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Messages - starspirit

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856
General Discussion / Re: The Future of the BTSX Market Engine...
« on: October 12, 2014, 10:06:19 am »
Quote from: starspirit on October 08, 2014, 01:34:13 am
Quote from: bytemaster on October 07, 2014, 04:17:50 pm
Quote from: jsidhu on October 07, 2014, 03:57:28 am
Quote from: starspirit on October 07, 2014, 12:59:40 am
Does the rule that shorts are forced to cover after 30 days introduce the possibility of a short squeeze? Would it be better to set a limit on their purchases at the feed price, rather than being forced to buy at whatever price is available?
Its the way cfd work they are closed at market unless you redo your position

Short squeezes are not really an issue because new shorts can cover into the squeeze at the feed price.
I agree there is always incentive for shorts to reopen or new shorts to be opened if the price gets too high. If this occurred after a big BTSX decline though, the existing shorts would need to top up collateral to cover, so they may not all be in a position to do so.
Another thought I would like to add to this, because I still feel there's a risk here. If short-covering is compressed enough in time, new shorts just may not be able to come in fast enough to prevent a temporary short squeeze and rising price premium on BitUSD. It always takes some lag for market participants to respond, as we've seen many times in the much more liquid BTC market where flash crashes have been common. There is also a similar situation where BTSX falls considerably, and a fair number of shorts are forced to cover by buying whatever is available in the market at that point. What's to stop this turning into a runaway situation where more and more covers are triggered? There might be ways to help prevent this sort of situation if its considered a risk.

857
General Discussion / Re: Apart from volatility, what risks surround the collateral behind BitAssets?
« on: October 12, 2014, 09:37:52 am »
Quote from: bytemaster on October 12, 2014, 06:40:56 am
Market movements excluded, collateral is as safe as any blockchain balance.
Thanks. But who or what (e.g. code of some sort, and where?) handles the private keys to these block chain balances, and enables the release when a short is closed out? I'm wondering to what extent we can consider this a trust-less and secure system. I'm not very technical on these things, but if there is a simple link I should refer to, feel free to let me know.

858
General Discussion / Re: Apart from volatility, what risks surround the collateral behind BitAssets?
« on: October 12, 2014, 06:35:00 am »
Quote from: onceuponatime on October 12, 2014, 12:57:51 am
Quote from: starspirit on October 12, 2014, 12:41:19 am
Something I've been trying to understand is how secure is the (BTSX) collateral held behind BitAssets, because in effect the level of that collateral is a factor in how confident users can be of getting paid back if something goes wrong or demand falls. So my question is what risks are there, and what protections are either in place or need to be developed over time?

This is discussed in Max Wright's video from about 10:40 min

What are the best ways to hedge bitcoin?

https://www.youtube.com/watch?v=JAhDUk0r4-0&index=1&list=PL1zCD-urlm3iuJlUhq7Nwl5KuVXVShHKO

I watched the video, it was very interesting, thanks for the link, something I may watch more of in future. The main risks Wright discusses are BTSX volatility (i.e. if it falls so fast that shorts cannot be closed out before an under-collateralised position is reached - which he recognises as extremely unlikely) and the exchange counter-party risk of buying and selling BitUSD on exchanges (where he anticipates a more direct way for users to convert fiat <-> BitUSd in coming months to help negate this).

But is it possible for an under-collateralised position to result from security risks such as:
 - some sort of external hack?
 - malfeasance on the part of the developers, delegates or others?
 - a client or block-chain bug?
Or are these each essentially impossible because of the open-source nature, blockchain etc and why? Generally in the financial world there need to be protections around collateral, so I'm just trying to work out how that works for digital assets. Thanks.


859
General Discussion / Apart from volatility, what risks surround the collateral behind BitAssets?
« on: October 12, 2014, 12:41:19 am »
Something I've been trying to understand is how secure is the (BTSX) collateral held behind BitAssets, because in effect the level of that collateral is a factor in how confident users can be of getting paid back if something goes wrong or demand falls. So my question is what risks are there, and what protections are either in place or need to be developed over time?

860
General Discussion / Re: BitUSD Slogans & Memes
« on: October 10, 2014, 04:20:01 am »
Backed by 200%+ collateral
Near-instant transfers anywhere in the world
Buyback mechanism to help preserve full value against fiat USD
Earn a yield on your cash

861
General Discussion / Re: Does max holding period for shorts &quot;guarantee&quot; longs can exit at the feed price?
« on: October 10, 2014, 01:59:31 am »
Quote from: bytemaster on October 10, 2014, 01:14:33 am
I thought this was a self evident result of the forced cover!

Lol, maybe you need to spell these things out for us with IQ<<BM!
I didn't like this level of market intervention before, but these rules (forced cover + constrain on new supply creation below feed price) have combined to create the equivalent of issuers of the currency unit effectively guaranteeing its full redemption value within 30 days through a market buyback, even though I know that is not the language that has been used previously. That appears to be an elegant and powerful selling point, assuming it were a permanent feature(?).

862
Follow My Vote / Re: [ SNAPSHOT: 8/21 ] VOTE
« on: October 10, 2014, 12:44:20 am »
Is there somewhere we can see the results of the snapshot and how many VOTES each wallet received? I assume they can't be claimed yet...

