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the system never owns bitUSD because the very moment it creates them, it lends them to you so at no point in time it has the opportunity to own them)
Quote from: jakub on December 07, 2015, 11:38:17 pmQuote from: Helikopterben on December 07, 2015, 09:42:07 pmYou are not borrowing bts from the system. You are borrowing bts from yourself because you are the owner of that bts being used as collateral. The system itself does not own any bts.It's bitUSD (not BTS) that's being borrowed.The system does not own bitUSD. I cannot borrow an asset that no one or no thing owns.
Quote from: Helikopterben on December 07, 2015, 09:42:07 pmYou are not borrowing bts from the system. You are borrowing bts from yourself because you are the owner of that bts being used as collateral. The system itself does not own any bts.It's bitUSD (not BTS) that's being borrowed.
You are not borrowing bts from the system. You are borrowing bts from yourself because you are the owner of that bts being used as collateral. The system itself does not own any bts.
Quote from: Helikopterben on December 07, 2015, 06:35:02 pmI lent it on the network and charged a premium for that service. What?? What premium are you talking about? You paid a fee. You will pay the fee one more time when you terminate your debt.
I lent it on the network and charged a premium for that service.
Quote from: yvv on December 07, 2015, 06:01:18 pmDid you try to do exercise which I suggested? Just go and press the damn button, then check your account overview.I have created usd, cny, gold, silver, and bitcoin, but I did not borrow it.
Did you try to do exercise which I suggested? Just go and press the damn button, then check your account overview.
In this case you borrow one type of money (i.e. bitUSD) against a collateral in the form of another type of money (i.e. BTS).So one might say there is no premium or interest rate involved because the size of the collateral itself is enough to compensate the lender (i.e. the system) for their risk.
Lending to yourself and borrowing from yourself - this concept does not make sense.
It's similar to borrowing money from a bank at zero interest and keeping this borrowed money safely in a bank account of the same bank.
Quote from: Helikopterben on December 07, 2015, 06:54:54 pmSo what premium or interest rate does the system charge for this loan? Borrowers usually pay a premium or interest rate for borrowing money. Its more like lending to yourself and borrowing from yourself at the same time, instead of the system. As I said before, maybe lender is not the correct term to use. The smartcoin creator is more like an options seller.In this case you borrow one type of money (i.e. bitUSD) against a collateral in the form of another type of money (i.e. BTS).So one might say there is no premium or interest rate involved because the size of the collateral itself is enough to compensate the lender (i.e. the system) for their risk.Lending to yourself and borrowing from yourself - this concept does not make sense. Similarly you cannot sell something to yourself or buy something from yourself.In our case you borrow something (i.e. bitUSD) from the system and as long as you remain in control of this borrowed thing, you are not exposed to any risk (and any profit).It's similar to borrowing money from a bank at zero interest and keeping this borrowed money safely in a bank account of the same bank.Theoretically you have a debt but still your financial situation is not affected in any way as long as you do nothing with this borrowed money.
So what premium or interest rate does the system charge for this loan? Borrowers usually pay a premium or interest rate for borrowing money. Its more like lending to yourself and borrowing from yourself at the same time, instead of the system. As I said before, maybe lender is not the correct term to use. The smartcoin creator is more like an options seller.
yvv is right. Short position holder borrows bitUSD from the system and one day s/he will have to return these bitUSD. S/he can do it voluntarily (by buying back bitUSD from the market) or involuntarily (by being margin called or forced settled).
I don't think the short seller is a lender/borrower. The current BitAssets are bit like a contract for difference so it's just a market that matches buyers and sellers. If the shorts were extremely bullish they'd be wiling to pay a premium to longs to take the other side of the contract and vice versa. I don't know though.
Quote from: Helikopterben on December 07, 2015, 05:37:38 pmWrong answer. I will give you the correct answer. The short seller is a lender, not a borrower.You get it 180 degree wrong. Go to bitshares.openledger.info then "Trade" tab and press "Borrow USD" button. See what happens.
Wrong answer. I will give you the correct answer. The short seller is a lender, not a borrower.
I don't think the short seller is a lender/borrower. The current BitAssets are bit like a contract for difference so it's just a market that matches buyers and sellers.
