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Offline fussyhands

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How well have bitassets been tracking real assets to date?
« on: September 24, 2014, 12:48:24 PM »

How well have bitassets been tracking real assets to date?  I'm not looking for theory but actual performance.  Are BitUSD, BitBTC, etc., accurately price today?

Offline xeroc

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Re: How well have bitassets been tracking real assets to date?
« Reply #1 on: September 24, 2014, 12:59:31 PM »
This is a first start:
https://bter.com/trade/BITUSD_USD


IMHO the peg is holding very well. Some stats and nice pages with an overview are still missing though ..
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Offline bytemaster

Re: How well have bitassets been tracking real assets to date?
« Reply #2 on: September 24, 2014, 01:05:11 PM »
This is a first start:
https://bter.com/trade/BITUSD_USD


IMHO the peg is holding very well. Some stats and nice pages with an overview are still missing though ..

The fact that the peg is holding without bots to speak of or massive intervention by selfless actors in a low volatility market is a good sign. 

The pegs works well enough that you can use BitUSD to hedge against BTSX falling and make money when BTSX does fall.   

The peg is working despite:
1) buggy client, buggy market, low volume, etc....

Once all of these issues work themselves out it can only improve from here.
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Offline fussyhands

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Re: How well have bitassets been tracking real assets to date?
« Reply #3 on: September 24, 2014, 01:17:52 PM »
That's awesome.  How long have they been going now?  How is BitGold doing?

Also, how frequently is collateral assessed/collected.  It is done every block (every 15 seconds)?  If so, it would seem that the price swing would have to be extremely severe to wipe out the collateral before the position is covered and closed.  That would increase my confidence that this will keep working in the long run...

Offline xeroc

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Re: How well have bitassets been tracking real assets to date?
« Reply #4 on: September 24, 2014, 01:54:18 PM »
That's awesome.  How long have they been going now?  How is BitGold doing?
bitUSD was first .. and is up for some few weeks now
bitCNY was second as is up for 2 or 3 weeks AFAIK
bitBTC is relatively new with just over 2 weeks
and bitGLD will probably soon launch. checkout http://www.bitsharesblocks.com/assets
[/quote]
Quote
Also, how frequently is collateral assessed/collected.  It is done every block (every 15 seconds)?  If so, it would seem that the price swing would have to be extremely severe to wipe out the collateral before the position is covered and closed.  That would increase my confidence that this will keep working in the long run...
market is executed every block .. (10 seconds, btw) .. not sure if there is a 1 block delay though ..
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Offline svk

Re: How well have bitassets been tracking real assets to date?
« Reply #5 on: September 24, 2014, 02:02:10 PM »
How well have bitassets been tracking real assets to date?  I'm not looking for theory but actual performance.  Are BitUSD, BitBTC, etc., accurately price today?

http://bitsharesblocks.com/assets/asset?id=USD

Scroll down to the price history graph, it's got the asset exchange price history as well as the "real price", i.e. the Coinmarketcap weighted average price. I've only got this data for bitUSD, bitBTC and bitCNY, but they're the only open markets atm anyway.
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Offline nedscott

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Re: How well have bitassets been tracking real assets to date?
« Reply #6 on: September 24, 2014, 02:04:21 PM »

That's awesome.  How long have they been going now?  How is BitGold doing?
bitUSD was first .. and is up for some few weeks now
bitCNY was second as is up for 2 or 3 weeks AFAIK
bitBTC is relatively new with just over 2 weeks
and bitGLD will probably soon launch. checkout http://www.bitsharesblocks.com/assets
Quote
Also, how frequently is collateral assessed/collected.  It is done every block (every 15 seconds)?  If so, it would seem that the price swing would have to be extremely severe to wipe out the collateral before the position is covered and closed.  That would increase my confidence that this will keep working in the long run...
market is executed every block .. (10 seconds, btw) .. not sure if there is a 1 block delay though ..
[/quote]

Is the market not executed after 51 delegate signatures, but rather 101 signatures?

If 51 delegates is all that is required, wouldn't market executions occur every 5 seconds?


