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Quote from: cylonmaker2053 on May 29, 2016, 10:52:48 pmthis process of capitalizing fees ex ante comes at the cost of losing 100% asset backing for our smartcoins, which then hurts the PoS marketing message of being able to get at least the full pegged value at any time. It's a much easier story to sell that 1 bitUSD can be settled at any point for 1 USD worth of BTS. It's unnecessarily damaging to sell merchants on getting 0.95 on the dollar or whatever. This is one of the main arguments against, but liquidity subsidies would solve this imo and probably make BitUSD even more appealing than 1-1 forced settlement. Anyway we obviously disagree on a few issues so it will be interesting if the BitCNY change does go through whether we're able to gleam anything one way or the other.
this process of capitalizing fees ex ante comes at the cost of losing 100% asset backing for our smartcoins, which then hurts the PoS marketing message of being able to get at least the full pegged value at any time. It's a much easier story to sell that 1 bitUSD can be settled at any point for 1 USD worth of BTS. It's unnecessarily damaging to sell merchants on getting 0.95 on the dollar or whatever.
Quote from: cylonmaker2053 on May 29, 2016, 08:35:15 pmAlso, as a practical matter from trading...I've invoked forced settlement many times in both bitCNY and bitUSD ...actually, today has been a weird bitUSD trading experience in that people have been dumping at about 6%-7% below peg all afternoon and i've been the highest bidder soaking up the supply. Since I can't find anyone else to buy anywhere near peg, i've been invoking forced settlement. If there were some penalty for doing this, or if assets were only 95% collateralized, i'd be doing the same stuff but at 15%+ below feed. What's the point of that? The way i've seen forced settlement is that it acts as a natural supply reduction mechanism when we have imbalances and not enough buyers. It brings supply down to what the market is actually willing to support.I'd speculate the reasons BitUSD holders are willing to offer a 6/7% discount today rather than waiting for 1-1 in 24 hours is because they think BTC is surging so fast that they can make up the difference. If forced settlement was 1-1 with a 4% fee they still would be unlikely to sell much lower than a 7% loss because they're unlikely to make up a 7% loss. So in a way 1-1 might be of limited value other than to traders like yourself who are able to make good daily gains in these scenarios. While from the shorts perspective a lot of them are going to wake up tomorrow having been unexpectedly force settled and then have to compete with each other if they want to rapidly re-short but then find there are not a lot of willing BitUSD longs because they all want to be in BTC atm so this will disrupt the market, discourage shorts and ultimately raise premiums. A 4% fee would have forced longs to wait 24 hours because it wouldn't make sense to sell at a 9-10% loss today and shorts would have received some compensation for having provided liquidity. If liquidity close to 1-1 was something we wanted to provide to SmartCoin customers then liquidity subsidies would be the way to do it rather than disrupting the market, negatively impacting shorts & raising the premium the way the current system does imo.
Also, as a practical matter from trading...I've invoked forced settlement many times in both bitCNY and bitUSD ...actually, today has been a weird bitUSD trading experience in that people have been dumping at about 6%-7% below peg all afternoon and i've been the highest bidder soaking up the supply. Since I can't find anyone else to buy anywhere near peg, i've been invoking forced settlement. If there were some penalty for doing this, or if assets were only 95% collateralized, i'd be doing the same stuff but at 15%+ below feed. What's the point of that? The way i've seen forced settlement is that it acts as a natural supply reduction mechanism when we have imbalances and not enough buyers. It brings supply down to what the market is actually willing to support.
