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Offline santaclause102

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2 questions on flash crashes and the unity of bitUSD
« on: October 05, 2014, 02:18:16 PM »

Could you help me with these two questions?

In a flash crash, margins would be called and bitUSD holders would end up with btsx worth of their bitusd. They would only be hurt when btsx falls furter after the margin was called. Is that correct? Because I often hear BitUSd could be uncovered in a flash crash. That (to my understanding) would only be possible if the flash crash happens so fast that the system can not automatically call the margin, that would be 1 block / 10 seconds?

Also, are there BitUSDs with different margin call limits floating around in the market because those bitUSD where shorted into existence at different BTSX prices?

Offline bytemaster

Re: 2 questions on flash crashes and the unity of bitUSD
« Reply #1 on: October 05, 2014, 03:27:32 PM »
All bitusd is fungible and can never be called. 
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Offline santaclause102

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Re: 2 questions on flash crashes and the unity of bitUSD
« Reply #2 on: October 05, 2014, 07:01:13 PM »
Hmmm. Here is how it made it into my head: I short bitusd, -> I give up 3x the value of bitusd in btsx -> now btsx falls in price by 66% compared to usd -> margin call = the person that holds the bitusd that I shorted into existence gets btsx worth of his bitusd. Where is my mistake (i guess with the last bit)?

Offline toast

Re: 2 questions on flash crashes and the unity of bitUSD
« Reply #3 on: October 05, 2014, 07:09:13 PM »
The engine buys usd off the market instead of taking "his/your" usd.

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Offline santaclause102

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Re: 2 questions on flash crashes and the unity of bitUSD
« Reply #4 on: October 05, 2014, 07:15:35 PM »
The engine buys usd off the market instead of taking "his/your" usd.

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thought of that... ok, so it goes like this: margin call = the bitusd i shorted into existence is destroyed but with the collateral, which is now worth the amount of bitusd I shorted into existence,  the engine buys bitusd and gives it the the person who's bitusd were destroyed. Then I don't have anything anymore and the bitusd holder efectively keeps his bitusd. Is that right now?
« Last Edit: October 05, 2014, 07:17:57 PM by delulo »

Offline santaclause102

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Re: 2 questions on flash crashes and the unity of bitUSD
« Reply #5 on: October 08, 2014, 04:03:03 PM »
The engine buys usd off the market instead of taking "his/your" usd.

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thought of that... ok, so it goes like this: margin call = the bitusd i shorted into existence is destroyed but with the collateral, which is now worth the amount of bitusd I shorted into existence, the engine buys bitusd and gives it the the person who's bitusd were destroyed. Then I don't have anything anymore and the bitusd holder efectively keeps his bitusd. Is that right now?

Is that fully correct? And why would bitUSD then be uncovered partly if btsx prices drop too fast? what does it depend on whether bitusd become partly uncovered?

Scenario: Initial value of my collateral when bitusd are shorted into existence: 2x the value of the bitusd created -> at which value ratio of collateral to bitusd is the margin called? 

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Re: 2 questions on flash crashes and the unity of bitUSD
« Reply #6 on: October 08, 2014, 04:06:29 PM »
Is that fully correct? And why would bitUSD then be uncovered partly if btsx prices drop too fast? what does it depend on whether bitusd become partly uncovered?

Scenario: Initial value of my collateral when bitusd are shorted into existence: 2x the value of the bitusd created -> at which value ratio of collateral to bitusd is the margin called?
That happens when you collateral is insufficient to buy back all bitUSD you borrowed from the network!
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Offline santaclause102

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Re: 2 questions on flash crashes and the unity of bitUSD
« Reply #7 on: October 08, 2014, 04:24:02 PM »
Is that fully correct? And why would bitUSD then be uncovered partly if btsx prices drop too fast? what does it depend on whether bitusd become partly uncovered?

Scenario: Initial value of my collateral when bitusd are shorted into existence: 2x the value of the bitusd created -> at which value ratio of collateral to bitusd is the margin called?
That happens when you collateral is insufficient to buy back all bitUSD you borrowed from the network!
but isn't the margin called (automated buy back of bitusd) as soon as the collateral is below is certain ratio of collateral value/bitusd value? to me it seems that this would only be a problem when there are not enough bitusd sell offers in the market to buy the bitusd back.

 

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