863
General Discussion / Re: Does max holding period for shorts "guarantee" longs can exit at the feed price?
« on: October 09, 2014, 11:31:14 pm »
OK, so we'll still give this time to see if anyone has a counter-argument. But assuming it's right for the moment, as of today, this cannot be guaranteed because of the grandfathered positions. Though I think it was the fair thing to do not force pre-existing shorts immediately to the new rule, it might now be in their collective interests to voluntarily close out these grandfathered positions to see better pegging and promotion of BitUSD and BTSX. BitUSD could be marketed, as I began in another thread, based on 2 key unique features - its 'collateralisation', and its 'buyback' feature.




864
General Discussion / Re: Does max holding period for shorts "guarantee" longs can exit at the feed price?
« on: October 09, 2014, 10:50:26 pm »
Quote from: tonyk on October 09, 2014, 10:28:50 pm
I do not see a flow in your logic.
What is your point, though?
Guaranteed exit from any bitAsset at very very tiny discount below the peg, in reasonably short time period is very desirable feature.
If it is correct, it is very desirable - its effectively guaranteed 'redeemability' for longs, and could be a key marketing feature for BitUSD in addition to the fact that holdings are more than fully collateralised. It would also allow market-making bots to operate at the peg and substantially increase liquidity without fear of ever needing to sell inventory at a discount, which would increase liquidity and attractiveness on all exchanges. At first I didn't like these rules - now its looking more and more to me like a stroke of BM genius. But I'm jumping ahead. My point is firstly to confirm if this is actually correct or not.

865
General Discussion / Does max holding period for shorts "guarantee" longs can exit at the feed price?
« on: October 09, 2014, 10:08:35 pm »
I would like to see if others can verify what I've been thinking here - there is a touch of maths involved. Could anyone let me know if my logic or understanding of the mechanics here is wrong.

This argument assumes there no grandfathering, and every current and new short has to close their position within 30 days (a position we will eventually be in once the grandfathering rolls off).

Now lets say for simplicity we have an outstanding supply of 100 (100 long and 100 short). The worst case scenario from a peg-stability perspective is that all the 100 longs wish to simultaneously sell. To guarantee they get the feed price then, they merely need to set their sell orders at an arbitrarily small distance below the feed price, and wait for the 100 shorts to cover within the 30 days. Its not possible for extra sellers to join the queue, because there is no more supply available to sell, and new supply can only be created by shorts at or above the feed price (in which case new buyers would have to eat up the sell offers first). Now of course if for whatever reason some sellers are more urgent, they may need to take a discount within the 30 days, but the patience of hold-outs to sit ought to guarantee exit at (or extremely close to) the feed price sometime within 30 days.

Is there a flaw in this logic?

866
General Discussion / Re: Should DAC distributions to PTS holders depend also on time held?
« on: October 09, 2014, 09:38:38 pm »
OK that seems fairly unanimous. As you say, the free market can handle it, and if longer term holders want to exploit the movements, that's always within their power as well.

867
General Discussion / Should DAC distributions to PTS holders depend also on time held?
« on: October 09, 2014, 12:29:17 pm »
Around every new DAC snapshot there is pump before the snapshot and a dump after that is arguably excessive and driven by speculators aiming to purely to get shares in the latest DAC. Would a distribution based both on stake and time held lead to less volatility and rotation in PTS shares?

The argument against this is that maybe to a large extent the price changes in PTS are warranted, because as a new DAC snapshot approaches, and the DAC concept is presented in more detail, arguably its attributed valuation increases, and conversely after the snapshot the PTS value should fall by the value of the new DAC distribution. Yet it does seem at least to me the pump and dump is often excessive in the few weeks around a DAC snapshot, given its existence is generally known well in advance.

Maybe in the end its up to the DAC developers?

Any views on this?

868
General Discussion / Re: The Future of the BTSX Market Engine...
« on: October 08, 2014, 10:33:12 pm »
Quote from: lafona on October 08, 2014, 10:31:16 pm
When I looked this morning, it seemed like there were shorts with a less than 30 day expiration, suggesting that it has already been implemented. I also saw some expiration dates to be around a year or so out, so some were probably grandfathered in too.
Where can you see the expiries?

869
General Discussion / Re: The Future of the BTSX Market Engine...
« on: October 08, 2014, 10:22:56 pm »
Is there a status update - are these short-covering rules already implemented? I noticed that the latest client versions seem to refer to this having been implemented after block 640000. If so, are we seeing the buy volume come through in the market associated with around 1/30 of the supply on average being covered each day? Or has some grandfathering been applied to exclude older shorts?

870
General Discussion / Re: BitNu - Funding BTSX without Inflation...
« on: October 08, 2014, 10:09:19 pm »
I think the main thing people like about Nubits above all else are the buy and sell walls which give them the confidence to go in or out. They are able to suspend looking too deeply at the risk that this depends on sellers not outnumbering buyers for a prolonged period. If that happened the buy walls would fall (as they will represent an increasingly small fraction of the growing supply), and unless shareholders were willing at that point to prop it up by committing the profits they have received (and potentially spent) along the way from their NBT sales, the peg would break and owners would be left with something of much lower value. While demand increases uninterrupted, the game can go on, potentially a long time. When the flaw is ultimately exposed to the masses however, there will be no coming back.

It doesn't matter to people right now, but the big difference with BitUSD is that it is (over-) collateralised (albeit by BTSX which is volatile), and its supply can shrink automatically with lower demand. If BitUSD could also create buy/sell walls, it could compete as well as hold a higher ground.

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