BitShares Forum
Main => General Discussion => Topic started by: bytemaster on April 16, 2015, 07:48:38 pm
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#1 No explicit short sell price limit
#2 No pre-set expiration on short positions.
#3 Any time someone with USD is unhappy with the current internal market price, they can request settlement at the 99% of feed (a 1% fee) in X days, where X is more than 24 hours.
#4 On settlement day the least collateralized short position is forced to settle at 99% of feed (a 1% profit)
#5 At any time entire market can be settled at the feed price given 30 day notice to be executed only in the event that all USD holders are unwilling to sell anywhere near a fair price. (black swan protection), this settlement can be canceled if the market returns to normal voluntarily.
#6 200% collateral
In effect a short position is a "loan" that is callable based upon price or X day notice.
Expected Outcome:
1) The price feed should be irrelevant unless the current market price is below 99% the expected price feed in X days
2) No shorts would dare sell down the price much below the expected feed for long because longs can force settlement to call their bluff.
3) The market has a graceful escape valve where all parties have ample time to voluntarily settle to avoid being forced settled.
4) Well collateralized shorts never have to cover
5) USD holders are guaranteed liquidity at 99% of the feed within X days (potentially as little as 24 hours).
All that is required is the threat of forced settlement to keep the market fair, by charging a fee for forced settlement longs that demand liquidity compensate the shorts who were forced out. Over all the market rules are simpler, liquidity is much greater, and all parties are far more protected than they are today.
Thoughts?
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#1 No explicit short sell price limit
I was always against the fixed pricefeed. We need just some orientation to let normal people know what price they could expect.
#2 No pre-set expiration on short positions.
- good!
#3 Any time someone with USD is unhappy with the current internal market price, they can request settlement at the 99% of feed (a 1% fee) in X days, where X is more than 24 hours.
- sound also better then the current system
#4 On settlement day the least collateralized short position is forced to settle at 99% of feed (a 1% profit)
#5 At any time entire market can be settled at the feed price given 30 day notice to be executed only in the event that all USD holders are unwilling to sell anywhere near a fair price. (black swan protection), this settlement can be canceled if the market returns to normal voluntarily.
#6 200% collateral
- i would like to reduce it to 100%, but force a cover by 50%, so the shorter needs less capital, but has to cover sooner if he gets on the wrong food
In effect a short position is a "loan" that is callable based upon price or X day notice.
Expected Outcome:
1) The price feed should be irrelevant unless the current market price is below 99% the expected price feed in X days
2) No shorts would dare sell down the price much below the expected feed for long because longs can force settlement to call their bluff.
3) The market has a graceful escape valve where all parties have ample time to voluntarily settle to avoid being forced settled.
4) Well collateralized shorts never have to cover
5) USD holders are guaranteed liquidity at 99% of the feed within X days (potentially as little as 24 hours).
All that is required is the threat of forced settlement to keep the market fair, by charging a fee for forced settlement longs that demand liquidity compensate the shorts who were forced out. Over all the market rules are simpler, liquidity is much greater, and all parties are far more protected than they are today.
Thoughts?
-
#1 No explicit short sell price limit
I was always against the fixed pricefeed. We need just some orientation to let normal people know what price they could expect.
#2 No pre-set expiration on short positions.
- good!
#3 Any time someone with USD is unhappy with the current internal market price, they can request settlement at the 99% of feed (a 1% fee) in X days, where X is more than 24 hours.
- sound also better then the current system
#4 On settlement day the least collateralized short position is forced to settle at 99% of feed (a 1% profit)
#5 At any time entire market can be settled at the feed price given 30 day notice to be executed only in the event that all USD holders are unwilling to sell anywhere near a fair price. (black swan protection), this settlement can be canceled if the market returns to normal voluntarily.
#6 200% collateral
- i would like to reduce it to 100%, but force a cover by 50%, so the shorter needs less capital, but has to cover sooner if he gets on the wrong food
In effect a short position is a "loan" that is callable based upon price or X day notice.
Expected Outcome:
1) The price feed should be irrelevant unless the current market price is below 99% the expected price feed in X days
2) No shorts would dare sell down the price much below the expected feed for long because longs can force settlement to call their bluff.
3) The market has a graceful escape valve where all parties have ample time to voluntarily settle to avoid being forced settled.
4) Well collateralized shorts never have to cover
5) USD holders are guaranteed liquidity at 99% of the feed within X days (potentially as little as 24 hours).
All that is required is the threat of forced settlement to keep the market fair, by charging a fee for forced settlement longs that demand liquidity compensate the shorts who were forced out. Over all the market rules are simpler, liquidity is much greater, and all parties are far more protected than they are today.
Thoughts?
I did reduce it.. 100% from buyer 100% from seller = 200% total, vs 300% today. So it looks like you like everything.
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#1 No explicit short sell price limit
I was always against the fixed pricefeed. We need just some orientation to let normal people know what price they could expect.
#2 No pre-set expiration on short positions.
- good!
#3 Any time someone with USD is unhappy with the current internal market price, they can request settlement at the 99% of feed (a 1% fee) in X days, where X is more than 24 hours.
- sound also better then the current system
#4 On settlement day the least collateralized short position is forced to settle at 99% of feed (a 1% profit)
#5 At any time entire market can be settled at the feed price given 30 day notice to be executed only in the event that all USD holders are unwilling to sell anywhere near a fair price. (black swan protection), this settlement can be canceled if the market returns to normal voluntarily.
#6 200% collateral
- i would like to reduce it to 100%, but force a cover by 50%, so the shorter needs less capital, but has to cover sooner if he gets on the wrong food
In effect a short position is a "loan" that is callable based upon price or X day notice.
Expected Outcome:
1) The price feed should be irrelevant unless the current market price is below 99% the expected price feed in X days
2) No shorts would dare sell down the price much below the expected feed for long because longs can force settlement to call their bluff.
3) The market has a graceful escape valve where all parties have ample time to voluntarily settle to avoid being forced settled.
4) Well collateralized shorts never have to cover
5) USD holders are guaranteed liquidity at 99% of the feed within X days (potentially as little as 24 hours).
All that is required is the threat of forced settlement to keep the market fair, by charging a fee for forced settlement longs that demand liquidity compensate the shorts who were forced out. Over all the market rules are simpler, liquidity is much greater, and all parties are far more protected than they are today.
Thoughts?
I did reduce it.. 100% from buyer 100% from seller = 200% total, vs 300% today. So it looks like you like everything.
ok :D 200% for both - great!
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#1 No explicit short sell price limit
#2 No pre-set expiration on short positions.
#3 Any time someone with USD is unhappy with the current internal market price, they can request settlement at the 99% of feed (a 1% fee) in X days, where X is more than 24 hours.
#4 On settlement day the least collateralized short position is forced to settle at 99% of feed (a 1% profit)
#5 At any time entire market can be settled at the feed price given 30 day notice to be executed only in the event that all USD holders are unwilling to sell anywhere near a fair price. (black swan protection), this settlement can be canceled if the market returns to normal voluntarily.
#6 200% collateral
In effect a short position is a "loan" that is callable based upon price or X day notice.
Expected Outcome:
1) The price feed should be irrelevant unless the current market price is below 99% the expected price feed in X days
2) No shorts would dare sell down the price much below the expected feed for long because longs can force settlement to call their bluff.
3) The market has a graceful escape valve where all parties have ample time to voluntarily settle to avoid being forced settled.
4) Well collateralized shorts never have to cover
5) USD holders are guaranteed liquidity at 99% of the feed within X days (potentially as little as 24 hours).
All that is required is the threat of forced settlement to keep the market fair, by charging a fee for forced settlement longs that demand liquidity compensate the shorts who were forced out. Over all the market rules are simpler, liquidity is much greater, and all parties are far more protected than they are today.
Thoughts?
I have more or less given up hope one ever seen ONLY #6. But all of them points?
for( a=0 a<65536 a++) +5% next
PS
I have never heard/read before but a smart way to make sure the longs get fair price, virtually at all times. +5%
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Margin call is now determined by the market price rather than the feed? It works because there is a threat of forced settlement at the price feed. This is really clever.
Also does forced settlement at feed price trigger margin calls as well? If so, this could be part of a black swan attack. A whale could drive the price direction opposite of the price feed, and then perform a forced settlement in another account; collapsing the entire market into a black swan trigger.
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#3 Any time someone with USD is unhappy with the current internal market price, they can request settlement at the 99% of feed (a 1% fee) in X days, where X is more than 24 hours.
#4 On settlement day the least collateralized short position is forced to settle at 99% of feed (a 1% profit)
Someone with a lot of USD *and* BTS could
1. request settlement of their USD tomorrow
2. buy lots of new USD with their BTS, driving the price up
3. settle their old USD at the higher price.
If they manage to drive the price up by more than 1% they have an instant profit. Rinse, repeat.
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Also does forced settlement at feed price trigger margin calls as well? If so, this could be part of a black swan attack. A whale could drive the price direction opposite of the price feed, and then perform a forced settlement in another account; collapsing the entire market into a black swan trigger.
If a whale (or anyone) sell bitAsset below the reasonable price (generally about feed) - you just buy the bitAsset and immediate request settlement/liquidation - pocketing the money and punishing the attacker. works real nice actually.
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Also does forced settlement at feed price trigger margin calls as well? If so, this could be part of a black swan attack. A whale could drive the price direction opposite of the price feed, and then perform a forced settlement in another account; collapsing the entire market into a black swan trigger.
If a whale (or anyone) sell bitAsset below the reasonable price (generally about feed) - you just buy the bitAsset and immediate request settlement/liquidation - pocketing the money and punishing the attacker. works real nice actually.
The attacker isn't who is punished unless he happens to be least collateralized. The 24 hour+ delay means you cannot depend upon errors in the price feed to guarantee a profit. But use, this basically means that the market has "infinite" liquidity for BitUSD at ~1% of the feed price.
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Also does forced settlement at feed price trigger margin calls as well? If so, this could be part of a black swan attack. A whale could drive the price direction opposite of the price feed, and then perform a forced settlement in another account; collapsing the entire market into a black swan trigger.
If a whale (or anyone) sell bitAsset below the reasonable price (generally about feed) - you just buy the bitAsset and immediate request settlement/liquidation - pocketing the money and punishing the attacker. works real nice actually.
The attacker isn't who is punished unless he happens to be least collateralized. The 24 hour+ delay means you cannot depend upon errors in the price feed to guarantee a profit. But use, this basically means that the market has "infinite" liquidity for BitUSD at ~1% of the feed price.
So its doing away with the concept of margin calls and replacing it with forced settlement. Unlike a margin call, which is triggered whenever the spot price (feed price in this case) moves beyond collateral amt, a forced settlement needs to meet two conditions: 1) authorization by a long holder and 2) being an account with least collateralize amt.
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My reaction with disclaimer that I know little about the nature of financial markets and I've had too much beer .. is that a lot of this appears rather arbitrary, which is perhaps ok but prompted a thought: who is BitShares principal customer likely to be in the future and can we be more deliberate about ensuring that what is offered is appealing to them? If it's financially savvy individuals then perhaps there is more flex; if it's orgs, perhaps we need to be more cautious and check that what is available does match what they will be looking for, relative to what they are familiar with. That is, do we know the people we are building for enough to be sure their opinion? From what I've seen the core dev team is very alert to these issues but then I see choice and wonder about where the limits of that really are. Some of us have less clue than you might credit us??.. There's a risk of playing up to early investors rather than the mainstream market???
