Author Topic: Proposal - Significant Enhancement to Market Engine  (Read 24889 times)

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Xeldal

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Is this all backwards?  Shouldn't the feed be below the shorts?   Feed <= 100 BTSX per USD

Offline bytemaster

Quote
I do not agree with people here saying that is easy/comprehendible explanation or with A86 saying it is uncomplicated explanations....
Show me the order book for the following orders (all orders above the feed price):

Sell @ 100;
Short @ 101 2x collateral;
Sell @ 101.1;
Short  102 4x collateral;
Sell @ 103

This is also the order those will appear in normal order book... From your explanation at least 3 variant of ordering are possible.

First of all your order book is lacking units so I don't know what you are selling / buying / etc ... but I will add some units here:

Code: [Select]
Sell USD @ 100 BTSX per USD;
Short Sell USD @ 101 BTSX per USD (min)  with 202 BTSX per USD collateral  (2x collateral);
Sell USD @ 101.1 BTSX per USD;
Short  Sell USD @ 102 BTSX per USD (min) with 408 BTSX per USD collateral (4x collateral);
FEED PRICE 102.5 BTSX per USD
Sell USD @ 103 BTSX per USD

You claim that all orders are "valid" according to the feed which means the feed is >= 102.. so we will call the feed 102.5 BTSX per USD

Given this ordering you have an effective order book of:

Code: [Select]
Sell USD @ 100 BTSX per USD;
Sell USD @ 101.1 BTSX per USD;
FEED PRICE 102.5 BTSX per USD
    Short Sell USD @ 102 BTSX per USD (min) with 408 BTSX per USD collateral (4x collateral);
    Short Sell USD @ 101 BTSX per USD (min)  with 202 BTSX per USD collateral  (2x collateral);
Sell USD @ 103 BTSX per USD

All short sell orders with the min limit below the feed execute *at the feed price* prioritized by collateral.

If the feed price were moved to 101.5 then the effective order book would be:
Quote
Sell USD @ 100 BTSX per USD;
Sell USD @ 101.1 BTSX per USD;
FEED PRICE 101.5 BTSX per USD
    Short Sell USD @ 102 BTSX per USD (min) with 408 BTSX per USD collateral (4x collateral);
    Short Sell USD @ 101 BTSX per USD (min)  with 202 BTSX per USD collateral  (2x collateral);
Sell USD @ 103 BTSX per USD


« Last Edit: September 18, 2014, 05:45:24 pm by bytemaster »
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Offline tonyk

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the bUSD buy order determines the price

I do not agree with people here saying that is easy/comprehendible explanation or with A86 saying it is uncomplicated explanations....
Show me the order book for the following orders (all orders above the feed price):

Sell @ 100;
Short @ 101 2x collateral;
Sell @ 101.1;
Short  102 4x collateral;
Sell @ 103

This is also the order those will appear in normal order book... From your explanation at least 3 variant of ordering are possible.

They can show up just like this as in a normal order book.  When you buy bitUSD you pay exactly the price you offered to buy at, therefore it really doesn't matter to you what specific sell or short you were matched with.

Assuming all of the above orders are for 1 bitUSD. If one places a buy order for 2 bitUSD @101 which will be the orders filled? What about if the buy order is @ 101.1?
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline Agent86

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the bUSD buy order determines the price

I do not agree with people here saying that is easy/comprehendible explanation or with A86 saying it is uncomplicated explanations....
Show me the order book for the following orders (all orders above the feed price):

Sell @ 100;
Short @ 101 2x collateral;
Sell @ 101.1;
Short  102 4x collateral;
Sell @ 103

This is also the order those will appear in normal order book... From your explanation at least 3 variant of ordering are possible.

They can show up just like this as in a normal order book.  When you buy bitUSD you pay exactly the price you offered to buy at, therefore it really doesn't matter to you what specific sell or short you were matched with.
« Last Edit: September 18, 2014, 05:39:26 pm by Agent86 »

Offline oldman

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It has taken 5 years for BTC to begin to be accepted at a very limited number of places. BTSX and bitUSD are on a faster track than BTC was. Give it a couple years. Once merchants realize that the earned interest will offset transaction and clearing fees, bitUSD will be widely accepted.

This cannot be understated.