Quote from: cylonmaker2053 on May 29, 2016, 08:13:34 pmWe have a good enough system the way it is, we just need to get more traders into it. Traders are just one group, btw. It'd be great to get actual end users for our smartcoins, like people using PoS apps for bitUSD, bitCNY, bitEUR, etc. like @kenCode is doing. 100% collateralized assets are a big selling point for that application. I'm all for subsidizing collateral used to maintain shorts, but just prefer doing it directly via some yield. I'm also fine without subsidies bc of the indirect benefits of shorting mentioned earlier. Also keep in mind, this proposal is to change one of the markets on the DEX, bitCNY. Doing so would unnecessarily complicate the DEX with markets trading with arbitrarily different rules.Competitors like NBT have no guaranteed redeem-ability at all (& I think they're struggling in this BTC surge) I think merivercap's BitCash has zero as well. I disagree with both those strategies but I do believe 95% is more than sufficient for the market to trade at 1-1 and will significantly reduce the spread without the need for subsidies & given that we haven't even subsidized SmartCoin liquidity yet I'm not sure how realistic it is. Given the stagnation of the 2.0 SmartCoin markets which have been operating with the current rules for over 7 months, I think trying a rule change at this stage is warranted. I think it's good that it's just one of the markets as we'll be able to see if it's a positive change before applying it elsewhere. Personally I'd prefer to make the change bigger so the differences would be more easily observable & actionable.
We have a good enough system the way it is, we just need to get more traders into it. Traders are just one group, btw. It'd be great to get actual end users for our smartcoins, like people using PoS apps for bitUSD, bitCNY, bitEUR, etc. like @kenCode is doing. 100% collateralized assets are a big selling point for that application. I'm all for subsidizing collateral used to maintain shorts, but just prefer doing it directly via some yield. I'm also fine without subsidies bc of the indirect benefits of shorting mentioned earlier. Also keep in mind, this proposal is to change one of the markets on the DEX, bitCNY. Doing so would unnecessarily complicate the DEX with markets trading with arbitrarily different rules.
Quote from: Empirical1.2 on May 29, 2016, 04:55:38 pmThe purpose of forced settlement is really to give market participants confidence SmartCoins are backed by actual collateral that can be redeemed for most of their value in an emergency. So even forced settlement at 0.95 would be very attractive. Absolutely, the purpose of settlement is to give market participants confidence that our assets are backed by collateral. The 100% settlement at the peg means our assets are 100% collateralized, which i certainly prefer. Any discount from that, like 0.95, just means we'd be advertising smartcoins with 95% collateral banking. I don't see that as beneficial. All market participants go into trades knowing the rules of the game ahead of time. i like 100% collateralilzation over any arbitrary fractional value, but if the system changed (which it changes too often IMO), then i'd just rationally discount the value on the long side and price my bids at 95% or whatever the collateral value. All we'd do is skew the bid-ask window in the other direction. Like i've repeated many times on this forum, i do see value in providing incentive to traders willing to short assets into existence. Right now that compensation is implicit with high spreads and shorts get leveraged upside. That's been enough for me to trade frequently on both sides of the market. However, if there is a big desire in this community to further compensate short traders, then i suggest directly subsidizing shorts with some yield on BTS locked in collateral; penalizing buy-side traders who want to settle assets at peg is not the best way to provide this subsidy.
The purpose of forced settlement is really to give market participants confidence SmartCoins are backed by actual collateral that can be redeemed for most of their value in an emergency. So even forced settlement at 0.95 would be very attractive.
I'm not seeing the big issue with forced settlement. You aren't losing anything you haven' already lost when forced to settle, the system is just closing out your position earlier than you might have liked, but you're welcome to re-open another position with the returned collateral. This simple mechanism keeps the entire system stable by cutting imbalanced positions early. The idea of modifying system rules market by market instead of having a coherent system doesn't at all seem worth it in this case.
The "supporting stake" column means how much stake has chosen to vote for the specified worker. Just ignore the colors and other workers, focus on these 2 workers.Because there is no longer a way to vote "no" on a worker. So here comes 2 workers, * if you agree to change, vote for the "yes" worker; * if you don't agree to change, vote for the "no" worker;* if you want to stay neutral, or you're not aware of this voting, don't vote.
