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Would making the minimum trading unit bigger also decrease the volatility? I.e Lets say 1 Bitcoin was trading at $1000 If the minimum trading unit was $0.10 then manipulating the price a few $ might start a small short squeeze. If the minimum trading unit was $1 then manipulating the price tens of dollars might have the same effect. " " " was $10 then they would have to move it a few hundred $.Obv. $10 would be extreme, but as the blocks will be processing slower than real time trading, Bitshares hopefully won't be practical for HFT bots or people trying to make 0.X% gains so you should be able to make the trading unit bigger than most other platforms which should also suit the slightly longer-term trading mindset of the users and reduce volatility?
there is no interest charged for holding a short position
short positions will pay a 5% borrowing cost.
How is my description not accurate?My main objection is this: What Bad Things would happen if you increased the margin requirement to 1000000x from 2x?How do you know that 10x margin requirement isn't enough to make those Bad Things happen?If nothing else, with 10x margin requirement, I'm thinking many investors will be scared away by the small upside and large downside. The remaining capital will be stretched quite thinly, and most of it will be inefficiently deployed insuring extreme events.In other words, I think 10x margin is so favorable to BitUSD holders that there won't be enough BitUSD short sellers to make the system work at any price.
Quote from: Liberty on February 24, 2014, 05:39:09 amYou can also glean ideas by searching for post-crash proposals to avoid flash crashes in markets.Can you give a few starting points?
You can also glean ideas by searching for post-crash proposals to avoid flash crashes in markets.
Quote from: bytemaster on February 23, 2014, 07:51:31 pmYou don't seem to understand the mechanics or economics behind how BitShares X works. You cannot resort to price fixing and the collective capitalization of BTS holders has nothing to do with begging BitAPPL to APPL. You just need enough people willing to speculate on BitAPPL but the amount they each speculate is irrelevant.As long as there are currently people who are essentially receiving early shares in these assets at extremely low prices, there is almost no way they don't sell far below real world market value. Essentially, for all of these assets, as long as there are large amounts of holders before the public gets full access to it, their values will NOT be pegged to real world values for a very long time, because no matter what, these early holders will be tempted to sell out early when they see such a large percentage on their gains.
You don't seem to understand the mechanics or economics behind how BitShares X works. You cannot resort to price fixing and the collective capitalization of BTS holders has nothing to do with begging BitAPPL to APPL. You just need enough people willing to speculate on BitAPPL but the amount they each speculate is irrelevant.
Quote from: toast on February 23, 2014, 06:40:15 pmOk so pretend this thread is titled "Solution to High Volatility potentially breaking the BitAPPL Peg". You didn't solve the problem.The value for APPL will come from the value APPL produces. If BitShare Holders simply see no value in APPL, there can not possibly be a peg.We of course cannot flood the market with a BitAsset for every company right away, because Bitshare holders simply do not have the collective market capitalization to match real world prices.I suppose what you can do is create Precious Metal BitAssets, and then tie the BitUSD DIRECTLY to those BitAssets in terms of real world prices.For instance, an ounce of silver costs 20 dollars. Therefore, you may purchase 1 BitSilverOunce for exactly 20 BitUSD. In addition, BitSilverOunce may not be purchased via any other method, thus tying the value of BitUSD to a virtual precious commodity (which is a lot more to say than for the actual USD).We need to build this system from the ground up, and not worry so much about what the current "real world" pricing will be for the time being, because if you truly believe in this system, what you are dealing with right here right now WILL BE the 'real world'.
Ok so pretend this thread is titled "Solution to High Volatility potentially breaking the BitAPPL Peg". You didn't solve the problem.
The solution is simple, friends!In reality, fiat currencies will not survive long-term. There is no viable reason to invest in BitUSD, because it is ultimately worthless.The total number of BitUSD shares should be directly equivalent to the number of USD in circulation (say a few trillion, give or take 10 trillion, plus the total number of mass-produced counterfeits in circulation).Perfect, now we know that in relation to BTS, USD is actually going to be worth very little. As more nations enter currency crisis, such solutions such as BTS will be seen as viable alternatives, and yet when people finally come into BTS, do you think the first thing they are going to buy will be BitUSD?NO! That'd be like buying BitZimbabwe or BitGermanMark.People will more likely be looking to invest directly in real companies such as BitAPPL, as well as DAC's such as Ticketcoin/Biticket.Think real hard about it. BitUSD in fact should be the last thing we are even concerned about.