If the shorts were extremely bullish they'd be wiling to pay a premium to longs to take the other side of the contract and vice versa. I don't know though.
Quote from: fuzzy on December 07, 2015, 05:17:44 pmOpinions and facts must be tested. How are the alternatives being tested?I tend to agree with proposal to test bitAssets which pay premium or interest to holders. Setting positive interest would motivate holders and demotivate borrowers, increasing demand and reducing supply which would push the price up. Setting negative interest would reduce demand and increase supply which would push the price down. This could give an efficient way to keep the asset close to peg.
Opinions and facts must be tested. How are the alternatives being tested?
Quote from: yvv on December 07, 2015, 05:48:49 pmQuote from: Helikopterben on December 07, 2015, 05:37:38 pmWrong answer. I will give you the correct answer. The short seller is a lender, not a borrower.You get it 180 degree wrong. Go to bitshares.openledger.info then "Trade" tab and press "Borrow USD" button. See what happens.That "borrow USD" button should say "loan USD". Actually it should say "create USD." That would be more correct terminology.
Edit: If I buy a house and go to the bank for a loan, I am not required to put a 200% down payment toward the loan as the borrower. Same logic applies.
Quote from: Helikopterben on December 07, 2015, 05:00:34 pmQuote from: yvv on December 07, 2015, 04:41:07 pmQuote from: Helikopterben on December 07, 2015, 04:12:51 pmQuote from: yvv on December 07, 2015, 01:55:01 pmQuote from: Helikopterben on December 07, 2015, 02:53:14 amFirst, we need to understand the roll of the short seller. The short seller is a lender that provides a service to the network by lending bts to borrowers in the form of smartcoins. Lenders do not lend money for free so they will either charge interest or charge a premium. Otherwise, the risk/reward doesn't work. For example, if I lend 1 usd into existence at a rate of 300 bts/usd with 2x collateral of 600bts, then my risk of loss is 100% of outlay (with a 50% drop in price) while my potential gains are only 50% of outlay. It just does not make sense to enter this agreement unless I charge a fee to compensate for the added risk.The short seller is a borrower, not a lender. You borrow bitUSD to provide them to the market. Those who buy these bitUSD are the lenders.If that is correct, then why do short sellers not PAY premium to smartcoin buyers? Borrowers almost always pay either premium or interest to lenders. By your logic, the short seller should pay premium to the buyer.Short sellers should not pay any premiums, they are already fucked up enough for borrowing bitAssets. Why do you want them to be fucked up even more?I asked you a question that you failed to answer. I will ask the question again. Why do short sellers not pay a premium if they are borrowers?Because this is how the devs made the bitshares. You don't have to pay a premium for a loan, but you have to keep 200% collateral instead. You are asking trivial questions.
Quote from: yvv on December 07, 2015, 04:41:07 pmQuote from: Helikopterben on December 07, 2015, 04:12:51 pmQuote from: yvv on December 07, 2015, 01:55:01 pmQuote from: Helikopterben on December 07, 2015, 02:53:14 amFirst, we need to understand the roll of the short seller. The short seller is a lender that provides a service to the network by lending bts to borrowers in the form of smartcoins. Lenders do not lend money for free so they will either charge interest or charge a premium. Otherwise, the risk/reward doesn't work. For example, if I lend 1 usd into existence at a rate of 300 bts/usd with 2x collateral of 600bts, then my risk of loss is 100% of outlay (with a 50% drop in price) while my potential gains are only 50% of outlay. It just does not make sense to enter this agreement unless I charge a fee to compensate for the added risk.The short seller is a borrower, not a lender. You borrow bitUSD to provide them to the market. Those who buy these bitUSD are the lenders.If that is correct, then why do short sellers not PAY premium to smartcoin buyers? Borrowers almost always pay either premium or interest to lenders. By your logic, the short seller should pay premium to the buyer.Short sellers should not pay any premiums, they are already fucked up enough for borrowing bitAssets. Why do you want them to be fucked up even more?I asked you a question that you failed to answer. I will ask the question again. Why do short sellers not pay a premium if they are borrowers?