Quote from: cylonmaker2053 on May 25, 2016, 02:27:34 pmAs one of the community's most active traders and from a financial market theory perspective, i support @pc perspective on this. I also share @Empirical1.2 frustrations in having many short positions force settled on me; however, I've been on the settlement initiation side of trades many times and it is a very valuable feature. @pc is correct that this is mainly an issue in bear markets. From personal experience, it has SUCKED pouring more and more collateral into my shorts just to keep them open, but that's a reasonable price to pay for the leverage on the upside when market conditions reverse, and for the fact that I've sold all of my short assets at premiums to begin with. #1 priority is to guarantee parity with the underlying asset. Forced settlement seems the best way to do this. We cannot compromise on this priority or we lose one of our biggest value propositions in the smartcoin market. #2 there are times when asset holders, mainly Chinese CNY from my experience, value immediate liquidation and so put their assets up for sale at discounts to the feed price; this is where market makers like myself and @JonnyBitcoin come in, buy at a discount, and settle for some risky profit (risky in that the feed can fluctuation in the next 24 hours).#3 we all know the rules of the game going into any trade, these are built into our expectations ex ante, and so the prices we choose to initiate ought to compensate for the risk of forced settlement. What could be improved is the old idea we've punted in this community about compensating short positions with some sort of yield on collateral. This would further incentivize short initiations, especially in bear markets. Once we're back to a bull market, it'll be irrelevant.I was reading all comments and opinions about this proposal. After considering the case I decided to vote against the BSIP 16 and to not support a change of the CNY settlement parameters. PC made his point clear enough that we should not break the trust in the guarantee of getting at least 1 CNY back. This could have another negative impact on the BitShares ecosystem and further harm our reputation in the crypto community. I think the current settlement parameters are fine and the spread will get tighter when volume picks up. Please don't forget we are at the beginning of this payment platform and we see many anomalies due to low volumes.I also think that market makers like cylonmaker2053 and JonnyBitcoin know the trading risks and can evaluate the associated risks and potential profits. Shorting and providing liquidity is not for everyone and should be handled by experts who know how to create a derivate. I am looking forward to adding bankers to the BitShares platform so that they can add their market expertise and help us with the market creation. Creating a derivate is banking 101. Just replace BTS with USD and every banker knows what you are talking about. cheers Chris4210
As one of the community's most active traders and from a financial market theory perspective, i support @pc perspective on this. I also share @Empirical1.2 frustrations in having many short positions force settled on me; however, I've been on the settlement initiation side of trades many times and it is a very valuable feature. @pc is correct that this is mainly an issue in bear markets. From personal experience, it has SUCKED pouring more and more collateral into my shorts just to keep them open, but that's a reasonable price to pay for the leverage on the upside when market conditions reverse, and for the fact that I've sold all of my short assets at premiums to begin with. #1 priority is to guarantee parity with the underlying asset. Forced settlement seems the best way to do this. We cannot compromise on this priority or we lose one of our biggest value propositions in the smartcoin market. #2 there are times when asset holders, mainly Chinese CNY from my experience, value immediate liquidation and so put their assets up for sale at discounts to the feed price; this is where market makers like myself and @JonnyBitcoin come in, buy at a discount, and settle for some risky profit (risky in that the feed can fluctuation in the next 24 hours).#3 we all know the rules of the game going into any trade, these are built into our expectations ex ante, and so the prices we choose to initiate ought to compensate for the risk of forced settlement. What could be improved is the old idea we've punted in this community about compensating short positions with some sort of yield on collateral. This would further incentivize short initiations, especially in bear markets. Once we're back to a bull market, it'll be irrelevant.
Quote from: xeroc on May 28, 2016, 08:01:14 amI am voting for the "no changes" worker:http://cryptofresh.com/workersthanks for the link. this is a cool way to see what's being worked on, but can you explain the different columns, especially the "supporting stake" column? And why is the bitCNY forced settlement split into two workers, one YES and one NO instead of one worker that gets voting on for yes or no? sorry for the newb governance questions...
I am voting for the "no changes" worker:http://cryptofresh.com/workers
I was hoping for a more neutral approach for getting shareholders approval so I published a quick article on Steem:https://steemit.com/bitshares/@xeroc/vote-please-cast-your-vote-for-the-bitcny-settlement-offset-worker
that's a reasonable price to pay for the leverage on the upside when market conditions reverse, and for the fact that I've sold all of my short assets at premiums to begin with.