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Offline xeroc

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Re: How well have bitassets been tracking real assets to date?
« Reply #7 on: September 24, 2014, 02:09:59 PM »

That's awesome.  How long have they been going now?  How is BitGold doing?
bitUSD was first .. and is up for some few weeks now
bitCNY was second as is up for 2 or 3 weeks AFAIK
bitBTC is relatively new with just over 2 weeks
and bitGLD will probably soon launch. checkout http://www.bitsharesblocks.com/assets
Quote
Also, how frequently is collateral assessed/collected.  It is done every block (every 15 seconds)?  If so, it would seem that the price swing would have to be extremely severe to wipe out the collateral before the position is covered and closed.  That would increase my confidence that this will keep working in the long run...
market is executed every block .. (10 seconds, btw) .. not sure if there is a 1 block delay though ..

Is the market not executed after 51 delegate signatures, but rather 101 signatures?

If 51 delegates is all that is required, wouldn't market executions occur every 5 seconds?


Sent from my iPhone using Tapatalk
[/quote]

blocks are generated/signed every 10 seconds .. that is the raster in which operations on the blockchain can operate .. the market operations only require 1 block/signature.

the AVERAGE block time is 5 secs .. that means that you (on average) only need to wait 5 secs until your transaction is in the blockchain ..
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Offline Riverhead

Re: How well have bitassets been tracking real assets to date?
« Reply #8 on: September 24, 2014, 02:28:20 PM »
In practice the transactions seem instantaneous because on average you are only 5 seconds away from the next block.  I have found the experience to be similar to the centralized exchanges where once you confirm your order it appears in the appropriate book within a few seconds.

Offline bitmarket

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Re: How well have bitassets been tracking real assets to date?
« Reply #9 on: September 24, 2014, 02:33:48 PM »
This is a first start:
https://bter.com/trade/BITUSD_USD


IMHO the peg is holding very well. Some stats and nice pages with an overview are still missing though ..

The fact that the peg is holding without bots to speak of or massive intervention by selfless actors in a low volatility market is a good sign. 

The pegs works well enough that you can use BitUSD to hedge against BTSX falling and make money when BTSX does fall.   

The peg is working despite:
1) buggy client, buggy market, low volume, etc....

Once all of these issues work themselves out it can only improve from here.

This is very encouraging.   Did this just "happen" as predicted or did you guys end up doing a bit of "manipulating" as youpreviously discusses to get this done?
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Offline fussyhands

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Re: How well have bitassets been tracking real assets to date?
« Reply #10 on: September 24, 2014, 03:58:32 PM »
How much collateral is required when shorting an asset?  100%?

Does a 10 second update mean that the asset would have to appreciate 100% in less than 10 seconds for there to be an uncovered loss?

It seems like that would virtually never happen for any widely traded asset.

The biggest risk seems like if the price drifts far enough away from the real asset to shake people's confidence.  So if BitUSD gradually drifts down to 80% value of USD, then who would go long?  At that point, people might start to think it's going to zero, and that will be a self fulfilling expectation.

It seems like some kind of instability in the system, or perceived risk could cause the initial wedge between the Bit price and the real price, and once that wedge is established, and people see the price diverging from the real price, they will no longer trust the market to correct to the value of the real asset.  Once they don't believe the market will correct, then they won't take long positions which will make it impossible for the market to correct.


Offline toast

Re: How well have bitassets been tracking real assets to date?
« Reply #11 on: September 24, 2014, 04:02:09 PM »
How much collateral is required when shorting an asset?  100%?

Does a 10 second update mean that the asset would have to appreciate 100% in less than 10 seconds for there to be an uncovered loss?

It seems like that would virtually never happen for any widely traded asset.

The biggest risk seems like if the price drifts far enough away from the real asset to shake people's confidence.  So if BitUSD gradually drifts down to 80% value of USD, then who would go long?  At that point, people might start to think it's going to zero, and that will be a self fulfilling expectation.

It seems like some kind of instability in the system, or perceived risk could cause the initial wedge between the Bit price and the real price, and once that wedge is established, and people see the price diverging from the real price, they will no longer trust the market to correct to the value of the real asset.  Once they don't believe the market will correct, then they won't take long positions which will make it impossible for the market to correct.