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Someone with a lot of USD *and* BTS could
1. request settlement of their USD tomorrow
2. buy lots of new USD with their BTS, driving the price up
3. settle their old USD at the higher price.
If they manage to drive the price up by more than 1% they have an instant profit. Rinse, repeat.
Wouldn't they need to drive the feed price up, not the market price?
Otherwise, that's just plain market manipulation, like exists on all crypto exchanges.
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Someone with a lot of USD *and* BTS could
1. request settlement of their USD tomorrow
2. buy lots of new USD with their BTS, driving the price up
3. settle their old USD at the higher price.
If they manage to drive the price up by more than 1% they have an instant profit. Rinse, repeat.
Wouldn't they need to drive the feed price up, not the market price?
Otherwise, that's just plain market manipulation, like exists on all crypto exchanges.
Same thoughts I had monsterer. Its really not a vulnerability.
I feel like the threat of forced settlement is enough to keep the market price at 99% parity. Its like a random checkpoint that keeps things honest. And it gets rid of that black swan function that the team was working on before. What do you think?
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Also does forced settlement at feed price trigger margin calls as well? If so, this could be part of a black swan attack. A whale could drive the price direction opposite of the price feed, and then perform a forced settlement in another account; collapsing the entire market into a black swan trigger.
If a whale (or anyone) sell bitAsset below the reasonable price (generally about feed) - you just buy the bitAsset and immediate request settlement/liquidation - pocketing the money and punishing the attacker. works real nice actually.
The attacker isn't who is punished unless he happens to be least collateralized. The 24 hour+ delay means you cannot depend upon errors in the price feed to guarantee a profit. But use, this basically means that the market has "infinite" liquidity for BitUSD at ~1% of the feed price.
By punished I mean he would be selling below the real price, before the rest of the market corrects the price in relatively short order. Even though it is not necessarily attackers shorts closed upon/liquidated.
2 more broader points:
- It seems that one big sure negative is the yield is gone for good. I understand you have more or less given up on it as it is but just saying.
- I can definitely see positives the settlement price to be 99% of the feed price at request time ,even if it takes 24h or so for the BTS to be actually received. Going a step further - how about using the average of price at request and actual settlement times.
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Its fine if yield goes away. It can be re-introduced with loans and leveraging like in Bitfinex. I'm sure that's the aim. And yield in this matter would be much larger.
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I like this; going in the right direction. +5%
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With all my higher education, I am smart enough to admit that I don't understand a freaking thing about how this market works. I applaud you for continuing to improve and tinker with it until we have a finished product that everyone loves. So thumbs up from me.
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Its fine if yield goes away. It can be re-introduced with loans and leveraging like in Bitfinex. I'm sure that's the aim. And yield in this matter would be much larger.
exactly
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I have a few proposed tweaks.
First I will make a note of five main queues:
- Regular call queue
- Margin call queue
- Activated redeem queue
- Sell queue
- Buy queue
A short position has a grace period G (e.g. G = 14 days) during which it is not callable unless margin called. If the collateral ratio of a short position is below the margin call ratio limit M (e.g. M = 175% = 1.75), it will be placed in the margin call queue. If a short position does not belong in the margin call queue but it has existed for longer than the grace period, it is placed in the regular call queue. Both the regular call queue and margin call queue are ordered in ascending collateral ratio order (meaning the head of each queue is the short position that has a lower collateral ratio than any other short position in the same queue).
The buy queue contains all the orders that want to buy the BitAsset by selling its corresponding collateral asset (e.g. BTS). This is actually a virtual queue that encompasses all the other real buy queues such as the ones for absolute buy orders and relative (to the price feed) buy orders. The sell queue contains all the orders that want to sell the BitAsset for the corresponding collateral asset. It too is actually a virtual queue that encompasses all the other real sell queues such as the ones for absolute sell orders, relative sell orders, absolute short orders, relative short orders, and unactivated redeem orders.
An unactivated redeem order is very similar to a relative sell order except that its offset is restricted to be no greater than -1% (meaning offering the order at a price no better than 99% of the price feed). Once an unactivated redeem order has existed continuously for an X period (e.g. X = 48 hours), it is promoted to an activated redeem order.
The buy queue is in descending price order. The sell queue and activated redeem queue are in ascending price order.
Matching rules are as follows:
- If the activated redeem queue is not empty, first attempt matching the head of the activated redeem queue with the order with the highest bid from the set of orders composed from the head of the buy queue and margin call queue (all margin call queue items offer a limit bid price up to Y fraction above the feed price, where Y is a monotonic function of the collateral ratio, e.g. Y = 20% * (1 - (COLLATERAL_RATIO - 1)/(M-1))^2 ). If there was a (partial) match, repeat with the new set of heads until there is no match anymore. If the activated redeem queue is still not empty at that point (which, by the way, indicates that the margin call queue must be empty), match the head of the activate redeem queue with the head of the regular call queue (this will guarantee a match as long as the regular call queue is not empty) until either the activated redeem queue is empty or the regular call queue is empty.
- Attempt matching the order with the highest bid from the set of orders composed from the head of the buy queue and margin call queue with the head of the sell queue. Repeat until no more matches are possible.
A short order has no price restriction. However, the short order has to provide the initial collateral ratio it wants to match with and the blockchain requires that this ratio is not less than the margin call ratio limit imposed by the BitAsset (a reasonable value for the margin call ratio limit, for now, might be something between 150% and 180%). So if the margin call ratio limit for the BitAsset was set to 175%, the short order could specify an initial collateral ratio of 175%, but then the risk of margin call would be insanely high, so perhaps the short seller would choose a more sensible initial collateral ratio of 190%.
Black swan liquidation rules still exist and are triggered when the collateral ratio of any short position falls below 100%.
Finally, the mechanism that triggers forced settlement of all longs with shorts needs to be made more concrete. How exactly do we determine whether BitUSD asks are not fair and also not fair for a long enough period of time (30 days?) to justify triggering the forced settlement? I'm still thinking about the details of this one, but would love to hear what you suggest.
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1) All short positions can "vote" and if more than 51% of the shorts think the market has gone bad then the forced liquidation of the long side can be initiated with a 10% premium to the USD positions. 51% of the shorts would equal 25% of the stakeholders in the asset and if they are all willing to take a 10% hit then chances are the long positions are being unreasonable.
2) Allow the price feed producers to trigger it any time they feel it makes sense (with 30 day notice). These producers are the "guardians of the feed" and the peg.
3) Require both the feed producers AND the shorts to agree.
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I have a few proposed tweaks.
First I will make a note of five main queues:
- Regular call queue
- Margin call queue
- Activated redeem queue
- Sell queue
- Buy queue
A short position has a grace period G (e.g. G = 14 days) during which it is not callable unless margin called. If the collateral ratio of a short position is below the margin call ratio limit M (e.g. M = 175% = 1.75), it will be placed in the margin call queue. If a short position does not belong in the margin call queue but it has existed for longer than the grace period, it is placed in the regular call queue. Both the regular call queue and margin call queue are ordered in ascending collateral ratio order (meaning the head of each queue is the short position that has a lower collateral ratio than any other short position in the same queue).
The buy queue contains all the orders that want to buy the BitAsset by selling its corresponding collateral asset (e.g. BTS). This is actually a virtual queue that encompasses all the other real buy queues such as the ones for absolute buy orders and relative (to the price feed) buy orders. The sell queue contains all the orders that want to sell the BitAsset for the corresponding collateral asset. It too is actually a virtual queue that encompasses all the other real sell queues such as the ones for absolute sell orders, relative sell orders, absolute short orders, relative short orders, and unactivated redeem orders.
An unactivated redeem order is very similar to a relative sell order except that its offset is restricted to be no greater than -1% (meaning offering the order at a price no better than 99% of the price feed). Once an unactivated redeem order has existed continuously for an X period (e.g. X = 48 hours), it is promoted to an activated redeem order.
The buy queue is in descending price order. The sell queue and activated redeem queue are in ascending price order.
Matching rules are as follows:
- If the activated redeem queue is not empty, first attempt matching the head of the activated redeem queue with the order with the highest bid from the set of orders composed from the head of the buy queue and margin call queue (all margin call queue items offer a limit bid price up to Y fraction above the feed price, where Y is a monotonic function of the collateral ratio, e.g. Y = 20% * (1 - (COLLATERAL_RATIO - 1)/(M-1))^2 ). If there was a (partial) match, repeat with the new set of heads until there is no match anymore. If the activated redeem queue is still not empty at that point (which, by the way, indicates that the margin call queue must be empty), match the head of the activate redeem queue with the head of the regular call queue (this will guarantee a match as long as the regular call queue is not empty) until either the activated redeem queue is empty or the regular call queue is empty.
- Attempt matching the order with the highest bid from the set of orders composed from the head of the buy queue and margin call queue with the head of the sell queue. Repeat until no more matches are possible.
A short order has no price restriction. However, the short order has to provide the initial collateral ratio it wants to match with and the blockchain requires that this ratio is not less than the margin call ratio limit imposed by the BitAsset (a reasonable value for the margin call ratio limit, for now, might be something between 150% and 180%). So if the margin call ratio limit for the BitAsset was set to 175%, the short order could specify an initial collateral ratio of 175%, but then the risk of margin call would be insanely high, so perhaps the short seller would choose a more sensible initial collateral ratio of 190%.
Black swan liquidation rules still exist and are triggered when the collateral ratio of any short position falls below 100%.
Can you summarize for the less smart of us what your model achieves and or how it differs from the original proposal 3.0?
As I read the proposal 3.0 - the (forced) settlement process would be completely independent of the market matching engine.
And although the OP does not talk about margin calls at all, I assume they would be simple buy (the bitAsset) @ feed price orders with no special rules other than they will change its price with the feed price changes.
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Its fine if yield goes away. It can be re-introduced with loans and leveraging like in Bitfinex. I'm sure that's the aim. And yield in this matter would be much larger.
exactly
Loans, leverage and credit creation are the keys to the rocket ship.
When integrated into the BTS platform there will be literally nothing on the planet that can compete... and no more powerful force for social reform.
Decentralized finance on a global scale.
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So as i understand this is the system where the price feeds are only forced onto participants if they 'misbehave' and deviate from the fair price too much. If everyone play nice there will be no need for the blockchain to police the market.
+5%
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I like this a LOT better than proposal 2.0. This gets us back to one bitAsset per currency and frees up the market. I'll comment in the 2.0 thread why that model gives me the heebeejeebees.
However, can we first see how the market works once more bugs are worked out? While the recent bitUSD issue was a confluence of events the short matching bug prevented us from seeing how the market may have worked itself out.
That said a system that reduces restrictions while improving liquidity (no more logjams :D ) is all good in my book.
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Can you summarize for the less smart of us what your model achieves and or how it differs from the original proposal 3.0?
Mostly the same objectives as the ones listed in bytemaster's post. I have added some detail for a possible implementation. However there are a few notable differences.
