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General Discussion / Re: BitSharesX Leveraged Instruments
« on: April 12, 2017, 06:30:47 am »This thread is old but the author of this thread is right, traders need leverage to make profits, if you want mass adoption in the DEX you'll need to attract clients. Offering them liquidity and leverage are two things that bitshares lack of.IMO the problem is that if you loose money with a broker account, you will have to pay. If the leverage is an BitShares algorithm, the failure will be at expense of BitShares.
You are right but, if done correctly, there shouldn't be many defaults. Could the reserve pool serve as an insurance for these defaults? There is a part of Deribit's newsletter from 27 March:
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Insurance Fund reduction to 25BTC
Because of the changes we expect to see less bankruptcies. Therefor we decided the insurance fund will be reduced 25 BTC. In case the insurance fund will be depleted, we will replenish the fund with an amount to be decided in the future.
Currently there are various traders with positions in Options that expire in June. For any positions in June Options created before the 31th of March, we will keep an additional 75 BTC of insurance reserved, as most of those positions got opened assuming a 100 BTC insurance fund.
We will always strive for not having to socialize any losses. During the 8 months that Deribit has been operating, we never have socialized any losses among our users. Deribit had only 4 BTC worth of bankruptcies sofar, that got assumed by our insurance fund. With a lower insurance fund of 25 BTC, Deribit will still be motivated to manage the risk on the platform in such way that traders will not go bankrupt.