Quote from: Helikopterben on December 07, 2015, 04:12:51 pmQuote from: yvv on December 07, 2015, 01:55:01 pmQuote from: Helikopterben on December 07, 2015, 02:53:14 amFirst, we need to understand the roll of the short seller. The short seller is a lender that provides a service to the network by lending bts to borrowers in the form of smartcoins. Lenders do not lend money for free so they will either charge interest or charge a premium. Otherwise, the risk/reward doesn't work. For example, if I lend 1 usd into existence at a rate of 300 bts/usd with 2x collateral of 600bts, then my risk of loss is 100% of outlay (with a 50% drop in price) while my potential gains are only 50% of outlay. It just does not make sense to enter this agreement unless I charge a fee to compensate for the added risk.The short seller is a borrower, not a lender. You borrow bitUSD to provide them to the market. Those who buy these bitUSD are the lenders.If that is correct, then why do short sellers not PAY premium to smartcoin buyers? Borrowers almost always pay either premium or interest to lenders. By your logic, the short seller should pay premium to the buyer.Short sellers should not pay any premiums, they are already fucked up enough for borrowing bitAssets. Why do you want them to be fucked up even more?
Quote from: yvv on December 07, 2015, 01:55:01 pmQuote from: Helikopterben on December 07, 2015, 02:53:14 amFirst, we need to understand the roll of the short seller. The short seller is a lender that provides a service to the network by lending bts to borrowers in the form of smartcoins. Lenders do not lend money for free so they will either charge interest or charge a premium. Otherwise, the risk/reward doesn't work. For example, if I lend 1 usd into existence at a rate of 300 bts/usd with 2x collateral of 600bts, then my risk of loss is 100% of outlay (with a 50% drop in price) while my potential gains are only 50% of outlay. It just does not make sense to enter this agreement unless I charge a fee to compensate for the added risk.The short seller is a borrower, not a lender. You borrow bitUSD to provide them to the market. Those who buy these bitUSD are the lenders.If that is correct, then why do short sellers not PAY premium to smartcoin buyers? Borrowers almost always pay either premium or interest to lenders. By your logic, the short seller should pay premium to the buyer.
Quote from: Helikopterben on December 07, 2015, 02:53:14 amFirst, we need to understand the roll of the short seller. The short seller is a lender that provides a service to the network by lending bts to borrowers in the form of smartcoins. Lenders do not lend money for free so they will either charge interest or charge a premium. Otherwise, the risk/reward doesn't work. For example, if I lend 1 usd into existence at a rate of 300 bts/usd with 2x collateral of 600bts, then my risk of loss is 100% of outlay (with a 50% drop in price) while my potential gains are only 50% of outlay. It just does not make sense to enter this agreement unless I charge a fee to compensate for the added risk.The short seller is a borrower, not a lender. You borrow bitUSD to provide them to the market. Those who buy these bitUSD are the lenders.
First, we need to understand the roll of the short seller. The short seller is a lender that provides a service to the network by lending bts to borrowers in the form of smartcoins. Lenders do not lend money for free so they will either charge interest or charge a premium. Otherwise, the risk/reward doesn't work. For example, if I lend 1 usd into existence at a rate of 300 bts/usd with 2x collateral of 600bts, then my risk of loss is 100% of outlay (with a 50% drop in price) while my potential gains are only 50% of outlay. It just does not make sense to enter this agreement unless I charge a fee to compensate for the added risk.
Quote from: Helikopterben on December 07, 2015, 05:00:34 pmQuote from: yvv on December 07, 2015, 04:41:07 pmQuote from: Helikopterben on December 07, 2015, 04:12:51 pmQuote from: yvv on December 07, 2015, 01:55:01 pmQuote from: Helikopterben on December 07, 2015, 02:53:14 amFirst, we need to understand the roll of the short seller. The short seller is a lender that provides a service to the network by lending bts to borrowers in the form of smartcoins. Lenders do not lend money for free so they will either charge interest or charge a premium. Otherwise, the risk/reward doesn't work. For example, if I lend 1 usd into existence at a rate of 300 bts/usd with 2x collateral of 600bts, then my risk of loss is 100% of outlay (with a 50% drop in price) while my potential gains are only 50% of outlay. It just does not make sense to enter this agreement unless I charge a fee to compensate for the added risk.The short seller is a borrower, not a lender. You borrow bitUSD to provide them to the market. Those who buy these bitUSD are the lenders.If that is correct, then why do short sellers not PAY premium to smartcoin buyers? Borrowers almost always pay either premium or interest to lenders. By your logic, the short seller should pay premium to the buyer.Short sellers should not pay any premiums, they are already fucked up enough for borrowing bitAssets. Why do you want them to be fucked up even more?I asked you a question that you failed to answer. I will ask the question again. Why do short sellers not pay a premium if they are borrowers?Because this is how the devs made the bitshares. You don't have to pay the premium for the loan, but you have to keep 200% collateral instead. You are asking trivial questions.
