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« on: March 17, 2015, 12:51:30 pm »
1) What if we removed the expiration period entirely. This would make the market symmetric in the same way that making shorts instantly callable (the other extreme). We went away from this because of a lack of liquidity, but I wonder if the lack of liquidity is merely a growing pain and not something that needs to be supported.
2) What if we removed the interest rate entirely and instead allowed shorts to sell below the parity by up to X%. This could cause the price to deviate from the feed when there is heavy short demand in a bull market, but this would be symmetric with deviations in the other direction like we have now when there is a bear market and shorts are only willing to sell above parity if at all. Perhaps design decisions were made during a bull market that were not appropriate for all markets and we need to restore sym. to the market. As long as shorts do not have the ability to "sell to 0 and keep it there" then the price should follow the dollar and deviate with swings in supply and demand.
3) What if the problem with BitAssets is NOT the mechanics of the market, but the lack of a sufficiently well capitalized market maker using an algorithm that doesn't attempt to "enforce a peg" but instead attempts to maintain a balanced portfolio of USD and BTS. With such a market maker in place price swings should be dampened and liquidity would improve around what ever price the market established.
4) What if the price feed wasn't just one price, but 2. A short limit and a call limit designed to protect USD from being sold to 0 and to prevent margin calls at unreasonable prices as people attempt to force USD to infinity. What if these limits could get wider over time as the market gets deeper. The end result would be true price discovery with safety.
Attempting to maintain 99.9% parity with very high liquidity in a young/thin market without large market makers is the fallacy. Imagine if we had many market makers like NuBits where the primary difference is that all of the collateral is ON THE BLOCKCHAIN and there are no fractional reserves.
I think that there needs to be less restrictions, less dependence upon the feed, and less complexity. BitShares would have a hard time pivoting to a NuBits style market maker unless some major whales step up to the plate and start operating bots.