First, I reintroduce a grace period where the shorts cannot be called. This is similar to our current system of expiration. I'm thinking it would be useful for shorts to have 2 weeks where they do not have to worry about being forced out of their position (assuming they maintain enough collateral to not get margin called). It is only after that grace period that they need to worry about their ranking in the regular call queue and keep track of any pending unactivated redeem orders they may potentially force call their short position in a day or two.
Since, the activated redeem queues have priority over any other order (especially shorts), there is no way for the existing shorts to roll over to a new short without first satisfying the activated redeem order. So it may, in the worst case, delay settlement of the redeem order from 2 days to 2 weeks, but I think that isn't a big deal for the long. I for one would find a 2 week grace period incredibly useful since I have often "purchased" BTS at (what I thought was) a nice price (via short) and then took my time to settle the payment with new BitUSD purchased using new Bitcoin (and that has delays associated with ACH transfers if you don't already have fiat stored with a Bitcoin exchange).
There are two other major differences that have to do with collateral requirements and margin calls. I would not force any particular initial collateral ratio, such as 200%. Instead the margin call ratio limit would be defined as part of the BitAsset (and if we have "privatized" BitAssets then each creator can specify their own), and the blockchain only requires the initial collateral ratio to not be less than the margin call ratio limit defined for the BitAsset. Other than that restriction, the short seller has freedom to specify the initial collateral ratio depending on how much margin call risk they are willing to tolerate. Also, even when a short position is margin called, it does not automatically buy up BitUSD up to a price of 10% above the feed price in my proposed tweaks. Instead the price limit it is willing to cover at grows monotonically from the feed price all the way to 20% above the feed price as the collateral ratio continues to drop lower and closer to 100%.
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That said a system that reduces restrictions while improving liquidity (no more logjams :D ) is all good in my book.
Aside from that there is a very important detail not mentioned by anybody up to now (I do not know if the 3.0 designer did it intentionally or it is side effect) BUT IMHO this 3.0 things has a very good chance to also improve the peg (remember a few months back when for days and weeks bitUSD was selling for 0.98...0.97 or less?)
For the first time the bitAsset holders will have the actual power to sell at about the feed price. It is significant (in my book) difference from the current model where the shorts have to cover at the peg and only as a consequence of that the longs can sell at the peg (in 30 days or less).
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Black swan liquidation rules still exist and are triggered when the collateral ratio of any short position falls below 100%.
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Arhag, falls below 100% during redemption process?
Can't we see this situation from an attacking whale who attempts to swing the internal price dramatically downward seconds before his bts is reclaimed at a higher price feed?
Sent from my iPhone using Tapatalk
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I really like these changes! Well done all those who contributed to this idea!!
Improvements:
* No forced cover at any particular amount of time. (30 day rule is gone). The least collateralized short may be "margin called" with 24 hour notice by the bitAsset longs, but they have to pay him 1% to do so at least.
* bitAsset holders can be guaranteed a return with only 1% loss in 24 hours, which is much better than up to 30 days!
* Probably a better peg!
* Collateral is much more fair, even colalteral between shorts and longs, instead of favoring bitAsset longs.
We are going through a process of testing and improving the bitshares product. This iteration will be superior to the previous one.
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Can you summarize for the less smart of us what your model achieves and or how it differs from the original proposal 3.0?
Mostly the same objectives as the ones listed in bytemaster's post. I have added some detail for a possible implementation. However there are a few notable differences.
First, I reintroduce a grace period where the shorts cannot be called. This is similar to our current system of expiration. I'm thinking it would be useful for shorts to have 2 weeks where they do not have to worry about being forced out of their position (assuming they maintain enough collateral to not get margin called). It is only after that grace period that they need to worry about their ranking in the regular call queue and keep track of any pending unactivated redeem orders they may potentially force call their short position in a day or two.
Since, the activated redeem queues have priority over any other order (especially shorts), there is no way for the existing shorts to roll over to a new short without first satisfying the activated redeem order. So it may, in the worst case, delay settlement of the redeem order from 2 days to 2 weeks, but I think that isn't a big deal for the long. I for one would find a 2 week grace period incredibly useful since I have often "purchased" BTS at (what I thought was) a nice price (via short) and then took my time to settle the payment with new BitUSD purchased using new Bitcoin (and that has delays associated with ACH transfers if you don't already have fiat stored with a Bitcoin exchange).
Wait how do you prevent shorts to cover with owned (already) bitAsset. By completely removing such operation?
There are two other major differences that have to do with collateral requirements and margin calls. I would not force any particular initial collateral ratio, such as 200%. Instead the margin call ratio limit would be defined as part of the BitAsset (and if we have "privatized" BitAssets then each creator can specify their own), and the blockchain only requires the initial collateral ratio to not be less than the margin call ratio limit defined for the BitAsset. Other than that restriction, the short seller has freedom to specify the initial collateral ratio depending on how much margin call risk they are willing to tolerate.
As I have said before I like this idea of yours a lot. Maybe it is a good time to really implement it, with the rest of all those changes.
Also, even when a short position is margin called, it does not automatically buy up BitUSD up to a price of 10% above the feed price in my proposed tweaks. Instead the price limit it is willing to cover at grows monotonically from the feed price all the way to 20% above the feed price as the collateral ratio continues to drop lower and closer to 100%.
I do hope we get rid of this 'up to 10%' penalty, altogether.
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Too high-level conversation for me. :( I may need Max's kind explanation. Will "BitAssets 101" be published? ;)
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Black swan liquidation rules still exist and are triggered when the collateral ratio of any short position falls below 100%.
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Arhag, falls below 100% during redemption process?
Can't we see this situation from an attacking whale who attempts to swing the internal price dramatically downward seconds before his bts is reclaimed at a higher price feed?
The black swan liquidation is independent of the redemption process and already (in theory) exists with the current BitAsset system. The risks associated with that are price feed manipulation or market manipulation to trigger unfair black swan liquidation to the advantage of BitAsset holders and at the expense of the shorts. These are the same risks that exist with the current system because it is the same exact mechanism. The shorts holding BTS as collateral would never benefit from falsely triggering black swan liquidation because the BTS price cannot falsely be higher than its true price and still trigger an undercollateralization event that wouldn't have been triggered with the true price anyway. So in this case, the attacking whale would need to be a large BitUSD holder and would then want to manipulate the price feed (perhaps by dumping some BTS in thin markets and hoping the delegates update corresponding prices to trigger undercollateralization). But I think this would be a difficult attack to profitably pull off.
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Wait how do you prevent shorts to cover with owned (already) bitAsset. By completely removing such operation?
Well they can still cover with already owned BitAssets, but then they wouldn't really be short. I am assuming they don't own enough of the BitAsset to cover their existing short (so that they profit from BTS price increases). Then to rollover they would need to use their spare BTS to buy BitUSD to cover the existing short and to buy into their new short order. However these BitUSD buy orders would first match with the activated redeem orders (if any exist) before matching with any other sell (or short) orders.
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Wait how do you prevent shorts to cover with owned (already) bitAsset. By completely removing such operation?
Well they can still cover with already owned BitAssets, but then they wouldn't really be short. I am assuming they don't own enough of the BitAsset to cover their existing short (so that they profit from BTS price increases). Then to rollover they would need to use their spare BTS to buy BitUSD to cover the existing short and to buy into their new short order. However these BitUSD buy orders would first match with the activated redeem orders (if any exist) before matching with any other sell (or short) orders.
Without yield there's less, if any, incentive to short to yourself?
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Wait how do you prevent shorts to cover with owned (already) bitAsset. By completely removing such operation?
Well they can still cover with already owned BitAssets, but then they wouldn't really be short. I am assuming they don't own enough of the BitAsset to cover their existing short (so that they profit from BTS price increases). Then to rollover they would need to use their spare BTS to buy BitUSD to cover the existing short and to buy into their new short order. However these BitUSD buy orders would first match with the activated redeem orders (if any exist) before matching with any other sell (or short) orders.
Without yield there's less, if any, incentive to short to yourself?
Believe me there are more reasons to be short and long at the same time than yield harvesting:
- buying cheap bitAssets without the exposer to price movement of the bitAsset; (generally first have to be short and later buy discounted bitAsset and put it for sale just below the feed)
- staying at all times in the no redemption period (in the arhag's proposal);
- never closing grandfathered (1 year expiration ) shorts, when ever you decide the price of BTS will go down.
to name a few.
.....
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I really like these changes! Well done all those who contributed to this idea!!
Improvements:
* No forced cover at any particular amount of time. (30 day rule is gone). The least collateralized short may be "margin called" with 24 hour notice by the bitAsset longs, but they have to pay him 1% to do so at least.
* bitAsset holders can be guaranteed a return with only 1% loss in 24 hours, which is much better than up to 30 days!
* Probably a better peg!
* Collateral is much more fair, even colalteral between shorts and longs, instead of favoring bitAsset longs.
We are going through a process of testing and improving the bitshares product. This iteration will be superior to the previous one.
I believe BM said more than 24 hours
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I like the proposal in its current form. It's worth a try and I'm sure changes can be made later if need be. Legacy futures and paper markets largely influence (and in some cases determine) asset prices. I think bitshares has the potential to take that role and if so, then bitasset prices may naturally adhere to true prices without the need for a price feed. The price feed can become just a backstop in case prices deviate. This proposal seems to be headed in that direction vs bitAssets 2.0.
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@arhag: Your implementation of bytemasters scheme makes the most sense. I especially like that short positions set their own initial collateral level. Doesn't that also mean that providing a grace period is unnecessary, since a short can decided how to collateralize their position and thereby determine the probability that their position gets called within a given period.
@bm: This is definitely a step in the right direction. The 30 day cover rule was too arbitrary. In the bear market that we've seen it forced shorts to buy bitusd when no one other than new shorts were willing to sell. This is the first implementation of bitassets that really doesn't seem to have any flaws. The only one I can think of is that shorts can't exit their position at their whim, like the longs.
I don't think shorts should have to hold onto extra funds to cover their position. Would it be possible for shorts to remove collateral from their position up to the margin call limit in order to place themselves at the head of regular call queue?
Additionally, why is there no yield now? I thought yield came from transaction fees as well as from the interest offered by shorts.
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This all sounds really awesome. I am looking forward to the improvements to make bitassets more resilient. +5%
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I especially like that short positions set their own initial collateral level. Doesn't that also mean that providing a grace period is unnecessary, since a short can decided how to collateralize their position and thereby determine the probability that their position gets called within a given period.
I wouldn't say it is unnecessary. Certainly being able to adjust the collateral ratio (via choosing initial collateral and adjusting the collateral of an existing short position through add margin and partial cover operations) helps the short owner adjust the likelihood of having their short position called. But the grace period gives certainty that the short position won't be called. For example, even in the situation where all BitUSD holders want to simultaneously exit, the owner of a short position within the grace period still doesn't need to worry about their short being called. That of course also assumes that the short position maintains sufficient margin to not be margin called and also assumes that settlement is not triggered either due to an undercollateralization event or through the vote of the feed producers and majority of shorts (https://bitsharestalk.org/index.php/topic,15775.msg202693.html#msg202693). Although since the last trigger can only be done after 30 days, the short owner that could be affected by the settlement event would have had plenty of prior warning of that potential risk (with a 14 day grace period, they would have already been at least 16 days into the 30 day period at the time the short position was created).
