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Offline nikauforest

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USD:BTSX Market Peg
« on: September 01, 2014, 01:01:01 AM »

I know this has been discussed quite a bit.

In theory won't the market peg work better as more users come on board? ( smaller spreads)  Are the rules imposed on trading really necessary? Why net let the market be free to decide?

 

Offline liondani

Re: USD:BTSX Market Peg
« Reply #1 on: September 01, 2014, 01:04:55 AM »
You are right if you ask me. They are only messures for the first days I guess where the market depth is very thin, just in case... I bet it will change very soon.
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Offline Riverhead

Re: USD:BTSX Market Peg
« Reply #2 on: September 01, 2014, 02:25:39 AM »
Nice thing about a DAC is that it isn't one size fits all. If you have a better, or even different, rule set that you think will garner like minded customers you can fork it. By following the social contract for AGS/PTS distribution you're guaranteed a lot of users on day 1.

Offline theoretical

Re: USD:BTSX Market Peg
« Reply #3 on: September 01, 2014, 02:44:53 AM »

In theory won't the market peg work better as more users come on board?

In theory won't users avoid BitUSD if the peg doesn't work?
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Offline starspirit

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Re: USD:BTSX Market Peg
« Reply #4 on: September 01, 2014, 02:45:49 AM »
We all want a free market to establish itself. The problem with market limits and interventions is that they prevent the key thing market participants demand - liquidity. And this ultimately stains the market and prevents its future growth more than does volatility. I believe the price should float freely.

So what if its a bit chaotic for a while and looks like a casino. That will attract more users, who will come in with more strategies to take advantage of the initial distortions and that ultimately will lead to more normalised price behaviour. Remember the early days of BTC? Now its volatility is naturally decreasing, which over time increases its utility to merchants and customers, increasing usage in a positive feedback cycle. I think constantly shutting this market down just reduces user growth and impedes this cycle.

Having said that, I think the peg would ultimately be better behaved if the underlying collateral could be more mature and independent of the platform itself. As it stands, instability can arise if BitUSD peg is distorted, lowering confidence and BTSX prices, reducing liquidity and distorting the peg further. It will be interesting to see what variations on the current collateral structure are possible.

 

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