Quote from: Empirical1.2 on May 15, 2016, 05:19:28 pm1. When you guarantee liquidity at the expense of shorts and at 1-1, this adds a significant burden to shorts that they will price in via an additional premium. By lowering the forced settlement number as well as the amount that can be forced settled you reduce this burden and therefore not only bring the price close to the peg (which is favourable) but also reduce the risk premium shorts need to charge & thus create a tighter peg overall.Your wording implies that forced settlement is in some form damaging to shorters. That is wrong. Settlement happens at the fair price and does not change the NAV of either involved party. The shorter can take the remaining collateral and the proceeds from selling the originally shorted smartcoins and immediate extend his short position, should he want to stay short. The only "damage" here is the required fee, which is negligible (less than 1 US-cent I believe).
1. When you guarantee liquidity at the expense of shorts and at 1-1, this adds a significant burden to shorts that they will price in via an additional premium. By lowering the forced settlement number as well as the amount that can be forced settled you reduce this burden and therefore not only bring the price close to the peg (which is favourable) but also reduce the risk premium shorts need to charge & thus create a tighter peg overall.
Quote from: Empirical1.2 on May 15, 2016, 05:19:28 pmIn addition to lowering forced settlement, I am personally also in favour of other measures that reduce the burden on shorts so that their risk premium is reduced thus creating a tighter peg overall. The "burden" on shorts is an inherent factor in *every* short position. The reward for that position is the leverage effect, which works for the shorter in a BTS bull market. Actually, in BitShares the shorts are relatively well protected. In real-world shorts you can literally lose everything, not just your collateral.Increasing the settlement offset to 1% would reduce the risk premium by 1%, right? How far above the feed are smartcoins trading currently? Would 1% really make a significant difference wrt the tightness of the peg?
In addition to lowering forced settlement, I am personally also in favour of other measures that reduce the burden on shorts so that their risk premium is reduced thus creating a tighter peg overall.
Without a tightly pegged, liquid SmartCoin there will be no users and no attraction for merchants to serve that market.
3. SmartCoins are not working well imo. They have gained low/no traction with the current parameters since being introduced 7 months ago. They have a tiny 2-4% of existing market share (never mind potential market share.) and no/low merchant adoption and clearly need some improvements.
I suggest we all take a step back and take 15 minutes to (re-)read https://bitshares.org/technology/price-stable-cryptocurrencies/ .What I take from thatThe settlement price guarantees price stability to holders of BitAssets. This guarantee defines the peg.Shorters are supposed to sell their shorted BitAssets at a premium to cover their risk.BitAssets are expected to trade at a premium, due to the inherent risk of shorters. The premium is expected to be higher in a BTS bear market.The premium is supposed to encourage merchants to accept BitAssets.The premium does not play a significant role to traders or other users of BitAssets.My conclusionsBitAssets are working right now exactly in the way they are supposed to be working.The premium we are seeing in BitAsset markets is due to the BTS bear market. The settlement price is not the cause of this. (Coincidentally, BitCrab's attacks on forced settlement always seem to happen in a bear market.)When (if) the BTS price is rising again, the premium will automatically reduce to something close to zero. (IIRC, two months ago there was actually a negative premium on the markets, where some people bought below the feed and used forced settlement to make a profit.)The premium is good to have, for shorters, merchants and customers. It is the natural market mechanism to keep everyone's interests balanced.We want bitCNY to be pegged to CNY. By changing the settlement offset to 1% we are moving the "guarantee", which in turn means that bitCNY will be pegged to .99 CNY. This is an undesired side effect.Furthermore, every piece of documentation I have seen tells BitAsset buyers that they can always exchange their BitAssets for an equivalent amount of BTS. The word "guarantee" is used in several places in that context. Do we really want to unilaterally declare that guarantee void, thereby destroying all credibility of the very concept of BitAssets?From all of this follows thatthe proposed change is not necessary - it is the function of the premium to encourage shorters, not the function of the settlement offsetthe proposed change does not have the desired effect - the reason for the premium and the risks of the shorters is the BTS bear market, not the settlement offsetthe proposed change is extremely harmful to our ecosystem, due to its side effects - it redefines 1 bitCNY to be worth 0.99 CNY and destroys our credibility, because we will be breaking our own guarantees.