Quote from: yvv on December 07, 2015, 04:41:07 pmQuote from: Helikopterben on December 07, 2015, 04:12:51 pmQuote from: yvv on December 07, 2015, 01:55:01 pmQuote from: Helikopterben on December 07, 2015, 02:53:14 amFirst, we need to understand the roll of the short seller. The short seller is a lender that provides a service to the network by lending bts to borrowers in the form of smartcoins. Lenders do not lend money for free so they will either charge interest or charge a premium. Otherwise, the risk/reward doesn't work. For example, if I lend 1 usd into existence at a rate of 300 bts/usd with 2x collateral of 600bts, then my risk of loss is 100% of outlay (with a 50% drop in price) while my potential gains are only 50% of outlay. It just does not make sense to enter this agreement unless I charge a fee to compensate for the added risk.The short seller is a borrower, not a lender. You borrow bitUSD to provide them to the market. Those who buy these bitUSD are the lenders.If that is correct, then why do short sellers not PAY premium to smartcoin buyers? Borrowers almost always pay either premium or interest to lenders. By your logic, the short seller should pay premium to the buyer.Short sellers should not pay any premiums, they are already fucked up enough for borrowing bitAssets. Why do you want them to be fucked up even more?I see alot of disagreements here. Why not test your opinions in the market by having a smartcoin competition that awards something like a month's worth of worker proposal wages after x months to the smartcoin that best maintains the peg?Seems to me the best way to go about this while being productive...
Quote from: Helikopterben on December 07, 2015, 02:53:14 amI don't think we will be able to get smartcoins to trade at parity with the current design, which is perfectly fine because I think the current design is the best design, possibly with a few tweaks and feature adds. I think removing forced settlement should enable prices to range around parity, just like Nubits. (Not making any comments on the rest of Nubits design, only that at least they are trying for 1:1)
I don't think we will be able to get smartcoins to trade at parity with the current design, which is perfectly fine because I think the current design is the best design, possibly with a few tweaks and feature adds.
Quote from: Helikopterben on December 07, 2015, 02:53:14 amFirst, we need to understand the roll of the short seller. The short seller is a lender that provides a service to the network by lending bts to borrowers in the form of smartcoins. Lenders do not lend money for free so they will either charge interest or charge a premium. Otherwise, the risk/reward doesn't work. For example, if I lend 1 usd into existence at a rate of 300 bts/usd with 2x collateral of 600bts, then my risk of loss is 100% of outlay (with a 50% drop in price) while my potential gains are only 50% of outlay. It just does not make sense to enter this agreement unless I charge a fee to compensate for the added risk. Not sure I follow you here. The short gets leverage by shorting bitUSD. I'm not sure why you are explaining it in terms of the short as lender. The short actually creates a debt into the system so the short should be a borrower of 1 bitUSD in your example. The short's BTS collateral is necessary to make sure the 1 bitUSD debt is paid back in full. I assume the system adds the bitUSD buyer's BTS into the collateral pool such that both long and short have collateral for each bitUSD.
In the current design shorts put twice the collateral, but I don't think that's necessary and I assume can easily be changed. If the short only had to put 300bts in the scenario and the long had to put 300bts you would have 600bts collateral when a trade is executed (200% collateral overall). A loss of 50% of BTS against USD would trigger a black swan so to be safe the system can just trigger margin-calls at 75% of initial collateral. That's very safe esp since price feeds update every hour.