I don't think shorts should have to hold onto extra funds to cover their position. Would it be possible for shorts to remove collateral from their position up to the margin call limit in order to place themselves at the head of regular call queue?
I agree with this. I believe that the short owner should be allowed to add and remove margin as they please as long as the collateral leftover after the operations are complete has a collateral ratio (at the current price feed) that is above the margin call ratio limit. This operation also makes partial cover more sane. There would no longer need to be silly tricks like breaking up your shorts into pieces to minimize the amount of spare BTS to keep outside of the locked collateral.
Additionally, why is there no yield now? I thought yield came from transaction fees as well as from the interest offered by shorts.
I suppose there could still be yield from transaction fees and overlap fees, but due to yield harvesting and also due to the fact that most of the yield would have likely come from short interest, I think it makes sense to just send the transaction and overlap fees to BTS shareholders instead and get rid of the idea of yield for BitAssets. The nonfungible bond market will likely be the best way of allowing longer term holders to get interest on their savings.
In this new BitAsset system, the people who can profit from eager shorts are those who are willing to buy the shorts offered below 99% of the price feed (if any exist), wait for X period of time (e.g. a few days) and then use the BitAsset they bought to redeem BTS at profit (assuming the price of BTS relative to the asset has not gone up too much in that period of time). They still need to take some speculation risk, so I don't think it makes sense to have the blockchain attempt to do it.
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Just when I started giving up on BitShares... Your proposed changes are excellent.
Specifically - promise of liquidity, I've proposed the blockchain to be a market maker many times before, but stakeholders didn't want to take the risk of losses turning into dilution.
Whatever you do - can you please KISS? There is so much confusion as to how this works, and it keeps changing. Make sure you put together a nice infographic showing how things work.
Would love to see synthetic depth of market as well - e.g. BitUSD:BTS <-> BTS:BitGold should automatically populate BitUSD:BitGold. And UI should have a "base asset" mode, so traders can think in terms of BitUSD, or BitCNY, or whatever.
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great,good idea,just do it.
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Whoa, do new shorts choose collateral level now? Extra choice means extra complexity.
I like this proposal in general, but thought should be put toward how to make this as easy to understand as possible for users of the market. I think most people don't intuitively "get" shorting unless they are already traders.
What if shorting were a single button "short x of BTS" that automatically shorted at feed price to yourself? Could this be combined with the proposal? Would it be beneficial?
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Controlling feed price now enables a major attack.
1) Obtain large BitAsset position
2) Request liquidation in 24 hours
3) Just before liquidation, spike the feed price via the delegates under your control
4) Profit, at the expense of the called shorts
Was this already a weakness? Is it made worse under these new rules?
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Nice!! I like it +5%
As it was mentioned before an infographic will be great, simple way to short and a simple example on different types of investment and risks associated.
To inspire more confidence it will be great to have a thread as we had before of possible "market manipulations", which happen on all other markets, this way any newbie trader can anticipate them, and realise that this market is here to help.
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Controlling feed price now enables a major attack.
1) Obtain large BitAsset position
2) Request liquidation in 24 hours
3) Just before liquidation, spike the feed price via the delegates under your control
4) Profit, at the expense of the called shorts
Was this already a weakness? Is it made worse under these new rules?
Kinda. If a short position expires in the current system and just sits in the order book at the feed price, it is also vulnerable to such an attack. Another reason why I would like there to be a grace period.
And of course if you truly have control over the price feed you could also trigger black swan liquidation and profit from the shorts in both systems.
I think the assumption is that it is very difficult to just completely take over the median feed price.
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I have some questions.
1) The price feed should be irrelevant unless the current market price is below 99% the expected price feed in X days
I wouldn't mind further explanation of this comment. When bitUSD is a large liquid market, there will be redemption requests and redemption settlements spread through time on an a near continuous basis. This means that the veracity of the price feed is critical at all times, doesn't it?
Additionally, why is there no yield now? I thought yield came from transaction fees as well as from the interest offered by shorts.
I suppose there could still be yield from transaction fees and overlap fees, but due to yield harvesting and also due to the fact that most of the yield would have likely come from short interest, I think it makes sense to just send the transaction and overlap fees to BTS shareholders instead and get rid of the idea of yield for BitAssets. The nonfungible bond market will likely be the best way of allowing longer term holders to get interest on their savings.
In some recent brainstorming threads I made a similar suggestion about relegating yield purely to the bond market, but I'm now recanting that idea after thinking through an issue raised elsewhere about how Russian roubles as a bitAsset might possibly fetch the 14% odd yield they receive in the external market. The problem I now see is that if the currency receives no yield, the only demand for it will be in the bond market. It will only be used very reluctantly and with high velocity as transactional currency because of the high opportunity cost.
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just for my understanding:
No more Yield, instead we get something like Liquidity Providing (https://www.bitfinex.com/pages/howitworks )?
sounds like a good idea.
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Someone with a lot of USD *and* BTS could
1. request settlement of their USD tomorrow
2. buy lots of new USD with their BTS, driving the price up
3. settle their old USD at the higher price.
If they manage to drive the price up by more than 1% they have an instant profit. Rinse, repeat.
Wouldn't they need to drive the feed price up, not the market price?
Otherwise, that's just plain market manipulation, like exists on all crypto exchanges.
The feed price on the internal market reflects the market price on external markets. Manipulating the market price influences the feed price.
The difference to a classic pump&dump is that here the entire position will be settled near the new feed price. In a classic pump&dump you can't dump a large amount without driving the price down again.
I feel like the threat of forced settlement is enough to keep the market price at 99% parity.
In theory you're right, if all market participants continually keep an eye on the market and react quickly and rationally. But that's not reality. In reality, people go short and come back 30 days later to see if they've made a profit or not.
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Alt :
Shorting must have a highest limit , covering must have a lowest limit .
Otherwise , the system can be gamed .
Find a market with low activity , short 0.2 million USD with 0.1 billion BTS , cover it with 20USD , so I get 0.1 billion BTS plus nearly 0.2 million USD (only minus 20USD)
the system will be having a lost .
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All sounds great, but this guarantees liquidity for the longs, but not the shorts, which was another criteria in the other thread. Will shorts still have to struggle to find BitUSD for sale when covering?
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1) All short positions can "vote" and if more than 51% of the shorts think the market has gone bad then the forced liquidation of the long side can be initiated with a 10% premium to the USD positions. 51% of the shorts would equal 25% of the stakeholders in the asset and if they are all willing to take a 10% hit then chances are the long positions are being unreasonable.
2) Allow the price feed producers to trigger it any time they feel it makes sense (with 30 day notice). These producers are the "guardians of the feed" and the peg.
3) Require both the feed producers AND the shorts to agree.
I assume this scenario is meant to be a rare one and only to be used for unwinding a BitAsset totally?
Making long positions callable won't go down well with people just wanting to use them as a "stablecoin".
PS: Somebody mentioned there wouldn't be any benefits for shorting to oneself with these new rules. This rule does provide some incentive.
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Another question: The 200% collateral (100% each) is based on the feed price and not the actual transaction price, right?
If not it could be exploited the following way:
Short to yourself at e.g. 10% of feed price (possible in thin markets by smashing through the few buy orders in the book)
Don't worry about the short position, it will only be 20% collateralised. Just let it go bust.
Keep the long position which you got for paying just 20% of feed price.
Different scenario:
If the shorter had to post 100% of the feed price and the 'longer' pays only the purchase price (which I assume is the current plan) you could create a dangerously low collateralised position (100% + x with x→0) by shorting to yourself at near zero price. Conclusion would be that if there really is no limit for the shorting price the shorter's required collateral would have to be at least the margin call percentage, i.e. 150% at the moment.
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+5% At first glance this looks very good 8)
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the grace period gives certainty that the short position won't be called.
Shorters are big boys / big girls, they can handle it. One of our underlying assumptions from before BitShares was even created, is that longs should be friendly to relatively unsophisticated market participants (guy who just wants an account with dollars he can use to buy coffee). There is no such assumption about shorts. Adding this grace period risks the security of the network -- protected shorts aren't providing liquidity to longs at the price feed (which is the entire point of having BitAssets in the first place, right?) and can get undercollateralized without being called.
when a short position is margin called, it does not automatically buy up BitUSD up to a price of 10% above the feed price in my proposed tweaks. Instead the price limit it is willing to cover at grows monotonically from the feed price all the way to 20% above the feed price as the collateral ratio continues to drop lower and closer to 100%.
This is actually a feature that's been in my mind as well -- instead of having a cliff, the premium should slowly go up as the value goes down.
For the first time the bitAsset holders will have the actual power to sell at about the feed price. It is significant (in my book) difference from the current model where the shorts have to cover at the peg and only as a consequence of that the longs can sell at the peg (in 30 days or less).
Yeah. I've always been skeptical that the current BitAsset system would have a correctly functioning, tight peg in all market conditions, and experience hasn't really alleviated that skepticism. Having a stronger redemption system increases my confidence, as sound economic theory says that if A is redeemable for B, then the price of B sets a floor for the price of A. A price floor for BitUSD protects existing long holders.
Arhag, falls below 100% during redemption process?
This is impossible if you always call the lowest collateral shorts (we'll always improve the strength of the average short's books by settling the short with the weakest books). With arhag's "grace period" scheme it is possible, however, if shorts protected by the grace period have worse-than-average books.
the short owner should be allowed to add and remove margin as they please
This simply doesn't work. The whole point of collateral is that it's a "backstop" for the system that the shorts need to cover to liberate. "Removable collateral" doesn't meet the definition of the word "collateral" which is "property used to guarantee a loan." Collateral has to be only allowed to increase. It's okay for a short to increase his collateral level because that increases the security of the system. However, if a short wants to drop his collateral level, he needs to cover and re-short.
Also, you can view the assignment of a redemption request to the lowest short as having the short holders "bid" against each other in an "auction" which is "selling" the right to remain in the market when the long wants to settle. Auction-style systems only work when bidding requires at least the winning bidder to sacrifice something of value (i.e. pay a price proportional to their bid). Tying up their capital for a few minutes when the redemption is actually processed, is not requiring sacrifice of a very meaningful amount of value (there's an incentive to add a ton of collateral a few minutes before a redemption request is due to be processed, then pull out your collateral a few minutes after). Tying up capital for an indefinite period of time (until covered or redeemed) is definitely a big enough sacrifice of value to be meaningful, tying up capital for a few minutes is not.
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This post is specifically addressing a portion of Arhag's proposal with multiple queues. If I understand that proposal correctly, Arhag is essentially saying that "A settlement offer is the long requesting to trade their long for a certain amount of BTS. Why don't we just let the system use the market to give the long what they are asking for, if someone in the market is willing to provide it? That will give the settlement process a chance to be completely voluntary, and only resort to involuntary settlement when no one is willing to serve as a counterparty to the redeeming long holder."
The answer is that the 24-hour period between the filing and execution of the redemption request actually has a purpose that hasn't been mentioned in this thread as far as I can see. There is no technical obstacle to processing redemption requests immediately. However, such a scheme would suffer from a critical economic flaw: The long is free to view the feed's data sources (external exchanges, etc.), and is able to react to changes in these external data sources much faster than the feed.
