Sidechain should be implemented first, before Bond market.

Bond market is feature which will be used by tiny fraction of bitshares users. Sidechain is something which could actually bring thousands of new users which will not have to worry any longer about security of traiding their REAL bitcoins on exchange.

With 100% bitcoin collateral, this will instantly boost all BTC:XYZ markets.

Moreover... there are other exchanges which has bondmarkers. There are none exchange/cryptocurrency which has such feature like sidechain. This should be our top priority which will move Bitshares to all frontpages of services about bitcoin.

Quote from: JonnyBitcoin on February 28, 2016, 03:40:37 pm

Quote from: xeroc on February 26, 2016, 02:08:58 pm

Quote from: Xeldal on February 26, 2016, 02:03:27 pm

Quote from: xeroc on February 26, 2016, 01:00:14 pm

Settlement has nothing to do with liquidity (in core smartcoins like USD, EUR, CNY, etc..) IMHO

maybe I misunderstand what you're saying.
Settlement has everything to do with liquidity.  That's its only purpose. 
It guarantees up to 2% (or whatever it's set to) of daily smartcoin supply is liquid at the settlement price.

It is in effect a standing order to buy that smartcoin. (with 24 hr delay)

sure .. for that direction there is everything fine and we do have 2% of supply in instant buy orders for smartcoins ..
the liquidity issues are on the other side .. no one wants to sell his smartcoins .. not even for a 5-10% premium (depending on the actual asset) ..
simply because we don't have a big on/off ramp for bitassets ..

Forced settlement is guaranteed buy side liquidity at the peg.

I think we need some sort of guaranteed sell side liquidity at the peg+10%. This would have to come from the rerserve pool imo.

One of the benefits of @Empirical1.2's idea is that yield can be directed not only to BitUSD longs, but also to BitUSD shorts.  Also, it stands to reason that a subset of the people buying BitAssets for yield would also be interested in participating in a liquidity pool to gain additional yield.  Funds from such a pool can then be used in conjunction with funds from the reserve pool to create liquidity on both sides of the peg.

This is to enable collateralized margin trading, not unsecured debt.

Quote from: JonnyBitcoin on February 28, 2016, 03:40:37 pm

Quote from: xeroc on February 26, 2016, 02:08:58 pm

Quote from: Xeldal on February 26, 2016, 02:03:27 pm

Quote from: xeroc on February 26, 2016, 01:00:14 pm

Settlement has nothing to do with liquidity (in core smartcoins like USD, EUR, CNY, etc..) IMHO

maybe I misunderstand what you're saying.
Settlement has everything to do with liquidity.  That's its only purpose. 
It guarantees up to 2% (or whatever it's set to) of daily smartcoin supply is liquid at the settlement price.

It is in effect a standing order to buy that smartcoin. (with 24 hr delay)

sure .. for that direction there is everything fine and we do have 2% of supply in instant buy orders for smartcoins ..
the liquidity issues are on the other side .. no one wants to sell his smartcoins .. not even for a 5-10% premium (depending on the actual asset) ..
simply because we don't have a big on/off ramp for bitassets ..

Forced settlement is guaranteed buy side liquidity at the peg.

I think we need some sort of guaranteed sell side liquidity at the peg+10%. This would have to come from the rerserve pool imo.

excellent idea, but maybe widen that spread bc we'd be forcing a 10% range where we tend to have much higher spreads in all of our markets. spreads are a source of profit for market makers and needed to bear risk, but of course risk to those traders drops significantly with a ceiling settlement option. purely a subjective guess, but i'd say 20% for starters...maybe roll it out for a single market (USD-BTS) as a test case?

Quote from: JonnyBitcoin on February 23, 2016, 05:14:46 pm

Quote from: Empirical1.2 on February 23, 2016, 08:49:20 am

Quote from: JonnyBitcoin on February 23, 2016, 05:35:35 am

Quote from: Empirical1.2 on February 23, 2016, 02:15:43 am

Quote from: JonnyBitcoin on February 23, 2016, 01:18:09 am

Keep all UIAs.
What I'm saying is we need a master USD smartcoin for fiat.
Use the master as a base smartcoin to create all other fiat smartcoins from.

These other sub smartcoins would hold value in euros or yen etc but couldn't be traded only used to hold value.
They would need to be turned back to BitUSD if you want to do trading.

these sub smartcoins would work by transfering bitusd in to a special EUR wallet which uses a CFD behind the scenes to keep the the value correct by either adding or subtracting Bitusd.

I'm a bit slow with these things.

Lets say I have 1215 BitUSD & I put it into a special Gold wallet because I want to be long 1 ounce of Gold.

Gold then increases by 300% vs. USD.

Where does the additional $2400 come from to pay me my gains. Who loses on that trade?

The blockchain/reserve pool would have to cover these costs. 
But lets get some perspective. For every winning trade there will be a similar number of losing trades which would offset losses and may even make profit.
I think should only be for fiat currencies.
Another way of offsetting any losses would be to charge a 1% fee when users choose to lock their Bitusd to another fiat currency.
Another way to offset this proposed systems excessive long USD position might with prediction markets.

Why do no real world companies offer this exact service unless their exposure is hedged?...

Imo the closest we can come to offering this service is something like my 'Simple Smartcoin Account' approach.. https://bitsharestalk.org/index.php/topic,21507.0.html

The real world example that does exactly this would be IG index (the worlds largest spreadbetting company )

Andrew Bole, Risk director at IG index

As counterparty to thousands of spread trades every day, from small punts to large trading positions, IG Index has to manage a significant amount of market risk. But hedging every spread trade as it is placed is not practical.

There are two ways around this problem. First, in highly active markets, many of the spread bets cancel each other out. "If it's a very busy market, you will have a lot of two-way business, which is ideal. We are just acting as another market-maker," says Bole.

However, in less liquid markets, such as spread bets on single stocks, IG Index cannot rely on investors taking both sides of the market. Instead, it hedges its exposure using futures on the underlying stock.

Yeah I was referring to spread betting companies. From the same article you quoted...

Quote

However, in less liquid markets, such as spread bets on single stocks, IG Index cannot rely on investors taking both sides of the market. Instead, it hedges its exposure using futures on the underlying stock. This is simple in principle, but the introduction of foreign exchange risk increases the complexity - a UK client might trade an overseas equity index but would expect payment in sterling. "The key part is working out what the underlying equivalent is (within our exposure model), and then you can use the tools available within the normal financial markets," Bole explains.

Keeping an eye on IG's exposure, the risk committee uses an approach that would be familiar to any fund manager - employing limits on individual underlyings, sectors of the markets and countries, in what Bole calls a hierarchy of exposure.

"If all your clients were long, you could arguably be inside your limits, but you could have massive exposure to the UK stock market as a whole. So, in that case, you would hedge on futures on the index. Or, if you are concentrated in a banking sector, you can review that sector - so you're building up a much better portfolio picture," he says.

They have a very complex risk management model to hedge their exposure wherever it's not easily cancelled out and presumably very few of our markets would be liquid and evenly matched at the beginning.

I like the idea of simple Smartcoin accounts but I think we'd have to incentivize others to put up collateral and then let market participants decide if they're happy with it. If we allowed BTS to be the loser if we were over-exposed/not properly hedged then we put BTS at serious risk imo.