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Offline bytemaster

BitUSD currently paying more than 1.5% APR
« on: September 30, 2014, 09:55:05 PM »

Based upon the current BitUSD supply and reserve fund BitUSD is paying 1.5% APR on average *IF* no new transactions were made and all BitUSD were held for duration.

Obviously some of that USD is tied up in market orders, some is traded before yield can accumulate, and some yield is claimed before it fully matures leaving more yield for others and it will likely generate more fees before the end of the year.... *so* if BitUSD supply remains constant you can expect more than 1.5% APR.

If BitUSD supply increases then that means the peg is holding and things are trading and you don't have to worry about the PEG much.   



 
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Offline xeroc

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Re: BitUSD currently paying more than 1.5% APR
« Reply #1 on: September 30, 2014, 10:06:53 PM »
+5%
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Offline yellowecho

Re: BitUSD currently paying more than 1.5% APR
« Reply #2 on: September 30, 2014, 11:07:44 PM »
lol 1.5% is more than my checking account !  :-X
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Offline carpet ride

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Re: BitUSD currently paying more than 1.5% APR
« Reply #3 on: September 30, 2014, 11:12:12 PM »
The 100 bitUSD I've been holding for little more than a week has produced a yield that also projects to come in at 1.5% APR

There had been speculation on your part of a 5% (or greater) APR for holding bitAssets.  Is this no longer a likely scenario?
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Offline bytemaster

Re: BitUSD currently paying more than 1.5% APR
« Reply #4 on: September 30, 2014, 11:13:51 PM »
The 100 bitUSD I've been holding for little more than a week has produced a yield that also projects to come in at 1.5% APR

There had been speculation on your part of a 5% (or greater) APR for holding bitAssets.  Is this no longer a likely scenario?

I think it is likely, that speculation was based upon the rate at which fees were accumulating relative to the supply.  I think 1.5% is the floor at the current supply.
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Offline tonyk

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Re: BitUSD currently paying more than 1.5% APR
« Reply #5 on: September 30, 2014, 11:33:22 PM »
The 100 bitUSD I've been holding for little more than a week has produced a yield that also projects to come in at 1.5% APR

There had been speculation on your part of a 5% (or greater) APR for holding bitAssets.  Is this no longer a likely scenario?

Yep, the current system solved 2 non-exiting problems:

- solidify the peg at non-existent demand (provided BM took and continues to take all the losses);

- greatly reduced the yield expectations.


The other great achievement, of the improved market order system : providing better collateralization - I am still patiently waiting explanation on that (A86 is still busy with his day time job, so not anytime soon).  But my guess is something like this "Short time shorts compete to provide liquidity, by providing as much collateral as they could... and then they buy back the bitAsset at 1% gain.... and by doing so, removing any improved collateralization NB The italic is my take on the issue
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline oldman

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Re: BitUSD currently paying more than 1.5% APR
« Reply #6 on: October 01, 2014, 01:30:49 AM »
A lower APR on an asset like bitUSD will facilitate adoption as it seems much less scammy than say 5%.

Folks are conditioned to expect low risk = low return and holding cash/cash equivalents is about as low risk as one can get (if one ignores the current trend of fiat debasement).

I would be very skeptical of anyone offering me 5% to hold USD - what's the catch?

But 1.5% offered by a decentralized bank/exchange without overhead (payroll, bricks) is believable.
« Last Edit: October 01, 2014, 01:32:57 AM by OldMan »

Offline carpet ride

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Re: BitUSD currently paying more than 1.5% APR
« Reply #7 on: October 01, 2014, 01:47:41 AM »

I would be very skeptical of anyone offering me 5% to hold USD - what's the catch?


And that would be my cue to explain DACs. .... after that it's all numbers; 5% is greater than 1.5%, which is greater than 0.25%, no matter how you slice it
« Last Edit: October 01, 2014, 01:50:59 AM by Gonzo »
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Offline bytemaster

Re: BitUSD currently paying more than 1.5% APR
« Reply #8 on: October 01, 2014, 02:34:53 AM »
The 100 bitUSD I've been holding for little more than a week has produced a yield that also projects to come in at 1.5% APR

There had been speculation on your part of a 5% (or greater) APR for holding bitAssets.  Is this no longer a likely scenario?