Thus, with instantaneous requests, a long holder would know (through their own observations of the external data sources used to produce the feed) that the settlement value of their long position is going to go down in the near future -- and then settle immediately, before the feed has a chance to update.
The delay period prevents this attack. It forces the long holder to say "I'm going to redeem" without knowing exactly what the redemption price will be.
Which brings us to Arhag's system. We can't match the long holder against a market order until we know the redemption price, and a fundamental feature of the system, which I included in the system because I believe is economically necessary for it to function, is that we don't know the redemption price until the redemption time.
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Upon further thought, I think this ruleset is vulnerable to an attack by a whale who can manipulate markets (AKA feed price) upwards for any length of time. Such attacks are particularly problematic in thinner markets.
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Upon further thought, I think this ruleset is vulnerable to an attack by a whale who can manipulate markets (AKA feed price) upwards for any length of time. Such attacks are particularly problematic in thinner markets.
Any one trading in a thin market with a large whale is taking a risk. Shorts are the only ones taking this risk and they choose to take it.
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Adding this grace period risks the security of the network -- protected shorts aren't providing liquidity to longs at the price feed (which is the entire point of having BitAssets in the first place, right?) and can get undercollateralized without being called.
My proposed tweaks with the grace period are nearly identical to the current BitAsset system with expiration except where the the expired shorts are ordered by collateral ratio rather than whatever order they use today. People complain about expired shorts and how this system gets rid of that restriction, but the reality is that making shorts callable from the beginning is nearly equivalent to reducing the expiration period from its current 30 days to 0 days (and setting expired cover orders at 99% of the price feed, ordering those expired cover by collateral ratio, and other smaller tweaks).
Also, I think you misunderstood my proposal. All short positions (whether in the grace period or not) are still subject to margin calls as before. It doesn't matter if the short is only one day old. If the collateral ratio falls below the margin call ratio limit, it will be margin called and the cover order will be offered above the feed price.
This is impossible if you always call the lowest collateral shorts (we'll always improve the strength of the average short's books by settling the short with the weakest books). With arhag's "grace period" scheme it is possible, however, if shorts protected by the grace period have worse-than-average books.
Undercollateralization is still possible with the new system. If the short position with the lowest collateral ratio is undercollateralized, the matching order will not get the full value back (at current price feed) for their BitAssets. However, if someone takes one for the team and removes that short with a redemption, other people will be able to get their full value back. Therefore, no one will be willing to redeem first and take the penalty all on themselves. You still need black swan liquidation when undercollateralization occurs in order to be fair to all BitAsset holders.
Also, again I think you misunderstood the matching rules of my proposal. Before a short can become undercollateralized, it must first be margin called. If it is margin called it is ahead of the queue of any other non-margin-called short position. There is no difference between my tweaked version and bytemaster's original version regarding this particular issue.
This simply doesn't work. The whole point of collateral is that it's a "backstop" for the system that the shorts need to cover to liberate. "Removable collateral" doesn't meet the definition of the word "collateral" which is "property used to guarantee a loan." Collateral has to be only allowed to increase. It's okay for a short to increase his collateral level because that increases the security of the system. However, if a short wants to drop his collateral level, he needs to cover and re-short.
The margin call limit is what protects BitAsset holders from undercollateralization. In my view initial collateral requirements are unnecessary (other than obviously being larger than the margin call limit). In a system where the short can choose any initial collateral greater than the margin call limit, there is no difference in terms of risk whether you allow removing margin (while still meeting minimum limits) or not. However, it does make things far more convenient for the short owner. The short owner could always short to themselves at the lower collateral ratio and use it to cover the old short. So why force them to do that rather than just adjusting the margin of an existing short. Also this IMHO flawed idea of never allowing collateral to decrease is the reason we have a broken implementation of partial cover operations and why we need to have hacks like breaking up short orders into small pieces to minimize the amount of free collateral to keep in order to be able to cover. If you could, as an example, partially cover half the debt and take back half the collateral, you wouldn't need hacks like that.
As for whether we should have a minimum limit on initial collateral that is greater than the margin call limit, I personally think it isn't necessary. From a risk perspective, we should mostly be considered with how much the price can fall in a short amount of time before undercollateralization occurs. This means you need to look at the case where the price has slowly dropped causing the collateral ratio of a short position to slowly drop from its initial collateral ratio to a ratio just above the margin call limit. That process can be incredibly slow. As long as the collateral ratio is above the margin call limit, the blockchain isn't going to force the short to cover above the price feed. What we should care about is how much leeway there is after the moment the blockchain has authority to force cover the short. This means we should care about how large the difference is between the margin call ratio limit and 100%, but not as much about the initial collateral ratio.
Also, you can view the assignment of a redemption request to the lowest short as having the short holders "bid" against each other in an "auction" which is "selling" the right to remain in the market when the long wants to settle. Auction-style systems only work when bidding requires at least the winning bidder to sacrifice something of value (i.e. pay a price proportional to their bid). Tying up their capital for a few minutes when the redemption is actually processed, is not requiring sacrifice of a very meaningful amount of value (there's an incentive to add a ton of collateral a few minutes before a redemption request is due to be processed, then pull out your collateral a few minutes after). Tying up capital for an indefinite period of time (until covered or redeemed) is definitely a big enough sacrifice of value to be meaningful, tying up capital for a few minutes is not.
Redemption requests can come at any time. Yes they have a delay which gives the short enough warning to adjust their collateral, but the question is what are they going to do with the free collateral if they need to have it ready (in as little as 24 hours) to get them to the back of the queue whenever a new redemption request comes in? Since you cannot predict the quantity of redemption request that may pop-up, the short owners are basically going to have to effectively treat the free collateral as locked collateral. They wouldn't risk putting it towards some bond that lasts a month. They will have no ability to pull it out in time to protect themselves from a redemption request.
Also, even if you forbid removing collateral from a short, people could still simulate it by rolling over their short. So let's say the price of BTS went up so that the short is excessively collateralized. The short may want to use the excess BTS for other purposes, e.g. compound gains by using it to short more BitAssets. So they self-short with spare BTS at the lower initial collateral ratio for a larger amount of BitAsset debt than they already owe, use a fraction of the BitAssets collected to fully cover the old short, and then sell the remaining BitAssets on the market. Or alternatively, they could just pull the excess BTS out of the existing short position and use that to create a new short order for the additional BitAsset debt they want to be exposed to. Why not allow them to do it the easier way that doesn't involve self-shorting?
This post is specifically addressing a portion of Arhag's proposal with multiple queues. If I understand that proposal correctly, Arhag is essentially saying that "A settlement offer is the long requesting to trade their long for a certain amount of BTS. Why don't we just let the system use the market to give the long what they are asking for, if someone in the market is willing to provide it? That will give the settlement process a chance to be completely voluntary, and only resort to involuntary settlement when no one is willing to serve as a counterparty to the redeeming long holder."
The answer is that the 24-hour period between the filing and execution of the redemption request actually has a purpose that hasn't been mentioned in this thread as far as I can see. There is no technical obstacle to processing redemption requests immediately. However, such a scheme would suffer from a critical economic flaw: The long is free to view the feed's data sources (external exchanges, etc.), and is able to react to changes in these external data sources much faster than the feed.
Thus, with instantaneous requests, a long holder would know (through their own observations of the external data sources used to produce the feed) that the settlement value of their long position is going to go down in the near future -- and then settle immediately, before the feed has a chance to update.
The delay period prevents this attack. It forces the long holder to say "I'm going to redeem" without knowing exactly what the redemption price will be.
So if I understand what you are saying correctly, you are basically saying that once you make a redemption request you are not allowed to cancel it during the 24 hour waiting period. If you were able to cancel it, you could effectively convert a redemption request with an arbitrarily long waiting period into a instantaneous request by simply deciding whether to cancel or not just prior to the end of the waiting period, based on which is the more profitable action given what you know about the near future feed price.
So with my proposed tweaks that would mean that redeem orders could not be cancelled unlike all other orders in the system.
Which brings us to Arhag's system. We can't match the long holder against a market order until we know the redemption price, and a fundamental feature of the system, which I included in the system because I believe is economically necessary for it to function, is that we don't know the redemption price until the redemption time.
The unactivated redeem orders would be just like regular relative ask orders and would match (if possible) at the current price with any bid order but not with the callable short positions in the regular call queue (however they would match with margin called shorts in the margin call queue). It is only when they become activated redeem orders after the waiting period that they can force the short position at the head of the regular call queue to match with it. It is only in this case where you need to worry about feed price prediction attacks since, ignoring margin calls, these are the only situations in which the fund owner hasn't given explicit permission to offer their order at the price it is offered at (technically relative orders are also at risk to feed price prediction attacks, but that is a risk they willing took on by choosing a relative order and you have to assume they account for that risk by adding enough spread to protect their orders). However, if redeem orders cannot be cancelled, the only action the owner of that order could have possibly done in response to information they had was at least 24 hours before the match occurred (meaning they couldn't predict the match price at the time they still had the ability to influence the order).
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In some recent brainstorming threads I made a similar suggestion about relegating yield purely to the bond market, but I'm now recanting that idea after thinking through an issue raised elsewhere about how Russian roubles as a bitAsset might possibly fetch the 14% odd yield they receive in the external market. The problem I now see is that if the currency receives no yield, the only demand for it will be in the bond market. It will only be used very reluctantly and with high velocity as transactional currency because of the high opportunity cost.
Hmm, maybe we bring in your idea from the BitCurrency thread of ranking the callable shorts by interest rate as well instead of just collateral ratio? But to prevent yield harvesting the BitAssets should only receive the minimum interest rate offered by shorts. The excess could instead be transferred to BTS shareholders (or to the manager of a private BitAsset?).
I haven't thought this through very carefully, but here are some ideas. A new short would initially have to pay the same interest rate as the lowest interest rate offered by an existing short (or 0% if no shorts already existed). A short position could increase its interest rate at any time. In order to decrease its interest rate, it would have to submit an order to decrease the interest rate to the new amount and wait for 48 hours for it to be activated. During that waiting period, its ranking would be based on the new interest rate, but the short would still need to pay the old interest rate. If we have a non-zero grace period, then the short position interest rate cannot be decreased during the grace period.
The margin call queue would still be in ascending collateral ratio order because getting rid of short positions with that low of a collateral ratio is more important than interest. However, the regular call queue would instead be ordered in ascending interest rate order. This encourages the shorts to offer a reasonable interest rate to get further away from the head of the queue. If people want to get rid of BitAssets (perhaps the interest rate isn't high enough), we could expect more redemption requests. These redemption requests would eat away at the shorts offering the lowest interest rates (thus raising the minimum interest rate offered, raising the yield, and making BitAssets more desirable). On the other hand, if the interest rate is too high (and there is too much demand for the BitAsset), no one will be resorting to redemption requests to get out into BTS, and therefore the short positions can get away with offering lower interest rates (which they can do after the 48 hour delay).
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I agree with arhag that:
- There is no need for an initial collateral requirement, only the minimum collateral requirement. It's the minimum that protects the longs, and shorts will need to determine for themselves how much additional collateral to post so that they are comfortable holding their position.
- If technically feasible, there is no reason that shorts should not be able to alter their level of collateral up or down so long as it remains above the minimum collateral requirement, CONDITIONAL on the total pool also being above some minimum collateral requirement (which may be the same percentage).
