I am against the yield to the long and short holders. But maybe yield to the short traders will work.

Why?

What I mean "traders", are the people who are placing orders.
Placing orders will affect the price instantly, and this affect the peg directly.

• if the bitUSD price is lower than realUSD,  new short orders pay instant interest. (to the system fund, not to the bitUSD seller. bitUSD can be sold to both short and buyer with BTS)
  if the bitUSD price is premium than realUSD, new short orders get instant interest. (from the system fund. not from the bitUSD holder.)

What I mean "holders" are people already hold bitasset or short orders.
We should not do the yield thing to the longs and shorts.  This will not help the instant price, but make the two sides much complex.

Edited:

And the yield control to the bitAsset and short holders will not help peg instantly. but yield control to new orders maybe will help. (why? check here https://bitsharestalk.org/index.php/topic,16378.msg209425.html#msg209425)

If yield control to the already orders:
If bitusd is lower than realusd, so the bitusd holder will get yield to cover the lost. people need not to buy cheap bitusd, because when bitusd become premium, the earning will be eaten up by yield.When the bitusd is premium, it will similiarly keep premium, because of the yield.

Quote from: bytemaster on May 11, 2015, 01:04:19 pm

So what remains is the "deflation of BitUSD" caused by shorts backing further and further from the price feed as BitUSD holders HODL and never sell except at just below what Shorts are willing to sell at.   I think that this scenario ignores other market realities:

  1.  The further BitUSD gets from $1 the more incentive there is for for BitUSD holders to take profits and sell. 
  2.  The further BitUSD gets from $1 the less demand there is to buy BitUSD
  3.  The further BitUSD gets from $1 the more demand there is to short BitUSD

So what remains is a scenario where a larger player buys up BitUSD and holds it ransom for a high premium in a bear market and forcing shorts that want to stop their losses to pay a price.   This is a form of short-squeeze and is present in all markets that allow shorts.    This same whale that the shorts complain about when they want to cover is the whale that provided them liquidity when then wanted to enter their position.     

In other words, whenever the price is above $1 neither party is guaranteed liquidity at the price they entered the position at and the market is balanced.   

You cannot have BitUSD go to infinity without BTS going to 0 and the further BitUSD gets from real USD the more people will use real USD to buy BitUSD to sell for BTS.  All liquidity for using BTS to buy BitUSD will dry up very quickly once it gets too far from the feed.   BTS holders wanting USD would simply opt for the real thing.  Therefore we know that there exists a narrow range in which BitUSD will actually trade and it will have a floor of $1 and a likely ceiling of $1.10. 

The only other solution is to have scheduled "black swans" (aka global forced settlement) which is good for traders but bad for merchants and consumers.

I agree with the conclusion that the only solution seems to be scheduled black swans, but they are not the right mechanism

I see why one would want to sell bitUSD closer to the feed, based on 1 and 2 BM listed above. There will be demand for bitUSD so people can close out their positions. But I still ask, why would bitUSD be created in the first place? The reason why it would be created is only if you think BTS will increase in value faster than what I will be able to buy bitUSD for in the future.

The problem is bitUSD is impossible to price as a short. Even if BTS value will increase at a known rate compared to realUSD, there is no mechanism by which I can anticipate what bitUSD will be worth relative to realUSD at any time in the future. That means I can't price, and if I can't price there is no reason I should enter the market (since it is just as likely to be right as it is wrong). Now there is a short squeeze, which reinforces the belief that no one can properly price shorts. Then you get into the "discount" war between merchants where everyone starts offering larger and larger discounts for using bitUSD, also driving the value of bitUSD away from the peg.

Yield won't fix this, unless the yield is based on the PEG value and not bitUSD value. I think that might be prefered to forced settlement, which is horrible for merchants.

All the solution mentioned by BM, is to make a fair trade market. This make the bitasset exist and be collateraled.
As to the bitusd price, we must do market make to finish the peg. 1 dollar is 1 dollar when many people will accept it as 1 . The money just be used like 1 dollar, so it is 1 dollar.
We need some people to accept 1 bitusd as 1 usd. If nobody do, we the community should be the first. (Such as establish the market make fund, the profit dividen to the fund share holders.)

Quote from: merivercap on May 15, 2015, 03:56:20 am

Quote from: starspirit on May 15, 2015, 03:08:55 am

merivercap, xiahui135, others interested - I had an initial go at a structure as an alternative to forced settlement in the internal market. You can see it here. https://bitsharestalk.org/index.php/topic,16352.0.html

I read through what I could, but I might need a summary version. 

If the idea is that the market can be fixed externally, that sounds good.  We don't currently have any bitUSD:USD markets to reference.  However we do have a bitCNY:CNY market: https://www.transwiser.com/

I'm not clear on the exact mechanisms of the website, but it would be interesting to know.  The peg seems reasonably tight.

Rather than unlimited forced-settlement, I think daily settlement at the price feed for undercollateralized positions should bring enough volume to tie pricing to an external price feed as you want.   We want to have long term shorters to maintain enough supply for bitUSD holders.  Shorters need predictability.

Summary version:
- On any day when the external bitUSD:USD market falls below 1:1, this instantly triggers a block of shorts to be selected for calling
- Calling is implemented like a margin cover, by buying bitUSD with the collateral, but with 24 hour notice to the market
- This could continue on consecutive days until the ask returns back to or over parity

It does not require a bitUSD:USD market necessarily, but if not, it does require at least one external market where both bitUSD and USD trade against a liquid asset like BTC, so that a bitUSD:USD exchange ratio can be inferred (edit: actually any bitUSD market will suffice as long as there is a path to USD).

I think your idea to not force-settle under any price scenario, and just cover under-collateralized positions (which only depends on BTS), would allow the external bitUSD:USD external rate to swing further from the peg, as there is no mechanism to force it back toward parity.

I am against the settlement is that the bitusd can settle for bts any time.
I agree with the system force-settle when the bts collateral is not enough. In this situation, once the collateral is under some level, say 120%, the market should force the short to cover.
The martket rules should be simple and fair to two side. This make the market work.

As to pegging of bitusd, it should be realised by market make. As the bitasset is well backed, pegging can be done via market make.
You idea sounds you want to use the collateral to do market make work to support the bitusd price. But when bitusd is higher than usd, people will not willing short more bitusd. I think this should be.considered.

A proper market-making business, which would hedge BTC and BTS exposure and only stay long fiat, whose income would come only from real mm profit and not speculation. Then it's a simply a matter of showing the numbers to get investors to add liquidity.

In the new rules, it will be hard to do market make business.
If you hold BTA, you can easily settle to get BTS with worry price change. You need not to place an buy BTS order on the market.
But if you hold BTS, you have to place an sell order on the market to get BTA. this drive the price down.

如果效率慢了可不行，因为现在银行汇款速度已经不错了，而且也不再那么昂贵。

感觉应该可行，不过有很多点要测试，找到痛点。

I think we should support this idea. It is something like POS. If this true, our system will combine advantage of POS and DPOS.