1. What about lowering the request settlement to 99%? It should lower the premium and it's fair that there should be a cost associated with accessing liquidity at the expense of shorters. Hopefully market makers will step in the majority of the time but the ability to get $0.99 on the dollar in 24 hours regardless of market conditions would still be very appealing to longs and merchants imo.
Quote from: xeroc on February 02, 2016, 04:13:26 pmQuote from: Empirical1.2 on February 02, 2016, 04:01:02 pmDoes the BitShares price feed reference last traded prices at weighted exchanges or does it average last traded prices over a certain amount of time? What I mean is there is that there is usually a 1-2% spread between buy and sell prices for BTS on BTC38 and Polo. If you are force settling and you know it will reference last traded prices at a specific time then it would be in your interest to make tiny sell trades so that the last traded price is in your favour by 1-2%. It your force settle is going through at a thinly traded time it may also be in your interest & very cheap to move the price by another 1-2%. That would assume that you know when witnesses publish a price and how many witnesses publish it ..This could be fixed by tracking trades over time or running a weighted average over time but that involves alot of work to upgrade the feed script into a time-sensitive feed script.Fortunately, this time-sensivity is also achieved by different witnesses running their scripts at different time instants.We may consider replacing the last price with the "(highest bid + lowest ask)/ 2" that would make it a little more "fair"Cool, yeah I'm just wondering if the forced settlement at 100% can currently be exploited.I think your other suggestion of introducing a 1-2% forced settlement fee could also help address that if it was a potential issue...Quote from: xeroc on February 02, 2016, 07:39:31 am- Settlement can be discouraged by asking for a percentage fee (1-2%) (this will move the peg AROUND parity. Flat fee for settlement can also be increase which has some negative effects on pred. markets
Quote from: Empirical1.2 on February 02, 2016, 04:01:02 pmDoes the BitShares price feed reference last traded prices at weighted exchanges or does it average last traded prices over a certain amount of time? What I mean is there is that there is usually a 1-2% spread between buy and sell prices for BTS on BTC38 and Polo. If you are force settling and you know it will reference last traded prices at a specific time then it would be in your interest to make tiny sell trades so that the last traded price is in your favour by 1-2%. It your force settle is going through at a thinly traded time it may also be in your interest & very cheap to move the price by another 1-2%. That would assume that you know when witnesses publish a price and how many witnesses publish it ..This could be fixed by tracking trades over time or running a weighted average over time but that involves alot of work to upgrade the feed script into a time-sensitive feed script.Fortunately, this time-sensivity is also achieved by different witnesses running their scripts at different time instants.We may consider replacing the last price with the "(highest bid + lowest ask)/ 2" that would make it a little more "fair"
Does the BitShares price feed reference last traded prices at weighted exchanges or does it average last traded prices over a certain amount of time? What I mean is there is that there is usually a 1-2% spread between buy and sell prices for BTS on BTC38 and Polo. If you are force settling and you know it will reference last traded prices at a specific time then it would be in your interest to make tiny sell trades so that the last traded price is in your favour by 1-2%. It your force settle is going through at a thinly traded time it may also be in your interest & very cheap to move the price by another 1-2%.
- Settlement can be discouraged by asking for a percentage fee (1-2%) (this will move the peg AROUND parity. Flat fee for settlement can also be increase which has some negative effects on pred. markets
The purpose of a forced settlement offset is not to protect any party specifically. The purpose is to maintain the stable and accurate price of the smartcoin, which in turn benefits all users of the system.So, the best metric is this: how has the trading price of BitCNY compared to the price feed, over the last months? Can we overlay the price feed to the historic price and take a look ourselves? I don't see the price feed in a graph here: http://cryptofresh.com/a/CNY
1. What about lowering the request settlement to 99%? It should lower the premium and it's fair that there should be a cost associated with accessing liquidity at the expense of shorters.