You need 200% collateral.

If the price starts falling that is an opportunity for shorts to cover at a profit. There is implicit demand for the bitassets in the form of the backing collateral - if nobody wants to hold BitUSD then there won't be any bitUSD because it will all have been taken out of circulation.
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Offline fussyhands

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Re: How well have bitassets been tracking real assets to date?
« Reply #12 on: September 24, 2014, 04:25:08 PM »
How much collateral is required when shorting an asset?  100%?

Does a 10 second update mean that the asset would have to appreciate 100% in less than 10 seconds for there to be an uncovered loss?

It seems like that would virtually never happen for any widely traded asset.

The biggest risk seems like if the price drifts far enough away from the real asset to shake people's confidence.  So if BitUSD gradually drifts down to 80% value of USD, then who would go long?  At that point, people might start to think it's going to zero, and that will be a self fulfilling expectation.

It seems like some kind of instability in the system, or perceived risk could cause the initial wedge between the Bit price and the real price, and once that wedge is established, and people see the price diverging from the real price, they will no longer trust the market to correct to the value of the real asset.  Once they don't believe the market will correct, then they won't take long positions which will make it impossible for the market to correct.

You need 200% collateral.

So to short you need 100% MORE than the current value of the asset (i.e. 200% total).  So unless the asset appreciates more than 100% in 10 seconds there will not be any uncovered losses, right?

If the price starts falling that is an opportunity for shorts to cover at a profit. There is implicit demand for the bitassets in the form of the backing collateral - if nobody wants to hold BitUSD then there won't be any bitUSD because it will all have been taken out of circulation.

If the price starts falling, that is an opportunity for shorts to cover at a profit.  But suppose the shorts think the price is going to zero.  They won't want to cover at a profit at 80% because they think the market is going to collapse and they can make a much bigger profit at 0%.

Meanwhile, the people who are long have a choice.  They can exit their position at 80%, taking a 20% loss compared to the real asset, or they can hold and hope the market corrects.  If some people exit at 80% that will drive the price further down as they absorb the short sellers looking to cover.  This price decline will further erode confidence.  Now those who are long face the same choice they did a moment ago, but now can only exit at an amount lower than 80%.  A few more given in and close their positions, thinking things don't look good.  The price sinks further.  Finally you have a classic run on the bank where all the long holders have given up on the market correcting the price, and are just trying to get out with some percentage.  What am I missing?

Also, it seems like a well funded short seller could manufacture the initial price differential by simply offering to sell as much of the BitAsset at 80% the price of the real asset as long holders can absorb.  Eventually the longs will run out of buying power/enthusiasm.  Then the price will sit at 80%, people will start to realize the market is not correcting, and the panic selling I described above will start.  What am I missing?



Offline Agent86

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Re: How well have bitassets been tracking real assets to date?
« Reply #13 on: September 24, 2014, 05:01:47 PM »
How much collateral is required when shorting an asset?  100%?

Does a 10 second update mean that the asset would have to appreciate 100% in less than 10 seconds for there to be an uncovered loss?

It seems like that would virtually never happen for any widely traded asset.

The biggest risk seems like if the price drifts far enough away from the real asset to shake people's confidence.  So if BitUSD gradually drifts down to 80% value of USD, then who would go long?  At that point, people might start to think it's going to zero, and that will be a self fulfilling expectation.

It seems like some kind of instability in the system, or perceived risk could cause the initial wedge between the Bit price and the real price, and once that wedge is established, and people see the price diverging from the real price, they will no longer trust the market to correct to the value of the real asset.  Once they don't believe the market will correct, then they won't take long positions which will make it impossible for the market to correct.

You need 200% collateral.

So to short you need 100% MORE than the current value of the asset (i.e. 200% total).  So unless the asset appreciates more than 100% in 10 seconds there will not be any uncovered losses, right?

If the price starts falling that is an opportunity for shorts to cover at a profit. There is implicit demand for the bitassets in the form of the backing collateral - if nobody wants to hold BitUSD then there won't be any bitUSD because it will all have been taken out of circulation.