The answer is that the 24-hour period between the filing and execution of the redemption request actually has a purpose that hasn't been mentioned in this thread as far as I can see. There is no technical obstacle to processing redemption requests immediately. However, such a scheme would suffer from a critical economic flaw: The long is free to view the feed's data sources (external exchanges, etc.), and is able to react to changes in these external data sources much faster than the feed.
Thus, with instantaneous requests, a long holder would know (through their own observations of the external data sources used to produce the feed) that the settlement value of their long position is going to go down in the near future -- and then settle immediately, before the feed has a chance to update.
The delay period prevents this attack. It forces the long holder to say "I'm going to redeem" without knowing exactly what the redemption price will be.
I would like to see this argument scrutinised some more because it really depends on how price feeds are applied to matching, and I don't feel I understand this well enough. In principle, I don't see why any person should be able to confidently predict where the price feed will go any faster than the pool of price feed submitters themselves. Then the only question is how quickly price feed submissions are reflected in the market, and what feed price is applied to satisfying the person's order, and if the information present in each is the same, we do not have a problem with immediate settlement. Personally I think we should favour instant settlement if we can.
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In some recent brainstorming threads I made a similar suggestion about relegating yield purely to the bond market, but I'm now recanting that idea after thinking through an issue raised elsewhere about how Russian roubles as a bitAsset might possibly fetch the 14% odd yield they receive in the external market. The problem I now see is that if the currency receives no yield, the only demand for it will be in the bond market. It will only be used very reluctantly and with high velocity as transactional currency because of the high opportunity cost.
Hmm, maybe we bring in your idea from the BitCurrency thread of ranking the callable shorts by interest rate as well instead of just collateral ratio? But to prevent yield harvesting the BitAssets should only receive the minimum interest rate offered by shorts. The excess could instead be transferred to BTS shareholders (or to the manager of a private BitAsset?).
arhag, I have developed a potential solution to yield and other issues, which I hope you will see in the next few days. So I hope you don't mind if I hang off from responding to your suggestions on yield harvest right now, as I still need time to complete this work.
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arhag, I have developed a potential solution to yield and other issues, which I hope you will see in the next few days. So I hope you don't mind if I hang off from responding to your suggestions on yield harvest right now, as I still need time to complete this work.
Looking forward to it. :)
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* bitAsset holders can be guaranteed a return with only 1% loss in 24 hours, which is much better than up to 30 days!
+5% I think that change, changes everything. It's huge.
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Isn't it possible, albeit unlikely that the least collateralized short has less than 100% collateral?
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Isn't it possible, albeit unlikely that the least collateralized short has less than 100% collateral?
Thats why least prioritized shorts are cancelled first, so that hopefully never happens.
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Market symmetry is important. Charging interest to shorts will reduce the demand for shorting while complicating things. The only interest rate I could see making sense is a GLOBAL interest rate charged on all shorts put in place to govern the total issuance of all BitAssets backed by BTS.
Yield on USD is best accomplished by a bond market with fixed terms. BitUSD == checking, bond == CD.
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Market symmetry is important. Charging interest to shorts will reduce the demand for shorting while complicating things. The only interest rate I could see making sense is a GLOBAL interest rate charged on all shorts put in place to govern the total issuance of all BitAssets backed by BTS.
Yield on USD is best accomplished by a bond market with fixed terms. BitUSD == checking, bond == CD.
I am so excited about the bond market. Being able to lend out (from my wallet) my BitUSD at a rate I choose so that anyone can borrow it to buy BitBTC with leverage - that will be huge. If we can make that super easy in the web wallet then there is no reason we cant get a $4.5million daily transaction volume:
http://coinmarketcap.com/exchanges/bitfinex/
https://www.bitfinex.com/pages/howitworks#lending
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Reporter : "Janet, have you heard about BitShares?"
(http://www.nrc.nl/wp-content/uploads/2014/01/2014-01-07T042952Z_1912824234_GM1EA170YEJ01_RTRMADP_3_USA-FED-YELLEN-CEILING.jpg)
Jan : "Why no, what are Beet Chairs?"
Reporter : "You can create your own USD with BitShares, and it's backed with collateral."
(http://harvardpolitics.com/blog/wp-content/uploads/2013/12/Yellen-1.jpg)
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Market symmetry is important. Charging interest to shorts will reduce the demand for shorting while complicating things. The only interest rate I could see making sense is a GLOBAL interest rate charged on all shorts put in place to govern the total issuance of all BitAssets backed by BTS.
Yield on USD is best accomplished by a bond market with fixed terms. BitUSD == checking, bond == CD.
So does this mean you cannot earn yield just holding bitUSD, you need to put it to bond market to earn yield, right?
Does this apply to all bit assets like bitBTC?, bitCNY? and what about BTS bond market?
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So does this mean you cannot earn yield just holding bitUSD, you need to put it to bond market to earn yield, right?
Does this apply to all bit assets like bitBTC?, bitCNY? and what about BTS bond market?
That is the BTS bond market. You can easily lend out all of your BitAssets at any rate you choose, with the collateral requirements you choose from the lender. Most competitive rate will be the first to be borrowed. Its equivalent to Bitfinex liquidity providing.
You lend out BitBTC, and someone borrows it so that they can short BitBTC/BitUSD, paying you interest in the process.
Also I imagine there would be no reason not to have all your BitUSD available on the bond market at all times - might as well make your money work for you.
Thats how I understand it anyway.
Edit: Oh I see youre asking if you can put BTS on the bond market as well? I dont see why not. Someone might be super bearish and buying BitUSD is not enough for him.
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Market symmetry is important. Charging interest to shorts will reduce the demand for shorting while complicating things. The only interest rate I could see making sense is a GLOBAL interest rate charged on all shorts put in place to govern the total issuance of all BitAssets backed by BTS.
Yield on USD is best accomplished by a bond market with fixed terms. BitUSD == checking, bond == CD.
The current lack of demand for shorting at interest is two-fold:
i) USD in the external market has zero interest anyway, so why should shorts pay more? However in other currency markets (especially if financial repression eventually ends) there is a meaningful yield. If bitCurrency holders get zero interest in these markets, we will find it is the demand for currency that will disappear.
ii) We are in a powerful bear phase for crypto and BTS. This has removed the financial incentive for leverage on BTS. This is a cyclical issue, not a permanent one. If BTS enters a strong uptrend there will be no way for shorts to incentivise currency ownership, only through the bond market.
If yield only exists in the bond market, then in either case above, where external interest rates are higher, or where the BTS cycle is more bullish, we will see all transactional use of the currency disappear due to the high opportunity cost.
This still suggests to me that interest is highly desired as a clearing mechanism in the currency market, regardless of the existence of a bond market, assuming we can build it in. Though it is only a recent view I have come to myself.
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After 6 months following the launch of his Top 10 cryppto coin, Dan begins perfecting his core invention.
After 40 months following the launch of his Top 10 crypto coin, Charlie begins perfecting his invention:
http://bitcoinist.net/litecoin-official-branding-guide/
No wonder Litecoin trades at 5 times the marketcap of BitShares!
Haha ..
Note: Did you know that @cass is working on the exact same thing for BitShares, already?
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Isn't 1% fee too much? What about 0.3~0.5% as many gateways do?
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I realize the need to pivot as much as anybody.
But I need to know if there is a minimum length of time we can expect the new rules to be in effect once they take effect.
In the case of gemspace changes like this have a major impact on our business.
Not in a negative way per se, but it's a rules change that the investor must now be made aware of.
Whenever a change like that happens, we have an obligation to communicate the change to the investor base and explain to them the potential impacts to their investments. We also need to give them time to exit the market under the older rules if they so desire. This means we need to communicate with them as much as possible in advance.
Also when are these changes slated to take effect? I agree they are good changes, but what we have to communicate to our users, are the rules as they stand when they enter and any changes we foresee in the future.
Thanks!
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I would guess this proposal will be finished when we can vote for hard forks on the chain so that shareholders give a go or no go ... at least that is what I would like to see happen
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vote for hard forks on the chain so that shareholders give a go or no go ... at least that is what I would like to see happen
doesn't this already exist? if I don't update my client i'm voting for the old ways, no?
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vote for hard forks on the chain so that shareholders give a go or no go ... at least that is what I would like to see happen
doesn't this already exist? if I don't update my client i'm voting for the old ways, no?
This does not exist ... its be subject of discussions ...
I imagine a voting process similar to delegate voting in which the shareholders can approve the protocol changes of a new release .. no fixed hard fork time .. but approved by shareholders ..
@toast had a nice blog article about this in his own blog which unfortunatelly disappeared :(
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The current BitAsset system will be run in parallel with the new system users can migrate at will.
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The current BitAsset system will be run in parallel with the new system users can migrate at will.
Interesting. Would the old system ever be completely phased out?
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The current BitAsset system will be run in parallel with the new system users can migrate at will.
Interesting. Would the old system ever be completely phased out?
Probably once the shorts unwind and people stop using it.
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This does not exist ...
I beg to differ. The "vote" I described exist for every single cryptocurrency today. But, this is off topic, so I'll let it go at that.
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Now if we straighten out the delegate/employee pay system then we are solid.
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Now if we straighten out the delegate/employee pay system then we are solid.
One step at a time. :)
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I beg to differ. The "vote" I described exist for every single cryptocurrency today. But, this is off topic, so I'll let it go at that.
I was talking about the system to active a hardfork autmatically if a critical amount of approval was stated by the shareholders ..
this is different from bitcoins version updates which are performed over time with an overlap to a prevision version (soft forks) and hard forks being dictated by the pool admins.
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arhag, I have developed a potential solution to yield and other issues, which I hope you will see in the next few days. So I hope you don't mind if I hang off from responding to your suggestions on yield harvest right now, as I still need time to complete this work.
Looking forward to it. :)
Here...sorry it's long, I hope it doesn't waste your time...https://bitsharestalk.org/index.php/topic,15880.msg203776.html#msg203776
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This certainly doesnt fit here but the people discussing here might be interested in an overview of competitors implementation of margin trading
https://blog.bitmex.com/margin-call-how-it-works/
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What happens if some bad actors sell BitUSD under the 50% of feed price, and the short order backed by less than 100%?
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The main feature of BitAsset 3.0 that I like is that redemption is possible at the feed price, which underpins valuation throughout this and external markets. My main issue has been that it eradicates interest, which is particularly important for currencies. I believe that if interest rates are high on a currency in external markets, it basically eliminates usage of the bitAsset as a transactional currency, because it will only pay to have it hoarded in the bond market. However, this weakness could be overcome if one of the bond market tokens represented an at-call deposit instantly interchangeable for currency (like an ATM machine) or with check payment facilities.
I've just posted a white-paper that describes the architecture of an at-call market integrated with a bill market. That is here...https://bitsharestalk.org/index.php/topic,15880.msg203776.html#msg203776
This envisages currency being instantly created and destroyed with floating interest as the clearing mechanism.
However, that system can be adapted to accommodate BitAsset 3.0 and potentially create a more powerful system.
i) a Cash Creation Market, along the lines of BitAsset 3.0 (although I would suggest some modifications), which does not bear interest, and has a floating level of collateral as the clearing mechanism, plus
ii) an at-call Deposit Market, whose tokens pay a floating interest rate from longs to shorts (like the Currency Creation Market in the whitepaper), and
iii) a Bill Market at various terms (akin to zero coupon bond tokens, as described in the whitepaper).