Yep, the current system solved 2 non-exiting problems:

- solidify the peg at non-existent demand (provided BM took and continues to take all the losses);

- greatly reduced the yield expectations.


The other great achievement, of the improved market order system : providing better collateralization - I am still patiently waiting explanation on that (A86 is still busy with his day time job, so not anytime soon).  But my guess is something like this "Short time shorts compete to provide liquidity, by providing as much collateral as they could... and then they buy back the bitAsset at 1% gain.... and by doing so, removing any improved collateralization NB The italic is my take on the issue

First of all I don't take losses intentionally, I buy the spread based upon confidence in the peg and I do my accounting with USD gains rather than BTSX gains/losses.   I do maintain some USD holdings for various reasons.

You can claim all you want about reducing yield expectations, I am attempting to reduce spread and black swan expectations and I know that there is still buy/sell overlap from long/long that benefits BitUSD as well as all other USD only trades.   I expect yields to be closer to 5% once transaction volumes increase relative to supply. 

I will never intentionally eat losses to prop up a broken system. 
   
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Offline oldman

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Re: BitUSD currently paying more than 1.5% APR
« Reply #9 on: October 01, 2014, 03:03:25 AM »

I would be very skeptical of anyone offering me 5% to hold USD - what's the catch?


And that would be my cue to explain DACs. .... after that it's all numbers; 5% is greater than 1.5%, which is greater than 0.25%, no matter how you slice it

Your explanation of DAC's would be met with skepticism by the vast majority of investors, at least for next few years.

5% yields are expected on relatively high-risk equities/bonds... but not on cash.

I'm not saying the yield should not be 5% or greater - but I am saying that right out of the gate a lower yield is going to present better.

Now, if in a couple years bitAssets gain traction/acceptance and the yield climbs with transaction volume the result would be a spectacular flood of capital seeking low risk and protection from inflation.

Imagine the hordes of boomers that are retiring and need live off of their savings: bitUSD at 5% would be a Godsend!

Offline starspirit

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Re: BitUSD currently paying more than 1.5% APR
« Reply #10 on: October 01, 2014, 10:11:53 PM »
If we could establish a free lending and borrowing market in BitUSD, where borrowers pay interest to lenders, I am very confident that BitUSD longs could then earn much higher rates of interest than this by lending it out when not needed (initially the borrowers would be selling to go short, which although more costly than opening a short directly on BitUSD, is less difficult and has fewer restrictions). I think this would increase demand and confidence in a rate of return generated internally in the market without the need for subsidies.

I now think of BitUSD as like cash in hand. It should not have to earn interest if used for facilitating payments. But as a potentially longer term store of value, I want to be able to 'deposit' my funds and be compensated by those who would like to use the BitUSD.

Offline bytemaster

Re: BitUSD currently paying more than 1.5% APR
« Reply #11 on: October 02, 2014, 08:09:52 PM »
With new short rules that have shorts paying interest... I suspect short demand will push the interest rates well above 5%
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Offline starspirit

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Re: BitUSD currently paying more than 1.5% APR
« Reply #12 on: October 02, 2014, 08:58:36 PM »
Is there a single place to find a summary of all rules that have been implemented, as well as proposals, without having to search the threads? As I don't read here every day, I am admittedly losing track quite often.

Offline joele

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Re: BitUSD currently paying more than 1.5% APR
« Reply #13 on: October 03, 2014, 03:09:45 AM »
With new short rules that have shorts paying interest... I suspect short demand will push the interest rates well above 5%

Does holding shorts has monthly fee?
if yes, how much fee?
if no, why not add monthly fee, this will give more demand to buy bitUSD.

Edit:
Ok, found the answers here http://wiki.bitshares.org/index.php/Bitshares-x-Short
« Last Edit: October 03, 2014, 09:18:15 AM by joele »

 

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