Quote from: bytemaster on February 19, 2014, 08:51:32 amI solved a major issue in the design of BitShares X as it relates to how we handle the case where the collateral is insufficient to back the short position and thus the result is unbacked BitUSD in circulation. Considering the value of BitShares X is directly related to the degree to which the holders of BitShares X are willing to guarantee the purchasing power of BitUSD it seems that a decentralized Bank should take the same approach as their centralized counterparts... Sell new shares in the bank to raise capital to cover the losses. In effect all BTS holders would provide 'insurance' against the 50% discontinuity event that would blow out a short position and leave unbacked BitUSD. The reason why BTS longs would insure the BTS shorts is because the entire value proposition of BitShares X is derived from the promise of BitUSD remaining pegged. If the BTS holders can increase the value of BTS by providing this insurance against a very rare event, it should in turn increase confidence and thus increase the value of BTS.This change would shift the losses that BitUSD holders would currently pay to the BTS holders and thus collectively BTS holders are backing all BitUSD and BitUSD holders have something with much lower risks in these rare events.It is curious to see a proclaimed student of Austrian Economics turn to central bank intervention of markets. A liquidity problem seems like the real risk, and that is a market participation problem. Is it still correct that people get to own BitUSD from ownership of PTS (and now also AGS) at time of fork, and purchasing power increases 5% per year even though they never participate in the markets? If that is true then it seems natural that market participation would be a problem. People would hoard the stronger form of a currency (BitUSD) and trade the weaker one (USD). I presume I don't understand your plan because I don't see a market incentive to sell BitUSD as the market discovers it to have greater value than real USD.Many replies to your post indicate a general understanding that your central bank intended to create new BTS as necessary to fund the taking long positions by the bank. It was interesting to see that some even liked the idea of devaluing BTS (which imbalances all other products) to attempt to balance one product. The way I read your post however is that you intend to create a central bank that people can invest existing BTS into. I much prefer that idea, but wonder how that too would work. Investment in this bank subjects capital to more risk; do you have a reward in mind for this risk, and where does this reward come from? Do you intend for the actions of this bank to be automated and not otherwise subject to moral hazard? How do you imagine events would play out if Gresham's Law causes BitUSD to become systemically more valuable than USD in a way that the bank can not compensate for? Do you imagine a bank for each product, or one bank for a group of products?You may find this a useful perspective on central banking: http://www.cato.org/multimedia/events/31st-annual-monetary-conference-panel-1-100-years-fed-what-have-we-learned.
I solved a major issue in the design of BitShares X as it relates to how we handle the case where the collateral is insufficient to back the short position and thus the result is unbacked BitUSD in circulation. Considering the value of BitShares X is directly related to the degree to which the holders of BitShares X are willing to guarantee the purchasing power of BitUSD it seems that a decentralized Bank should take the same approach as their centralized counterparts... Sell new shares in the bank to raise capital to cover the losses. In effect all BTS holders would provide 'insurance' against the 50% discontinuity event that would blow out a short position and leave unbacked BitUSD. The reason why BTS longs would insure the BTS shorts is because the entire value proposition of BitShares X is derived from the promise of BitUSD remaining pegged. If the BTS holders can increase the value of BTS by providing this insurance against a very rare event, it should in turn increase confidence and thus increase the value of BTS.This change would shift the losses that BitUSD holders would currently pay to the BTS holders and thus collectively BTS holders are backing all BitUSD and BitUSD holders have something with much lower risks in these rare events.
This is called a short squeeze and if it happened there would be many people looking to enter new shorts (fully collateralized shorts) to make a profit and keep the price in line. The challenge will be if the short squeeze happens all in one block. I suspect there would be a large number of orders ready to catch any squeeze and put a stop to the rise.
Quote from: delulo on February 19, 2014, 08:50:00 pmQuote...always thought about that: The BitAsset speculator would have to take into account not only the future price developement of his Asset but also the price developement of BTS. That would not be good for someone that is looking for a simple way to hedge something or an expert in Gold/Oil/whateverAssett who is not also an expert on the future developement of BTS price..not a problem?Not a problem.
Quote...always thought about that: The BitAsset speculator would have to take into account not only the future price developement of his Asset but also the price developement of BTS. That would not be good for someone that is looking for a simple way to hedge something or an expert in Gold/Oil/whateverAssett who is not also an expert on the future developement of BTS price..not a problem?
...always thought about that: The BitAsset speculator would have to take into account not only the future price developement of his Asset but also the price developement of BTS. That would not be good for someone that is looking for a simple way to hedge something or an expert in Gold/Oil/whateverAssett who is not also an expert on the future developement of BTS price..