I just want to run one hypothetical example of the current system if a bitUSD trade is executed at the price feed: Feed price is: .00345606 USD/BTS (289.3468 BTS/USD)Collateral is 675 BTS (at 2.33x collateral against price feed) or $2.33. A bitUSD buyer would add 289.34 more BTS of collateral to purchase the bitUSD. Hence the total collateral in the system is 3.33x)Call price is: .00259249 USD/BTS (385.7295 BTS/USD)The shorter will be called at a 25% loss of BTS vs USD. The shorter's loss in BTS will be 96.4 BTS (385.7 BTS - 289.3 BTS) or about 14.3% of the initial collateral. The shorter will end up with 578.6 BTS (675BTS - 96.4BTS) worth $1.50. The shorter's total loss is $0.83 (or 36%) because of the leverage instead of $0.58 (or 25%) without leverage.If we only required the shorter to hold 1x collateral of 289.3468 BTS (or $1.00), then in the same scenario the shorter would end up with 192.9 BTS (289.3BTS - 96.4BTS) or $0.50 cents. The total loss in that scenario is $0.50 (or 50%) because of the leverage instead of $0.25 (or 25%) without leverage.Anyways I'm doing this late so hopefully my numbers are ok. I assume the design & collateral system works as described above. If so we should be able to reduce collateral for the shorts.
I think the real reason why I prefer to create another smart coin instead of CNY is not because of some unreasonable parameterthe importan reason is committee will never response as fast as the market's change, they can't and shouldn't take care of all businessan alternate smartcoin can have a committee which can focus on it's business, and can get more resouses to suport it's business
Quote from: Helikopterben on December 07, 2015, 02:53:14 amI don't think we will be able to get smartcoins to trade at parity with the current design, which is perfectly fine because I think the current design is the best design, possibly with a few tweaks and feature adds. You are bullish on parity if the right tweaks are made or it's okay to not be at parity?
What I hope to see is more detailed explanation how and why your system would work. Saying just "should be enough" is not very convincing for people like me who haven't fully grasped these things.But I somewhat like the idea of MPA that floats around the peg and not over. Could we test it first on a different asset than fiat-MPA? Maybe gold or oil? For now I support fiat-MPAs that are pegged at least for the face value (although I might change my mind later if I see that's not working) because it guarantees the value for users. This is propably a good thing for commerce. But maybe assets like gold do not need such guarantees and we could let them to float around face value?
I agree. I'd like to see a design for parity where risk is equal on each side of the trade. This is made difficult because of the need for fungible longs.To keep this simple, let's start with a design without fungable longs and go from there.BTS/USD market:* Longs and shorts trade on margin in a CFD style market * The only currency in use is BTS (different to the current design where bitUSD is also used)* Long BTS orders post BTS collateral * Short BTS orders also post BTS collateral* A matching long BTS order with a short BTS order begins the contract* Both sides need to maintain their positions in order to avoid getting margin called* Both sides start in BTS and end up in BTS* Either side can close their position at any time, or get margin called in which case that contract is closed* The other party which didn't initiate the close (directly or indirectly) gets rematched with next eligible order on the marketThoughts?
I would have a set daily allowance where BTS provides liquidity by selling at 1.01 and buy back at 0.99. (Then once that's breached a further daily allowance at 0.98, 0.97) Ideally the blockchain would be break-even to profitable long term providing this service. These limits and ranges can be tweaked by the committee based on results.
What customers want is liquidity within a tight range around the peg. Nubits is able to offer this because they are operating on fractional reserve & subsidizing liquidity providers. Uphold (formerly BitReserve) is able to offer this and do it for free because they are investing the reserve in yield-bearing instruments. https://support.uphold.com/hc/en-us/articles/205290895-How-does-Uphold-make-money-The name of the game is providing liquidity in a tight range around the peg. Personally, considering BTS already has dilution, I would use the blockchain as a market maker for three key market CNY, USD and GOLD. I would have a set daily allowance where BTS provides liquidity by selling at 1.01 and buy back at 0.99. (Then once that's breached a further daily allowance at 0.98, 0.97) Ideally the blockchain would be break-even to profitable long term providing this service. These limits and ranges can be tweaked by the committee based on results.
I would like to hear more about how to peg something without having a forced settlement. For me it seems to be a really important feature that makes sure that the peg holds. How you are going to replace that?
"force_settlement_offset_percent": 200,