I hope everyone can understand the importance to reduce the cost to mint bitUSD and then encourage more supply.

please support this proposal.

1.5 is a high enough MCR, Maker DAI has adopted this value for long time and it works well.

with the help of GS protection, nothing to worry.

Hello every witness, it's time to do the change.

Quote from: bitcrab on July 21, 2019, 07:05:08 am

blockchain taking over bad debt have no essential help, as it can do nothing but wait for the BTS price to go up.

So just talk about this.

Assuming we never GS.

If the blockchain takes over bad debt positions,
1. debt position holders (borrowers) will have a bit more pressure to keep their CR a bit higher, otherwise they'll always lose the whole collateral when devaluation occurs;
2. if we fund the pool somehow, E.G. putting a part of market fee into the pool, CR of the pool can be higher than the other debt positions, so "wait for price to go up" is not the only way

If blockchain don't take over bad debt positions,
1. the bad debt positions can lose their collateral if someone buy into margin calls or force-settle, but if nobody buys into margin calls nor force-settle, they will keep the collateral;
2. the borrowers have the option to increase CR of their positions (although perhaps they won't do)

Think about how game theory works.

By the way, just saying, there are a lot of voices from the community which want to "punish the bad borrowers", one way to punish is taking over the debt positions when some conditions are met.

in most of the cases, whether the bad debt position owner want to handle bad debt depend on whether they are able to, not whether they will, in extreme bear market, almost everyone are in serious shortage of fund, how can you demand them to handle each bad debt?

I don't think the "punish the bad borrower" way will work, it can only lead to less borrowing. and, should borrower be responsible for going down of BTS price?

there also have been a lot of voices from the community for higher MSSR, but now, don't you agree that MSSR should be low enough?

whether the bad debt position are kept by borrower or system is not a problem, market fee can be used to fund the pool, it can also be used to force settle the bad debt positions.

there's one important reason why I prefer the "active smartcoin devaluation" way, it minimize the impact to the market, as we have seen in several days ago, bad debt appeared in USD market but the GS protection worked, the common users were even not aware that the bad debt had appeared, if bad debt lead to debt position taking over, possibly it will have much bigger market impact.

we have seen many facts that the risk itself is not serious, however the way to handle the risk lead to much bigger risk, 10% MSSR is one example, GS is another example, we need to try to avoid this in bad debt handling.

The purpose of implementing GS protection into core is, no matter witnesses feed what price, force settlements and margin calls will execute at the protected price. So it's clearer for traders to know what's the feed price (produced by witnesses) and what's the settlement price (decided by the blockchain). Actually it's a UI issue, so we don't need to argue here. UI can even should a third price: what will be the settlement price and margin call price if GS protection is disabled.

On the other hand, if GS protection is implemented into core, witnesses will no longer need to and should not publish adjusted price feeds which was criticized as price manipulation.

IMHO, whether the blockchain should take over the bad debt is the main thing to debate.

yes, in my view one principle should always be followed either bad debt appears or not:

borrowing, margin call, force settlement should always refer to the same price.

so it seems necessary to introduce one new parameter which is called settlement price as margin trading reference to replace feed price.

settlement price = max(feed price, GS Protection Price)

feed price should always be the real time market price.

borrowing, margin call, force settlement will always refer to settlement price, CR is calculated based on settlement price, margin call order price = settlement price/MSSR, force settlement price = settlement price*(1+force settlement offset)

normally, settlement price = feed price.

while bad debt appear, settlement price will be GS Protection Price, in financial sense it means, the system recognize and accept the fact that the smartcoin is in devaluation.

however, margin call order filling, debt position adjustment, force settlement can all reduce GS Protection Price and lessen the devaluation, until finally bad debt disappear.

and GS will be disabled for ever.

and I feel a new name is needed to replace "GS protection", maybe "active devaluation of smartcoin".

blockchain taking over bad debt have no essential help, as it can do nothing but wait for the BTS price to go up.

updated BSIP: https://github.com/bitshares/bsips/issues/179

Quote from: bitcrab

so in my above example, obviously the pool has lower CR and will be settled with price 0.05USD.