Offline tonyk

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I haven't had a chance to post, but here is a shorthand for basic rules I was going to post earlier, the exact implementation may be slightly different, but this is the principle:

When orders are matched and there is a spread the order is executed giving the max BTSX per bUSD (the bUSD seller gets the advantage of any spread rather than the network).  Standard sell orders are always prioritized above shorts and are matched by price priority.  All eligible shorts are matched with buy orders prioritized by collateral rather than price (the bUSD buy order determines the price).

A short is eligible to be matched if
   1) it offers the bitUSD for sale at a price lower than the buy bUSD order
   2) buy order must be above the median price feed.
   3) Short must contain at least 2x collateral at the order execution price

I don't think these rules are particularly complicated and most people buying/selling bitUSD will just see a standard order book they are familiar with.

Interest rates are not needed for the peg to hold.  Interest rates are useful as a separate implementation in the form of a bond market.  I'm confident we will be happy and see that it works and it can be demonstrated in practice.

Understanding the role of the price feed:
The price feed does not make anybody do anything.  Any time someone places or executes an order to buy, sell, or short a bitAsset they do so at the price they have voluntarily agreed to.  The price feed can't make you buy sell or short at a price you didn't agree to.  None of the changes make the price feed into some ultra-critical thing that has to be super precise.

Generally the price feed's role is only to limit what people can do: You are not permitted to print undervalued bUSD.

I do not agree with people here saying that is easy/comprehendible explanation or with A86 saying it is uncomplicated explanations....
Show me the order book for the following orders (all orders above the feed price):

Sell @ 100;
Short @ 101 2x collateral;
Sell @ 101.1;
Short  102 4x collateral;
Sell @ 103

This is also the order those will appear in normal order book... From your explanation at least 3 variant of ordering are possible.
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline Method-X

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Quote from: skyscraperfarms
It has taken 5 years for BTC to begin to be accepted at a very limited number of places. BTSX and bitUSD are on a faster track than BTC was. Give it a couple years. Once merchants realize that the earned interest will offset transaction and clearing fees, bitUSD will be widely accepted.

Not to mention the fact that it's almost trivial for BitPay and others to allow other cryptos. The infrastructure has already been laid by BTC. With a few modifications, BitUSD can be accepted everywhere Bitcoin is.

Offline GaltReport

I haven't had a chance to post, but here is a shorthand for basic rules I was going to post earlier, the exact implementation may be slightly different, but this is the principle:

When orders are matched and there is a spread the order is executed giving the max BTSX per bUSD (the bUSD seller gets the advantage of any spread rather than the network).  Standard sell orders are always prioritized above shorts and are matched by price priority.  All eligible shorts are matched with buy orders prioritized by collateral rather than price (the bUSD buy order determines the price).

A short is eligible to be matched if
   1) it offers the bitUSD for sale at a price lower than the buy bUSD order
   2) buy order must be above the median price feed.
   3) Short must contain at least 2x collateral at the order execution price

I don't think these rules are particularly complicated and most people buying/selling bitUSD will just see a standard order book they are familiar with.

Interest rates are not needed for the peg to hold.  Interest rates are useful as a separate implementation in the form of a bond market. I'm confident we will be happy and see that it works and it can be demonstrated in practice.

Understanding the role of the price feed:
The price feed does not make anybody do anything.  Any time someone places or executes an order to buy, sell, or short a bitAsset they do so at the price they have voluntarily agreed to.  The price feed can't make you buy sell or short at a price you didn't agree to.  None of the changes make the price feed into some ultra-critical thing that has to be super precise.

Generally the price feed's role is only to limit what people can do: You are not permitted to print undervalued bUSD.

Thanks, this is a bit easier explanation. I do hope that the gui will be updated so that it visually makes sense to user...what they see and/or don't see makes sense without having to review all the forum posts.

Ggozzo

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I still can't grasp how is bitusd any better than dollars in my hand if I can't use it in commerce.

I am pretty sure the same thing was said about credit cards, debit cards, BTC and every other alternative to fiat currency in the begining.

In hindsight, had you been with BTC in March 2009, would you be asking the same questions about merchants and commerce? Probably. Look at BTC now.

It has taken 5 years for BTC to begin to be accepted at a very limited number of places. BTSX and bitUSD are on a faster track than BTC was. Give it a couple years. Once merchants realize that the earned interest will offset transaction and clearing fees, bitUSD will be widely accepted.