I think lowering forced settlement to 98/99% would be beneficial.
Quote from: pc on May 11, 2016, 06:52:33 pmThe term "compensation" implies that there is some damage caused by the settlement, which is often the case in "real-world" finance, but not in BitShares.If the shorter sells BitAssets with a 1% premium he achieves the same effect for himself as with a 1% settlement penalty, only with the premium existing holders are not hurt.Very good point ... and part of the problem as this results in the premium we can see on the bitassets/BTS markets.I think the question we need to answer to ourselves is this: Is a bitUSD worth $1 or not? Then we need to think about WHO is asking the question! A merchant who wants to exit bitUSD would say, YES because he can settled at the feed price (currently without penalty). A user however may say that he cannot enter bitUSD because it as a premium (at least in terms of BTS).However, the latter argument is only true when people want to *enter* bitUSD, if they instead get paid in bitUSD already, then it's all a wash and we can say 1bitUSD=$1.Thinking about it I actually prefer it that way, because it supports MERCHANTS and those that want to use it can accept a small premium because bitUSD is WAY WAY more flexible than real cash.We need to support MERCHANTS and thus it (IMHO) makes sense to keep the 1:1 settlement
The term "compensation" implies that there is some damage caused by the settlement, which is often the case in "real-world" finance, but not in BitShares.If the shorter sells BitAssets with a 1% premium he achieves the same effect for himself as with a 1% settlement penalty, only with the premium existing holders are not hurt.
Quote from: xeroc on May 11, 2016, 07:00:37 amIt is a little far fetched to call the proposal "full of lies". It may present different interpretation of things though (e.g. fee vs. robbery).Calling it a fee IS a lie.Yes, I'm using strong wording, because I have a strong opinion on people who make guarantees only to break them later. As well as on people who invent nice terms to cover up the awful truth.
It is a little far fetched to call the proposal "full of lies". It may present different interpretation of things though (e.g. fee vs. robbery).
Quote from: bitcrab on May 11, 2016, 09:44:57 amIn common financial logic the collateral should not be force settled without any compensation if the collateral price does not fall below the margin call price. Reference, please.The term "compensation" implies that there is some damage caused by the settlement, which is often the case in "real-world" finance, but not in BitShares.If the shorter sells BitAssets with a 1% premium he achieves the same effect for himself as with a 1% settlement penalty, only with the premium existing holders are not hurt.
In common financial logic the collateral should not be force settled without any compensation if the collateral price does not fall below the margin call price.
@bitcrab What do you think about a collateral offset of 0.1% instead of 0% or 1%? If the feed is accurate, that still results in guaranteed profit for the shorter.
I wonder if there are other businesses that would like to support this move besides transwiser
Quote from: bitcrab on May 10, 2016, 06:55:57 am... committee will create the committee proposal in next Monday.As stated in the BSIP .. the proposal will have an expiration of 30 days to give shareholders enough time to cast a vote and shorters enough time to settled/sell
... committee will create the committee proposal in next Monday.
Is Bitcrab involved in TCNY in any way? Perhaps this experimentation should be on that asset instead.
As a reference, TCNY has been set a 2% force settlement offset, the consequence is that almost no holder wanted to request force settlement even when the price for the collateral was very low.
The settlement will always happen AT the feed
The core product of BitShares is a class of assets referred to as Market-Pegged Assets (MPA), BitAssets, or SmartCoins and represent a crypto-token that has at least the value of the underlying asset. For instance, a bitUSD can always be sold for $1, either to a merchant at face-value, or to the network (by means of settlement of a contract) in return for BitShares’ core currency (BTS) worth $1.
Everyone that holds your (MPA) coin in BitShares can convert the coin into the backing asset at a fair price. This procedure is called “settlement” and ensures that your MPA is always worth at least the fair price.