Quote from: ul on February 20, 2014, 03:49:07 pmThe main difference of the special account and bm's solution is that the BitUSD which is used to cover the uncovered short position is not bought from the market, but took out from the former transaction fees. Yes, you got me. when the margin call execute, the current sell orders in the market get an absolutely power to make deal, these order get much benefit, it's unfair to others.Bought from the market just lead to unstable state:the margin call execute -> buy a lot of bitusd from market -> price up -> more margin call -> buy more -> price up -> more margin call .......It's unstable feedback.
The main difference of the special account and bm's solution is that the BitUSD which is used to cover the uncovered short position is not bought from the market, but took out from the former transaction fees.
The other solution is equivalent to that if the collateral is not enough, some BitUSD will be created directly to make a total cover. There's no more market transactions to do such a cover. That will lead to a less influence on the market.
Quote from: toast on February 20, 2014, 04:39:26 pmThe market will already take the locked up fees in the robot account into account as if the total XTS supply was lower. Destroying/creating and locking up / reallocating are the same thing when it comes to shares of a whole. Are you just saying one is less likely to cause problems because of exclusively psychological factors?No. There's a little difference even considering the equivalence of destroying/creating and locking up/reallocating. Let's just use destroying and creating instead of the other two to make it more clear. When margin call occurs, all the collateral bts is used to buy enough BitUSD to cover the short position. The current solution is that if the collateral is not enough, some bts will be created to buy BitUSD to make a total cover. The other solution is equivalent to that if the collateral is not enough, some BitUSD will be created directly to make a total cover. There's no more market transactions to do such a cover. That will lead to a less influence on the market.
The market will already take the locked up fees in the robot account into account as if the total XTS supply was lower. Destroying/creating and locking up / reallocating are the same thing when it comes to shares of a whole. Are you just saying one is less likely to cause problems because of exclusively psychological factors?
Why we must cover all the bitusd on margin call? In the case when the system is out of bitusd sell order we won't even be able to cover it no matter how many more xts created. Could it be simply to sell the collateral, and try to cover as much bitusd as possible. If not sufficient, take the rest as a global bad debt? One way to deal with bad debt is to use transaction fees or interest obtained later to cover it before paying back to stakeholders. Considering the bad debt is a rare event, it could be get controlled within a reasonable level. Just my 2 cents.
Also, Alt's idea about the market robot is also very interesting. The main difference of the special account and bm's solution is that the BitUSD which is used to cover the uncovered short position is not bought from the market, but took out from the former transaction fees. I'd like to prefer Alt's idea once taken into account the solution's influence on the market.
Imagine this:current price is 1000 usd/xfssome sell orders for bitusd in the market, maybe 10,000,000.first I offer an sell order: sell 1000,000 bitusd with price 1usd/xfsthen I buy all 10,000,000 bitusd with 10,000 xfs.now, the margin call execute.all the backup xfs will buy my bitusd with price 1usd/xfs. I can get 1000,000 xfs.If I change the price to 0.0001usd/xfs, I can destroy the BTS system.
Quote from: alt on February 19, 2014, 04:09:16 pmIf we have a company account, the margin call is very easy:transfer all short position and backup to the company account.these short position will be cover with the bitasset in the account.And I think It's very cool when you give the BTS such a robot account.margin call executed because price of bitusd rise up.In this situation, we still use backup xfs to buy bitusd with any price, even create new xfs.I think it's not ok for price stable. Maybe there huge danger to the whole network.I think transfer the short position and backup xfs to the robot account is more simple.
If we have a company account, the margin call is very easy:transfer all short position and backup to the company account.these short position will be cover with the bitasset in the account.And I think It's very cool when you give the BTS such a robot account.
Quote from: delulo on February 19, 2014, 08:50:00 pmQuoteTo clarify: This would be the case when BTS would decrease in price more than twice compared to the point in time when the short positions was taken (if a short position requires 2x Asset value in BTS)?so i guess this describes the margin call case. How can the system run out of bitshares like mentioned in the OP?If the starting collateral is 100 BTS backing 50 USD... and the price of 50 USD rises to more than 100 BTS so fast that the market couldn't cover the position in time then there would not be enough BTS in the short position to buy back 50 USD... so the network would be forced to create new BTS to close the short position.
QuoteTo clarify: This would be the case when BTS would decrease in price more than twice compared to the point in time when the short positions was taken (if a short position requires 2x Asset value in BTS)?so i guess this describes the margin call case. How can the system run out of bitshares like mentioned in the OP?