If the price starts falling, that is an opportunity for shorts to cover at a profit.  But suppose the shorts think the price is going to zero.  They won't want to cover at a profit at 80% because they think the market is going to collapse and they can make a much bigger profit at 0%.

Meanwhile, the people who are long have a choice.  They can exit their position at 80%, taking a 20% loss compared to the real asset, or they can hold and hope the market corrects.  If some people exit at 80% that will drive the price further down as they absorb the short sellers looking to cover.  This price decline will further erode confidence.  Now those who are long face the same choice they did a moment ago, but now can only exit at an amount lower than 80%.  A few more given in and close their positions, thinking things don't look good.  The price sinks further.  Finally you have a classic run on the bank where all the long holders have given up on the market correcting the price, and are just trying to get out with some percentage.  What am I missing?

Also, it seems like a well funded short seller could manufacture the initial price differential by simply offering to sell as much of the BitAsset at 80% the price of the real asset as long holders can absorb.  Eventually the longs will run out of buying power/enthusiasm.  Then the price will sit at 80%, people will start to realize the market is not correcting, and the panic selling I described above will start.  What am I missing?

You are missing a couple things…. The BitUSD holders have a lot of leverage in the "negotiation."  It is much more likely that they can hold out for a fair price from the shorts than that the shorts can hold out until BitUSD holders give it away for no reason.  This is in part because bitUSD is liquid and the shorts are stuck (until they cover they can't get their bitshares and they can't sell them.)  There's no reason for bitUSD holders to sell for nothing… Myself and many others would take it off their hands before they do so; why give it away when the shorts have to buy it back sometime to get their money, they also may be forced to buy it back at a fair price due to a margin call.  The smart shorts will pick up cheap bitUSD as a good chance to cover and try to re-short rather than futilely hoping it goes to zero, and the ones hoping it crashes will just miss the best opportunities they will get to cover at good price.

You are also missing that shorts can't short at 80%.  We use a decentralized price feed to prevent any new shorts from executing at below the real USD/BTSX exchange rate.

Offline fussyhands

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Re: How well have bitassets been tracking real assets to date?
« Reply #14 on: September 24, 2014, 05:20:57 PM »
You are missing a couple things…. The BitUSD holders have a lot of leverage in the "negotiation."  It is much more likely that they can hold out for a fair price from the shorts than that the shorts can hold out until BitUSD holders give it away for no reason.  This is in part because bitUSD is liquid and the shorts are stuck (until they cover they can't get their bitshares and they can't sell them.)  There's no reason for bitUSD holders to sell for nothing… Myself and many others would take it off their hands before they do so; why give it away when the shorts have to buy it back sometime to get their money, they also may be forced to buy it back at a fair price due to a margin call.  The smart shorts will pick up cheap bitUSD as a good chance to cover and try to re-short rather than futilely hoping it goes to zero, and the ones hoping it crashes will just miss the best opportunities they will get to cover at good price.

OK, you are right that there is no reason for a bitUSD holder to sell for nothing, but there may be a reason to sell at a steep discount:  to cut losses.  If they see the price at 80% for a prolonged period of time, that will erode their confidence that the price will recover, rather than drop further.  They can sit around waiting for new bitUSD demand to kick the price up, but where will that demand come from when the price looks so shaky?  You can others like you might buy up some of it, but if it's a manufactured short squeeze you may run out of funds before you move the price.  If its in a downtrend long enough it's going to cause a panic and bankrun.  I'm not getting it yet.

BTW, what is the point of covering and re-shorting?  To reduce the collateral that is tied up in the position?  And how does covering and re-shorting help those who are long?  If you re-short the same number of bitUSD it exerts the same downward price pressure as if you had just held on to your original short, doesn't it?

You are also missing that shorts can't short at 80%.  We use a decentralized price feed to prevent any new shorts from executing at below the real USD/BTSX exchange rate.

Maybe this is the key element that I'm missing.  What is a decentralized price feed?  Where can I read more about that?

 

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