is just my opinion, I trust BM and co to do whatever is good for Bitshares, so whatever you decide I will support it.
« Last Edit: August 29, 2014, 10:58:49 pm by CoinHoarder »
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Offline GaltReport

The primary utility for BitUSD within our community is hedging against bubbles.
The secondary utility (longer term) is as a means of payment.

So, this may be the answer I've been looking for.  We need to make work internally before we can realistically expect to get it to work as a payment system.  I guess it makes sense.  Has to work for BitShares ecosystem first.

Offline Empirical1

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There is no such thing as a decentralized feed... the data fed to the "decentralized" feeds are from centralized sources, and there is a smallish group of people that publish the said "decentralized" feeds. There are two weak links in that chain and it is not decentralized... call is pseudo-decentralized if you must, but it is not ideal and not decentralized in the sense of the true meaning of the word.

On top of there being not enough market depth and liquidity, bitUSD has another underlying factor that is stopping it from reaching parity, and changing the way the decentralized exchange functions will not fix it. That underlying issue is that there is simply not much demand for bitUSD. I would venture to say that a deflationary asset (gold/bitcoin?) with the exact same market system as bitUSD would be closer to its actual value, because then people have more of a reason to want to purchase it rather than hold onto their BTSX.

I think we as a community need to get together and organize projects that will increase the utility of bitUSD, because at the moment you can only buy or sell it and nothing else. I think most people in the Bitshares ecosystem are bullish on BitsharesX, so the demand is just not there. We need to get organized, brainstorm about the best use cases for bitUSD, and then raise funds and build those uses for it. I think things like gateways which would allow bitUSD to be spent anywhere Bitcoin is accepted is a good start, perhaps a multi-pool that pays out in bitUSD, things like this will increase the demand and thus keep bitUSD closer to its real life counterpart.

It is not the market system that is broken, the demand is just not there right now. We need to work on that as a community.
I respectfully disagree... maybe it doesn't feel ideal to you right now or doesn't seem "decentralized enough."  But at the end of the day I think it's the right way to do it and I think people will trust it.

I think it will make the peg really work and that is what makes bitAssets useful.  I also think the bond market I recently proposed could be a big deal for bitAssets.

I like the separate bond market, I think this what I was trying earlier to explain (badly) here https://bitsharestalk.org/index.php?topic=7208.msg96447#msg96447 without the bond market that options trading is being done by shorting below the peg, inadvertently damaging the peg and as a result BTSX.

Offline Agent86

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There is no such thing as a decentralized feed... the data fed to the "decentralized" feeds are from centralized sources, and there is a smallish group of people that publish the said "decentralized" feeds. There are two weak links in that chain and it is not decentralized... call is pseudo-decentralized if you must, but it is not ideal and not decentralized in the sense of the true meaning of the word.

On top of there being not enough market depth and liquidity, bitUSD has another underlying factor that is stopping it from reaching parity, and changing the way the decentralized exchange functions will not fix it. That underlying issue is that there is simply not much demand for bitUSD. I would venture to say that a deflationary asset (gold/bitcoin?) with the exact same market system as bitUSD would be closer to its actual value, because then people have more of a reason to want to purchase it rather than hold onto their BTSX.

I think we as a community need to get together and organize projects that will increase the utility of bitUSD, because at the moment you can only buy or sell it and nothing else. I think most people in the Bitshares ecosystem are bullish on BitsharesX, so the demand is just not there. We need to get organized, brainstorm about the best use cases for bitUSD, and then raise funds and build those uses for it. I think things like gateways which would allow bitUSD to be spent anywhere Bitcoin is accepted is a good start, perhaps a multi-pool that pays out in bitUSD, things like this will increase the demand and thus keep bitUSD closer to its real life counterpart.

It is not the market system that is broken, the demand is just not there right now. We need to work on that as a community.
I respectfully disagree... maybe it doesn't feel ideal to you right now or doesn't seem "decentralized enough."  But at the end of the day I think it's the right way to do it and I think people will trust it.

I think it will make the peg really work and that is what makes bitAssets useful.  I also think the bond market I recently proposed could be a big deal for utility of bitAssets.
« Last Edit: August 29, 2014, 10:19:56 pm by Agent86 »

Offline Empirical1

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have you ever played blackjack? when bets are down, cards are dealt, dealer can't say: OOps, there is a slight rule change, 22 beats 21:)

They are not changing the the rules...

https://bitsharestalk.org/index.php?topic=7231.0

Quote
Bottom line, we are going with the most market-based solution first and have fall backs to feed based solutions if they prove necessary

Keeping the peg is the aim, not the rules, the rules are hardcoded into the market engine.

I agree - 'keeping the peg is the aim, not the rules' - therefore if we can make the peg better with different rules, then the rules will be adjusted to help the peg.

You should trade with the expectation we will get very close to the peg imo.