Offline Agent86

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I got a little confused so I'll ask exactly what I'm interested in:
Will there be minimum required short collateral?
I believe minimum required short collateral is 2x with margin call at 1.5x

Offline emski

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I got a little confused so I'll ask exactly what I'm interested in:
Will there be minimum required short collateral?

Offline Agent86

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I haven't had a chance to post, but here is a shorthand for basic rules I was going to post earlier, the exact implementation may be slightly different, but this is the principle:

When orders are matched and there is a spread the order is executed giving the max BTSX per bUSD (the bUSD seller gets the advantage of any spread rather than the network).  Standard sell orders are always prioritized above shorts and are matched by price priority.  All eligible shorts are matched with buy orders prioritized by collateral rather than price (the bUSD buy order determines the price).

A short is eligible to be matched if
   1) it offers the bitUSD for sale at a price lower than the buy bUSD order
   2) buy order must be above the median price feed.
   3) Short must contain at least 2x collateral at the order execution price

I don't think these rules are particularly complicated and most people buying/selling bitUSD will just see a standard order book they are familiar with.

Interest rates are not needed for the peg to hold.  Interest rates are useful as a separate implementation in the form of a bond market. I'm confident we will be happy and see that it works and it can be demonstrated in practice.

Understanding the role of the price feed:
The price feed does not make anybody do anything.  Any time someone places or executes an order to buy, sell, or short a bitAsset they do so at the price they have voluntarily agreed to.  The price feed can't make you buy sell or short at a price you didn't agree to.  None of the changes make the price feed into some ultra-critical thing that has to be super precise.

Generally the price feed's role is only to limit what people can do: You are not permitted to print undervalued bUSD.

Offline Riverhead

Dollars in my pocket can't be seized too

You plan to carry a suitcase stuffed with cash around? :) . True your walk-about cash is safe but the hundreds of thousands or millions in the bank...not so much.

I was working independently on another form of bitassets for quite a long time and arrived at different system - then I found bitsharesx. I believe you could adopt my system of  issuing assets and get much better results in terms of maintaining 1:1 peg especially in first stages of adoption, where there is very limited liquidity. Are there any bounties for providing better peg enforcing mechanism?

That's a question for Bytemaster however he always seems open to discussing ideas about better ways to stabilize the peg.

Offline aaaxn

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Hi Aaaxn, welcome to the forum!

1) BitUSD has some utility. Namely:
  • It earns a reward or dividend (see 2 below)
  • It can't be seized or frozen by another party
  • It can be used to buy other assets
2) The interest isn't minting funds like other Proof of Stake assets. It is profit sharing of the fees collected by the blockchain. Instead of the fees going to miners they go to asset holders. It's more dividend than anything else.
Thanks. Nice to be around. I still can't grasp how is bitusd any better than dollars in my hand if I can't use it in commerce. As for your list:
Dollars in my pocket can't be seized too and I can buy far more assets for them. BitUSD is also illiquid and does not follow peg all the time. As for reward it is somewhat circular, because there will only be reward if people do trade BitUSD, but they won't do it unless it has utility and/or pays reward :) And isn't paying people for holding bitUSD a form of admitting they have no utility, so you need to pay people for holding them?

I was working independently on another form of bitassets for quite a long time and arrived at different system - then I found bitsharesx. I believe you could adopt my system of  issuing assets and get much better results in terms of maintaining 1:1 peg especially in first stages of adoption, where there is very limited liquidity. Are there any bounties for providing better peg enforcing mechanism?

Offline Riverhead

Demand for BitUSD is not under control of bitshares and depend only on utility of BitUsd. If there is nothing productive you can do with bitusd why would anyone exchange real usd to bitusd? You can offer interest, but then why would anyone want to provide this interest?

Hi Aaaxn, welcome to the forum!

1) BitUSD has some utility. Namely:
  • It earns a reward or dividend (see 2 below)
  • It can't be seized or frozen by another party
  • It can be used to buy other assets
2) The interest isn't minting funds like other Proof of Stake assets. It is profit sharing of the fees collected by the blockchain. Instead of the fees going to miners they go to asset holders. It's more dividend than anything else.