To clarify: This would be the case when BTS would decrease in price more than twice compared to the point in time when the short positions was taken (if a short position requires 2x Asset value in BTS)?
Quote from: bytemaster on February 20, 2014, 01:25:19 amQuote from: alt on February 20, 2014, 01:16:02 amQuote from: toast on February 20, 2014, 12:55:49 amThat's what we're already doing (the "rules" are not exactly the same, like your margin suggestion is 10% etc), except we're creating/destroying BTS instead of having an account that does trades. As long as your design only has one "network market bot", these designs are equivalent to the user when you view your funds as % BTS on marketbut still have something I want to issue:1. bitusd never be create2. can we limit total amount of bts not more then 400,000,000?In this particular case, BTS will only grow in the event BitUSD needs to be honored. The supply is limited and shrinking except in rare events (that may never happen). Dan, do you think adjusting the transaction fee formula in a way that it would get rid of BTS more quickly if ever the amount of outstanding BTS was more than 4 million is an option? I suggested that in the second post in this thread.Or do you think this scenario is too rare to be considered?
Quote from: alt on February 20, 2014, 01:16:02 amQuote from: toast on February 20, 2014, 12:55:49 amThat's what we're already doing (the "rules" are not exactly the same, like your margin suggestion is 10% etc), except we're creating/destroying BTS instead of having an account that does trades. As long as your design only has one "network market bot", these designs are equivalent to the user when you view your funds as % BTS on marketbut still have something I want to issue:1. bitusd never be create2. can we limit total amount of bts not more then 400,000,000?In this particular case, BTS will only grow in the event BitUSD needs to be honored. The supply is limited and shrinking except in rare events (that may never happen).
Quote from: toast on February 20, 2014, 12:55:49 amThat's what we're already doing (the "rules" are not exactly the same, like your margin suggestion is 10% etc), except we're creating/destroying BTS instead of having an account that does trades. As long as your design only has one "network market bot", these designs are equivalent to the user when you view your funds as % BTS on marketbut still have something I want to issue:1. bitusd never be create2. can we limit total amount of bts not more then 400,000,000?
That's what we're already doing (the "rules" are not exactly the same, like your margin suggestion is 10% etc), except we're creating/destroying BTS instead of having an account that does trades. As long as your design only has one "network market bot", these designs are equivalent to the user when you view your funds as % BTS on market
If the starting collateral is 100 BTS backing 50 USD... and the price of 50 USD rises to more than 100 BTS so fast that the market couldn't cover the position in time then there would not be enough BTS in the short position to buy back 50 USD... so the network would be forced to create new BTS to close the short position.
Do you not see how having such a robot account lock up backup funds is *exactly equivalent* to the network printing/destorying shares on demand? If they're out of circulation then supply-side things like the same in both cases. Or am I missing part of what this network account does?
So is the new solution basically "the exact moment all collateral is gone, fill everyone's buy-BTS-for-BitAsset order filled for free"? Or is it at the price the shorts blow out at?
en.....I still have a little doult about it.When I short the bitusd, I promiss with double price for backup.I think double price is the most I should be responsible.the solution you point out take more from the shareholder, It's unfair.I still prefer to force offer an buy order: sell the backup bts to buy full bitusd to cover the short position.I have give all my backup, it's enough for me.for this buy order, If it can match the sell order in the marketing , I don't care, it's the choice of the marketing.
I think what he's saying is that in the case of more than 2x drop of BTS/BitUSD and collateral runs out then the network will print more BTS to buy back BitUSD... this is paid for by BTS holders (remember "create/destroy" and "redistribute" are completely equivalent)Quote from: delulo on February 19, 2014, 02:20:35 pmTo clarify: This would be the case when BTS would rise in price more than twice compared to the point in time when the short positions was taken (if a short position requires 2x Asset value in BTS)? I thought it was the opposite?
To clarify: This would be the case when BTS would rise in price more than twice compared to the point in time when the short positions was taken (if a short position requires 2x Asset value in BTS)?
the case where the collateral is insufficient to back the short position and thus the result is unbacked BitUSD in circulation.
Quote from: alt on February 19, 2014, 09:47:26 amall the bit assets which are destroy should transfer to this account.If they are destroyed they can't be transferred because they don't exist anymore. Quoteand all short possision which can not cover should transfer to this account.A short position without collateral has a negative value. Nobody would want to have it - least buy it.
all the bit assets which are destroy should transfer to this account.
and all short possision which can not cover should transfer to this account.