I'm not sure I understand much of the above correctly, but if traders could make a 1% profit every ~1-4 hours by shorting the asset at the peak, and then buying again at the low, then holding until the peak.

A repetitive bot trading the 4 hour profit cycle (6 x 1% profit opportunities per 24 hours), would make 1.01x their initial investment.
Using a bot to trade each of these cycles every day for a month would create a (Initial-Investment * 1.01^(6*31) equals a 600% increase in capital, just from playing the tick-tock game of 1%

This asset needs to track the value of something that the mainstream will want to hold.
There will be lots of shorters wanting to earn the 1% profit 6 times a day.
BitShares-customers who want to buy CNY (?) at volume in a liquid market will not mind paying a 1% "fee" depending on where they are on the HERTZ cycle.
They won't even notice it

There would be lots of liquidity, shorters are guaranteed profits if there are buyers of the token.
High liquidity looks attractive to potential customers, and gets BitShares on the "front page" of crypto-news, because traders will see volume rankings and BitShares will be up there

Is this the kind of thing you're talking about?

Yes, however I'm initially thinking of a large amplitude (50% fluctuation from feed value) and a period of 1 month, effectively 0.138..% every hour not 1% every 4 hours.

We also need to take into account that not all witnesses publish price feeds for all smartcoins, and frequency of price feed publishes is variable, see: https://roelandp.nl/bitshareswitnesslog/
Thus, high frequency price feed publishing would require convincing the witnesses to shell out.

But the idea can be applied to any amplitude, period, graph function and reference asset. You need to take into account the specific smartcoin options for different algorithms.

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Edit: There's also phase shift to consider, you could have two tokens which have an opposite phase, canceling each other out.

I like the look of ALTCAP.XDR because it's a basket currency by the IMF, but it's only applied against 5 currencies. https://www.imf.org/external/np/fin/data/rms_sdrv.aspx

The CFETS basket currency by comparison is based on 24 currencies: http://www.chinamoney.com.cn/english/svcnrl/20161229/2047.html

Do you think there would be interest in an MPA based on CFETS?

Rather than a simple sin wave, we could have a sin wave with a period on the way down where the asset would be equal to the backing asset for about a week?

What do you think about the use of Fourier series? https://en.wikipedia.org/wiki/Fourier_series

Think wave interference would be simpler? Combining a triangle/sawtooth wave with a sin wave to get the above desired effect?

Thoughts?

I have produced a price feed generation script in Haskell for the HERTZ FBA:
https://github.com/grctest/HERTZ-Price-feed-script/blob/master/hertz.hs

It currently scrapes the price feed for XDR from cryptofresh, averages the last 10 published price feeds and outputs the results in a CSV file. It's outputting to a CSV for use in excel for charting.

Any suggestions?

What is Hertz?

Hertz is a highly experimental Market Pegged Asset (MPA) created on the Bitshares network. Elected Bitshares witnesses will publish price feeds which are pegged against the United States Dollar (USD) and predictably oscillates using a sine wave algorithm. The sine wave has an amplitude of 14% and a period of 28 days, thus the price feed value changes 2% every day and a resulting max price feed value of $1.14 and min of $0.86 (Note: Depending on the combination of Bitshares price volatility and age of price feeds published by witnesses, these limits may not always hold).

Hertz tokens are shorted (borrowed) into existence by users on the Bitshares network with at least 175% backing collateral in Bitshares; there is no centralized issuance and asset creator permissions have been restricted for increased decentralization.

By implementing a sine wave phase offset (date/time), we are able to make each Wednesday (mid working week) the most important day for Hertz.

Price feeds:
Reference Python scripts & calculator (https://github.com/BTS-CM/scripts)
  hertz_calculator.xlsx : A spreadsheet for evaluating the effect of different sine wave variables (amplitude, period, etc).
  hertz-verification.py : Used for verifying that the phase offset lines up appropriately.
  hertz-feed.py : What you'd use if you don't use wackou or xeroc's price feed scripts.
Wackou's 'BTS_Tools' (Only use if pull request #36 is merged, OR if you change 1/3 to 0.14 yourself manually).
  https://github.com/wackou/bts_tools/blob/master/bts_tools/feeds.py#L275
  https://github.com/wackou/bts_tools/blob/master/bts_tools/feeds.py#L441
Xeroc's 'Bitshares-PriceFeed' (Issue #25 addresses the inaccurate amplitude comments)
  https://github.com/xeroc/bitshares-pricefeed/blob/master/bitshares_pricefeed/examples/hertz.yaml

Surrendered FBA settings
- Disable confidential transactions:
- Require holders to be white-listed:
- Issuer may transfer asset back to himself:
- Issuer must approve all transfers

TODO
- Get witnesses to publish price feeds for the Hertz MPA

Links
https://sites.google.com/view/hertz-aba/

Best regards,Customminer.

Why would anybody buy VILLAIN if it's guaranteed to be worth less tomorrow?
Surely VILLAIN would need to have some other pro-buyer features to attract them to the asset.

Maybe holding it could be like a lottery ticket?
A small chance to gain +20%, but a definite chance of losing at least -5%.
Could this lottery be paid for out of the least collateralised short or something? (noob)

Primarily for the liquidity, there would be a constant supply of it at the price feed unlike bitUSD which doesn't incentivize lending it into existence.
If you hold VILLAIN and you need to liquidate it you could just settle it and get the BTS back at the feed price.

Perhaps the fees earned could be redistributed proportionally to the holders or to the parties involved in filled orders?

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A new formula backed asset enters the arena!

Introducing Pendulum!

X_Period = MOD((CurrentBlock-PendulumGenesisBlock),BlocksInPeriod)/BlocksInPeriod    //This will give us a value between 0 and 0.99[.....] (period) continuously.

Amplitude=0.5  //Varying the reference asset by 50%

PI=3.14159265359

Pendulum_Value = [USD | XDR] + (Amplitude*SIN(X_Period*(2*PI)))

Thus we get a formula backed asset which is representative of [USD|XDR] which both rises and falls in a predictable manner, thus having a phase which encourages the sale of the token and a phase which encourages the buying of the token.



https://steemit.com/bitshares/@cm-steem/a-new-formula-backed-asset-enters-the-arena-pendulum

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Anyone have any other ideas for FBA?

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Great post Thom! 

Great work!