maybe at the time the feed price is 0.042(not exact), but when user settle, they have to settle the pool with price 0.05, not the margin call order with price 0.04?

you tell the people the price is 0.042, but you only allow them to settle at 0.5...confusion...

feed_price = 0.04
settlement_price = 0.05

两个数，没毛病。

现在UI也是两个数：
feed_price = 0.3
settlement_price = 0.303

如果你硬是要因为 settlement_price = 0.05 而显示 feed_price = 0.05 才让人更困惑，明明外盘成交价在0.04

0.303=0.3*1.01， easy to understand the relation of these 2 figures.

0.05 and 0.04 is an example, even higher gap is possible, maybe the settlement price is 0.08 and feed price is 0.04, because the settle price of the pool may be much higher than market price.

when force settlement price does not refer the feed price, what sense does the feed price make? although it is the market price?

难道不是喂价格A， 然后爆仓价是A/MSSR, 清算价是A*（1+force settlement offset）,保持这样一种关系才是正常的吗？

Quote from: bitcrab on July 19, 2019, 02:08:28 pm

Quote from: abit on July 19, 2019, 12:23:47 pm

I'm for the 4th option now:
* allow undercollateralization
* no globally settlement
* has individual settlement, the system take over the undercollateralized debt positions (which would form a pool)
* when undercollateralization happens and someone tries to settle, fill the settlement request with the positions with lowest CR (can be the pool) first, so first settler will get less

so the pool as a debt position may have CR<1, when some tries to settle, how can the pool fulfill the request with CR<1? or the pool can only fulfill the request with CR>1?

The pool pays less BTS per bitUSD.

so when someone tries to settle,
the pool has a settle price of 0.05USD,
the margin call order price is 0.04USD,
the normal force settlement price is 0.043USD

which will fill the settle request? the pool?

Quote from: bitcrab on July 19, 2019, 07:04:34 am

then bitUSD holders begin to exploit debt position owners with force settlement.

even worse, the last bitUSD balance cannot do force settlement, it can only fill the settlement orders with higher price.

I don't understand how that exploit works. If I force settle while there are positions with CR < 1 are present, I settle for BTS that are worth less then 1 USD, accepting the undercollaterization. This also closes out the bad margin position, but that is of course the risk of running a undercollaterized position (it's a loss-loss scenario so I expect this is not an exploit for you). In my scenario force settlement still eats the margin position with least CR. There will of course be margin call orders with a price different than the feed price, but that does not force the traders to deviate from the peg. Can you please make another example please?

you cannot force settle debt positions with CR<1 with market price, as that will lead to a debt position with pure debt and 0 collateral, which is not allowed.

you can only force settle debt position with CR<1 with price higher than market price, bitUSD holders obviously will select to force settle debt positions with CR>=1, as it is cheaper.

while bad debt appear, bitUSD is easily be devaluated, as it is not backed by sufficient BTS.

you use devaluated bitUSD(insufficient collateral) to force settle a debt position in market price, is it fair?

Margin call price would need to be adjusted. If CR is less than MSSR, adjust the price such that the full debt would be bought (which is essentially their global settlement price). If CR is higher, use existing rules. Force settlement would still eat the least collaterized positions first, in that sense the punishment goes to holders that decide to force settle instead of sell on the market. Incentivization would be possible by adjusting the force settlement price if it settle a margin position with CR < MCR (the force settlement offset could then be MSSR (punishment for margin position holder)).

For the bitasset holders it is similar as compared to being in global settlement state.

With "prevent global settlement flag":
 - bitasset holder can sell into the margin calls which is equal or even better compared to global settlement price instead of force settling
 - bitasset holder can force settle, accepting the undercollaterization
 - margin position holder can recollaterize
 - new margin positions can be created
 - margin positions with CR < 1 receive a bit of protection that is shifted to bitasset holders iff they are using force settlement, on the other hand force settling is incentivized if applied to a margin position that is currently being called

what you describe is very similar to "individual settlement with force settlement", the disadvantage has been already discussed above.