The Deposit Market would use exactly the same structure as I outlined for the Cash Creation Market in that white-paper, except that now it would be settled in the currency token instead of BTS, and the bids and offers would be for DEPOSIT tokens. This guarantees instant interchangeability between deposits and currency, with a floating rate determined by the market.
A challenge with this particular market is the zero bound on interest rates. The whitepaper outlines a couple of possible approaches.
What I like about this total approach is that it would now be much closer to the complete functionality of the current money market system, while obviously also having the usual block-chain based advantages.
I want to think about all this some more, but if it pans out, as soon as I get a chance I will update the whitepaper to v2 to incorporate this thinking.
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The main feature of BitAsset 3.0 that I like is that redemption is possible at the feed price, which underpins valuation throughout this and external markets. My main issue has been that it eradicates interest, which is particularly important for currencies. I believe that if interest rates are high on a currency in external markets, it basically eliminates usage of the bitAsset as a transactional currency, because it will only pay to have it hoarded in the bond market. However, this weakness could be overcome if one of the bond market tokens represented an at-call deposit instantly interchangeable for currency (like an ATM machine) or with check payment facilities.
I've just posted a white-paper that describes the architecture of an at-call market integrated with a bill market. That is here...https://bitsharestalk.org/index.php/topic,15880.msg203776.html#msg203776
This envisages currency being instantly created and destroyed with floating interest as the clearing mechanism.
However, that system can be adapted to accommodate BitAsset 3.0 and potentially create a more powerful system.
i) a Cash Creation Market, along the lines of BitAsset 3.0 (although I would suggest some modifications), which does not bear interest, and has a floating level of collateral as the clearing mechanism, plus
ii) an at-call Deposit Market, whose tokens pay a floating interest rate from longs to shorts (like the Currency Creation Market in the whitepaper), and
iii) a Bill Market at various terms (akin to zero coupon bond tokens, as described in the whitepaper).
The Deposit Market would use exactly the same structure as I outlined for the Cash Creation Market in that white-paper, except that now it would be settled in the currency token instead of BTS, and the bids and offers would be for DEPOSIT tokens. This guarantees instant interchangeability between deposits and currency, with a floating rate determined by the market.
A challenge with this particular market is the zero bound on interest rates. The whitepaper outlines a couple of possible approaches.
What I like about this total approach is that it would now be much closer to the complete functionality of the current money market system, while obviously also having the usual block-chain based advantages.
I want to think about all this some more, but if it pans out, as soon as I get a chance I will update the whitepaper to v2 to incorporate this thinking.
As a follow-up thought to this, I was thinking more about the purpose of non interest bearing cash, when its possible to create interest-bearing currency. I can think of two possible purposes:
i) anonymity - there could be mechanisms in place to ensure anonymity of holding and spending (like some other crypto currencies).
ii) security - cash could be heavily collateralised in compensation for lack of interest
The question I have is do we ideally want a system with:
a) anonymous or extra secure cash + interest bearing deposits + bills/bonds, OR
b) interest-bearing currency + bills/bonds.
The option of (c) non-interest cash + bills/bonds, is lacking a critical ingredient as I've discussed, if we want these currencies to have transactional utility.
Any thoughts?
[edit: One more thing, by bond market, do we mean a counterparty-risk-free bond market, collateralised by BTS (akin to a government bond market), or do we mean a risky credit market for loans to counter parties? I am assuming the former.]
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#3 Any time someone with USD is unhappy with the current internal market price, they can request settlement at the 99% of feed (a 1% fee) in X days, where X is more than 24 hours.
Why does X need to be more than 24 hours? Why can't it be "instant" for example?
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#3 Any time someone with USD is unhappy with the current internal market price, they can request settlement at the 99% of feed (a 1% fee) in X days, where X is more than 24 hours.
Why does X need to be more than 24 hours? Why can't it be "instant" for example?
To prevent an attacker from exploiting time delays in the feeds, and other implementation artifacts to bot-harvest that 1% for reasons other than the intended liquidity. Neither side can know exactly which way the feed will move 24 hours from now, so we get a more fair result.
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#3 Any time someone with USD is unhappy with the current internal market price, they can request settlement at the 99% of feed (a 1% fee) in X days, where X is more than 24 hours.
Why does X need to be more than 24 hours? Why can't it be "instant" for example?
To prevent an attacker from exploiting time delays in the feeds, and other implementation artifacts to bot-harvest that 1% for reasons other than the intended liquidity. Neither side can know exactly which way the feed will move 24 hours from now, so we get a more fair result.
I can't imagine time delays in the feeds being more than a few minutes, so I assume the second part is the bigger driver? Would you mind clarifying what you mean by "other implementation artifacts to bot-harvest that 1%"?
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https://bitsharestalk.org/index.php/topic,15775.msg202669.html#msg202669
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https://bitsharestalk.org/index.php/topic,15775.msg202669.html#msg202669
BM says "The 24 hour+ delay means you cannot depend upon errors in the price feed to guarantee a profit", which basically reiterates that X needs to be greater than the lag in the price feed, which surely is not that long. Did I miss something there?
Why couldn't the delay be reduced to 10 minutes for example?
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BM says "The 24 hour+ delay means you cannot depend upon errors in the price feed to guarantee a profit", which basically reiterates that X needs to be greater than the lag in the price feed, which surely is not that long. Did I miss something there?
Why couldn't the delay be reduced to 10 minutes for example?
I think it's fine to give an opportunity for all timezones to participate and band together against a whale manipulator, and thus provide a truly fair price of settlement. Think of it like a miniature fire sale auctions that last 24 hours. :)
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BM says "The 24 hour+ delay means you cannot depend upon errors in the price feed to guarantee a profit", which basically reiterates that X needs to be greater than the lag in the price feed, which surely is not that long. Did I miss something there?
Why couldn't the delay be reduced to 10 minutes for example?
I think it's fine to give an opportunity for all timezones to participate and band together against a whale manipulator, and thus provide a truly fair price of settlement. Think of it like a miniature fire sale auctions that last 24 hours. :)
Do you mean to say that if an extremely large settlement request is made, global community awareness of the pending settlement means that the requestor cannot as easily manipulate the BTS market price at the time that settlement occurs? Hopefully this equally prevents a whale short with the lowest collateral from also being able to manipulate the price to their benefit.
Thanks for the clarifications. While it makes sense to me now that a delay period is the prudent thing to do here, I do wonder what commitment the community actually has to prevent such a manipulation, when it won't be clear whether erratic price movements are manipulation or the real thing. While I'm not recommending this, I wonder if there are other things that can be done to thwart manipulators, such as having a random element in the settlement timing with an alert once complete.
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Do you mean to say that if an extremely large settlement request is made, global community awareness of the pending settlement means that the requestor cannot as easily manipulate the BTS market price at the time that settlement occurs? Hopefully this equally prevents a whale short with the lowest collateral from also being able to manipulate the price to their benefit.
Thanks for the clarifications. While it makes sense to me now that a delay period is the prudent thing to do here, I do wonder what commitment the community actually has to prevent such a manipulation, when it won't be clear whether erratic price movements are manipulation or the real thing. While I'm not recommending this, I wonder if there are other things that can be done to thwart manipulators, such as having a random element in the settlement timing with an alert once complete.
Well, to clarify, that's my interpretation. Also - I think the "commitment" will come naturally, because inefficiencies in the market will be taken on by speculators.
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Another thing I'm still unclear on - why is there a preference shift for bitAsset shorts to be rationed by collateral on offer, rather than interest rate they are willing to pay?
I'm still trying to understand what the map of the system looks like and what the role of the bitAsset is within it. For example, if there is a plan to have a bond market and the like, how do bitAssets integrate with that?
Are we just talking about bitCurrencies having bond markets or all bitAssets?
Is bitUSD akin to cash, with at-call deposits and a bond market both to be separately defined, or is bitUSD the complete at-call market, with only a bond market behind that.
And is the bond market risk-free or credit-based? Or both?
Or does the map look completely different to this?
A map for context would be helpful in thinking about how proposed changes improve the fit of any component (e.g. a bitAsset) to its envisioned role within a broader system.
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The current BitAsset system will be run in parallel with the new system users can migrate at will.
Interesting. Would the old system ever be completely phased out?
Probably once the shorts unwind and people stop using it.
What if the current BITUSD/BITCNY owner never sell their asset? For example their private key is lost in fire.
So some short seller will have to renew their position forever?
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The current BitAsset system will be run in parallel with the new system users can migrate at will.
Interesting. Would the old system ever be completely phased out?
Probably once the shorts unwind and people stop using it.
What if the current BITUSD/BITCNY owner never sell their asset? For example their private key is lost in fire.
So some short seller will have to renew their position forever?
That's why we need an implementation that allows us to cover with our remaining collateral!
Can @bytemaster confirm they will do it ? It is very crucial for many of us!
Sent from my ALCATEL ONE TOUCH 997D
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24 hour delay is to give shorts NOTICE so they can start topping off their collateral if they want to keep their position.
Shorts can always reduce their collateral after the settlement as long as it stays above maintenance.
Shorts can enter a market order to cover their entire position using their collateral at any time.
In effect shorts only need the extra collateral for the moment of the settlement which means that someone who is pro-active can write a bot to always bump up their collateral if they are at risk. Of course many people may try this and they will all likely post at the last moment like an ebay auction. This posting of collateral will charge everyone transaction fees and those that reduce their collateral afterward will pay 2x the fees. This would be mere pennies.
If the market is functioning properly you will see very few settlement requests (the 24+ hour delay means you cannot use settlement to "buy the bottom" of a flash crash with huge volume) and those that want the money NOW will just sell on the normal market. There would be little incentive to pay interest to avoid a settlement that never happens.
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This is not fair for shorter, and the system will not work!!!! Because people hold BITUSD can get BTS back at any time, will not market impact no matter how big the volume the settlement is.
If I'm a whale and holding a lot of BTS. And I want get more.
What I need to do is keep buy the BITUSD, and drive the BITUSD price up. The more BITUSD I buy, the more expensive BITUSD is, and the less BITUSD can be created with same mount of BTS. This will keep moving the BITUSD price raise. And at some moment when succeed drive the BITUSD price up for more than x hours, I can request an settlement with only 1% lost, and I will not move the market at all, no mater how big volume I settled.
This is crazy.
The market will be completely controlled by whales.
The problem here is settlement will have a market impact. This is not a free market!
How do u think about this?
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This is not fair for shorter, and the system will not work!!!! Because people hold BITUSD can get BTS back at any time, will not market impact no matter how big the volume the settlement is.
If I'm a whale and holding a lot of BTS. And I want get more.
What I need to do is keep buy the BITUSD, and drive the BITUSD price up. The more BITUSD I buy, the more expensive BITUSD is, and the less BITUSD can be created with same mount of BTS. This will keep moving the BITUSD price raise. And at some moment when succeed drive the BITUSD price up for more than x hours, I can request an settlement with only 1% lost, and I will not move the market at all, no mater how big volume I settled.
This is crazy.
The market will be completely controlled by whales.
The problem here is settlement will have a market impact. This is not a free market!