(Edit: Because those were 'the rules' that the initial rules could be changed because keeping the peg is the ultimate outcome.)
« Last Edit: August 29, 2014, 09:54:50 pm by Empirical1 »

Offline yiminh

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have you ever played blackjack? when bets are down, cards are dealt, dealer can't say: OOps, there is a slight rule change, 22 beats 21:)

They are not changing the the rules...

https://bitsharestalk.org/index.php?topic=7231.0

Quote
Bottom line, we are going with the most market-based solution first and have fall backs to feed based solutions if they prove necessary

Keeping the peg is the aim, not the rules, the rules are hardcoded into the market engine.

Offline wesphily

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I know I have more trust in hedging into a decentralized exchange then into a centralized exchange where all my funds can be stolen by hackers. I think that people undervalue security and the skills of hackers. There are very few if any websites that can't be hacked. I really think there are none but there is only one way to prove that so I can't state that as a fact.


EDIT: Once bit(whatever) can be converted to the real version 1:1 we will be in the money.
« Last Edit: August 29, 2014, 09:31:17 pm by wesphily »

Offline bytemaster

The primary utility for BitUSD within our community is hedging against bubbles.
The secondary utility (longer term) is as a means of payment.
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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have you ever played blackjack? when bets are down, cards are dealt, dealer can't say: OOps, there is a slight rule change, 22 beats 21:)

They are not changing the the rules...

https://bitsharestalk.org/index.php?topic=7231.0

Quote
Bottom line, we are going with the most market-based solution first and have fall backs to feed based solutions if they prove necessary

Offline yiminh

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there maybe a lot of ways to keep the peg, you need to give the peg and market a lot of time to prove itself, changed the market engine and hard fork should be the last last resort, if you use AGS BTC buying BTSX again on the open market, we won't have this peg problem:) no rules have to be changed:)

Offline CoinHoarder

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please just make the change that prevents any short that is below the median price feed from being matched...

Any reason not to make the change?

Because then the bitasset ecosystem is not truly decentralized. Isn't that what bitassets are all about in the first place? Accurately determining the price of an asset in a completely decentralized manner?

Give the system time to mature. Many people cannot even access their funds and thus the market because of software bugs. It is a broken experiment thus far that was setup for failure. Give time for the bugs to be fixed, market depth and liquidity to increase, THEN judge whether the experiment was successful or not.
The decentralized feed doesn't change the fact that bitUSD is still decentralized and useful and it doesn't defeat the purpose.  Giving it more time won't help and will decrease confidence.  I'm confident it won't work for reasons that go beyond looking at the price action.  I proposed the feeds because I thought we would need a backstop and I don't know why we switched to moving averages or why everyone hates the feed just on principle.  There's nothing wrong with using a feed and it doesn't violate any important principles.

There is no such thing as a decentralized feed... the data fed to the "decentralized" feeds are from centralized sources, and there is a smallish group of people that publish the said "decentralized" feeds. There are two weak links in that chain and it is not decentralized... call is pseudo-decentralized if you must, but it is not ideal and not decentralized in the sense of the true meaning of the word.

On top of there being not enough market depth and liquidity, bitUSD has another underlying factor that is stopping it from reaching parity, and changing the way the decentralized exchange functions will not fix it. That underlying issue is that there is simply not much demand for bitUSD. I would venture to say that a deflationary asset (gold/bitcoin?) with the exact same market system as bitUSD would be closer to its actual value, because then people have more of a reason to want to purchase it rather than hold onto their BTSX.

I think we as a community need to get together and organize projects that will increase the utility of bitUSD, because at the moment you can only buy or sell it and nothing else. I think most people in the Bitshares ecosystem are bullish on BitsharesX, so the demand is just not there. We need to get organized, brainstorm about the best use cases for bitUSD, and then raise funds and build those uses for it. I think things like gateways which would allow bitUSD to be spent anywhere Bitcoin is accepted is a good start, perhaps a multi-pool that pays out in bitUSD, things like this will increase the demand and thus keep bitUSD closer to its real life counterpart.

It is not the market system that is broken, the demand is just not there right now. We need to work on that as a community.
« Last Edit: August 29, 2014, 09:23:23 pm by CoinHoarder »
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Offline bytemaster

concensus is based on fairness, no fairness, no concensus

Yes.   Fairness is very important.  In this case the goal of BTSX is to engineer a market peg that is as trustless as possible.  The "rules" are if you buy BitUSD then it should eventually be worth $1 and if you short BitUSD you should take your gains and losses accordingly.   

Every "rule change" being proposed is designed to enforce the consensus on BitUSD and reward people who trade accordingly.   

If you are trading BitUSD betting it will go to 0.... then you are betting we will be unable to enforce the rules via markets or price changes.


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 yiminh

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concensus is based on fairness, no fairness, no concensus

Offline yiminh

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have you ever played blackjack? when bets are down, cards are dealt, dealer can't say: OOps, there is a slight rule change, 22 beats 21:)