How do u think about this?
Not at any time, but at the price feed (not easily manipulated) and after 24+ hours (allowing the market time to correct from your attempted manipulation).
If you keep buying BitUSD further from the peg without real demand for BTS in the outside market then you will pay a high price without moving the feed. If you force settlement you will lose money. If you can control the outside price of all BTS then that *IS* the market price and you should speculate accordingly. Fortunately the only way to harm shorts is to buy BitUSD... dump BTS on external markets... for them to settle at a loss. But this is real market action and fair. If you have enough BTS to push the price down by 1% in 24 hours then you signaled your move when you purchased BitUSD above market and again when you requested settlement which would likely cause the market to fall before you can sell your BTS. Your gains on the BitUSD side would be offset by your losses on the BTS side. Any way you slice it there are no guaranteed profits and every move you make is a PRICE SIGNAL and a valid price signal. Buying BitUSD == Selling BTS
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Fortunately the only way to harm shorts is to buy BitUSD... dump BTS on external markets... for them to settle at a loss.
Agree
But this is real market action and fair.
Not agree.
What I need to do is:
1. Keeping dump BTS in external market, at the same time buy BitUSD in internal market. This will cause the BTS price fall. (I'm a whale, and have enough BTS)
2. After the price is down more than 5%(just a example) after 24 hours. I require a settlement in internal market, this will not make BTS price up (no market impact in settlement but only 1% price gap). I will get more BTS than before I buy BitUSD.
3. Buy BTS in external market, (maybe loss a bit BTS compared to before I sell BTS).
The chance is very big that the BTS I earned in step 2 is more than what I lost in step 3. Because In step 2 I will make no market impact with only 1% price gap. In step3 as the BTS price is already drag down by myself, I can buy cheap BTS, even if the price raise when I buy BTS back. It is likely the price will not raise to the price before Step 1.
If you have enough BTS to push the price down by 1% in 24 hours then you signaled your move when you purchased BitUSD above market and again when you requested settlement which would likely cause the market to fall before you can sell your BTS. Your gains on the BitUSD side would be offset by your losses on the BTS side.
Did not get you. why the settlement will cause the market to fall Why I want to sell my BTS?
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It seems people have to sell bts for bitasset, but they need not to buy bts when they need bts. So the market will face sell presure, but no buy presure. This will drive the bts price all way down. Correct me, if i misunderstand something.
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It seems people have to sell bts for bitasset, but they need not to buy bts when they need bts. So the market will face sell presure, but no buy presure. This will drive the bts price all way down. Correct me, if i misunderstand something.
This is exactly what I think
从我的 iPhone 发送，使用 Tapatalk
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If we finally put the bitasset 3.0 to real I will go away from BTS.
I have a better proposal, I will sent out latter.
从我的 iPhone 发送，使用 Tapatalk
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But this is real market action and fair.
Not agree.
What I need to do is:
1. Keeping dump BTS in external market, at the same time buy BitUSD in internal market. This will cause the BTS price fall. (I'm a whale, and have enough BTS)
2. After the price is down more than 5%(just a example) after 24 hours. I require a settlement in internal market, this will not make BTS price up (no market impact in settlement but only 1% price gap). I will get more BTS than before I buy BitUSD.
3. Buy BTS in external market, (maybe loss a bit BTS compared to before I sell BTS).
The chance is very big that the BTS I earned in step 2 is more than what I lost in step 3. Because In step 2 I will make no market impact with only 1% price gap. In step3 as the BTS price is already drag down by myself, I can buy cheap BTS, even if the price raise when I buy BTS back. It is likely the price will not raise to the price before Step 1.
That's how traders manipulate low volume asset, and will work specially if no demand for BTS, otherwise still a gamble, there is a 24hrs before you can make settlement and feed price can change not in your favor.
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How can BitAssets 3.0 solve "Nobody-wants-to-short" problem in a bear market?
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How can BitAssets 3.0 solve "Nobody-wants-to-short" problem in a bear market?
#5 At any time entire market can be settled at the feed price given 30 day notice to be executed only in the event that all USD holders are unwilling to sell anywhere near a fair price. (black swan protection), this settlement can be canceled if the market returns to normal voluntarily.
Thoughts?
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the longs and shorts are two sides of the market.
we should keep them in balance, so the market can run very long time.
Now in BitAsset, the BTA shorters have an expiring date, but the BTA holders have not. This means holding BTA have advantage than holding BTS（or the bts collateral）. So the BTA holders are winner, and BTS price is falling all the way.
In BitAsset 3.0, there is no solid time limit for BTA shorter too. But BTA holders have another advantage: can settle back BTS whenever they want.
And the settlement makes BTA not currencies any more. If we want to create BTA as currencies, then we just need to let BTA can buy BTS whenever they want.
What you called settlement seems not basic function of currencies, but some kind of bond. Correc me if I make mistakes.
EDIT PLUS:
For a healthy market:
if market mainly want to sell, sellers need place lower price orders to match buyers'.This leads the price to go down.
if market mainly want to buy, buyers need place higher price orders to match sellers'. This leads the price to go up.
In BitAsset 3.0, the settlement function make the market do not work normally. Hold BitAsset to get BTS, will not leads BTS price go up, but Hold BTS to get BitAsset leads BTS price to go down.
I suggest we need more consideration. Maybe just cancel the shorts time limit is enough, and market will do the rest.
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In effect a short position is a "loan" that is callable based upon price or X day notice.
BTA short position is different from loan.
If you loan from someone, he loan the right to use his resource. You benefit from the loan, and need to pay interest.
But BTA long side sell bts is a market behavior. They get money from this, and can withdraw to their bank account, can buy something. So the long do not have the right to call back.
The market have the right to call back from short. Only when the collateral is not enough.
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If the market is functioning properly you will see very few settlement requests (the 24+ hour delay means you cannot use settlement to "buy the bottom" of a flash crash with huge volume) and those that want the money NOW will just sell on the normal market. There would be little incentive to pay interest to avoid a settlement that never happens.
bytemaster, why wouldn't we see frequent settlement requests? Demand continuously fluctuates. Whenever there is enough of a decline in demand and price, sellers or arbitragers would choose to request settlement instead. That's its purpose, in preventing further price decline. Depending on how the bond market is structured, there will also be settlements required when cash holders move to lend longer term.
I still can't think of a better market clearing mechanism than interest if the peg is to be maintained, and we want to mediate swings in supply and demand.
It would be helpful to understand the root issue a bit better. Is your concern that:
a) in principle collateral is a better clearing mechanism than interest
b) there are insurmountable flaws to getting interest to work as a clearing mechanism in this market
c) short term shorts generally won't pay interest, so the zero bound on rates is a limiting factor for proper clearing
d) something else?
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Imagine a whale requests settlement for a huge amount of BitUSD, to be cleared in 24 hours. What happens during that time? The whale tries his best to depress prices in order to get a favorable settlement. The low-collateral shorts do one of these:
(1) Try to pump BTS. This is no longer a valuation-driven market. It's bad for the entire ecosystem.
(2) Add collateral to pass the problem to the next guy. This is not a solution.
(3) Do nothing (let's be honest -- most shorts won't notice in time). Whales take advantage until nobody wants to short!
I think that the whale will often get a favorable trade against the shorts: a serious problem with the proposed BitAssets 3.0.
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Bm can come up with such a proposal. I doubt your intelligence on economy
从我的 iPhone 发送，使用 Tapatalk
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I'm curious about the black swan protection mechanism, who exactly decides that the whole market needs to settle? And isn't 30 days too long? By that time the whole market could be worth zero, or it could be back to normal, or basically anything could happen.
Also, how would this coexist with the existing bitAssets? Would it simply be a matter of introducing a short_v3 operation etc and the "new" bitUSD will have the same name, or will there be new assets called bitUSD_v2 or something? (stupid name I know, just for the purpose of illustration..)
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I'm curious about the black swan protection mechanism, who exactly decides that the whole market needs to settle? And isn't 30 days too long? By that time the whole market could be worth zero, or it could be back to normal, or basically anything could happen.
Also, how would this coexist with the existing bitAssets? Would it simply be a matter of introducing a short_v3 operation etc and the "new" bitUSD will have the same name, or will there be new assets called bitUSD_v2 or something? (stupid name I know, just for the purpose of illustration..)
I also want to know about this. Will bitUSD_v2 have the same value as bitUSD_v1 and only a short_v3 will be introduced or bitUSD_v1 will evaporate slowly? In other words is bitUSD_v1 going to become worthless and no one should short anymore bitusd now until the new version is released even if we are bullish on BTS right now?
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#1 No explicit short sell price limit
I think it is better to use 1.0 rule. I agree with you that BTA is like to loan. but system must know when offer a loan, and when stop offering a loan . I think if the supply of BTA is larger than requirement , system should stop to offer loan . if the price bitusd:bts<usd:bts (by feed), system can think the supply larger than requirement. stop to offer loan.
but in 3.0 there is No explicit short sell price limit. I don`t know ,what happen .
#2 No pre-set expiration on short positions.
I agree with you , but shorter have to return/partial cover BTA to make the collateral increase to 200% per 30 days if the price of bts decrease ,
#3 Any time someone with USD is unhappy with the current internal market price, they can request settlement at the 99% of feed (a 1% fee) in X days, where X is more than 24 hours.
does this settlement compete with bitusd seller ?
#5 At any time entire market can be settled at the feed price given 30 day notice to be executed only in the event that all USD holders are unwilling to sell anywhere near a fair price. (black swan protection), this settlement can be canceled if the market returns to normal voluntarily.
when ,and system how to judge "all USD holders are unwilling to sell anywhere near a fair price"
what price is a fair price?
and the bad salutation is a bitusd holder would lost his bitusd though he would get equipollence bts at feed price ,but it is a good methods?
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To clarify, BitAssets 3.0 might replace existing BitAssets eg BitGold with a new hard fork at some stage? Will BitAssets that currently exist be mapped straight into the 3.0 system?
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To clarify, BitAssets 3.0 might replace existing BitAssets eg BitGold with a new hard fork at some stage? Will BitAssets that currently exist be mapped straight into the 3.0 system?
from BM's friday comments on beyond bitcoin: BTA3.0 will coexist with the current system, but BM expects that the new system will be preferred. The old system will naturally wind down, and if it totally winds down it could be disabled with a hardfork.
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There may well be good reason, but I am still trying to figure out how non-interest bearing cash is likely to fit into a broader bond market system.
For non-interest cash to find use in transactions, it would be important that it not get hoarded at fixed terms in the bond market to earn a yield. This hit me (*) in a recent discussion about 14% yields on roubles. Particularly when interest rates are high, I think this would require an interest-bearing at-call deposit market so that cash is able to move freely rather than be locked up. (*Till then I too thought that you might get away with just cash and term-based lending.)
One possible advantage of having cash in addition to at-call deposits could be that the at-call deposit market could be set up as block-chain based accounts that allow negative interest rates on the notional cash within it, when this is necessary in certain cycles to balance supply and demand. See The Zero Interest Bound Problem here...
https://bitsharestalk.org/index.php/topic,15880.msg203780.html#msg203780
However, it may not be necessary to have a separate cash market to accommodate this – the cash units could be purely notional and only ever exist inside the accounts if there is some type of check-based system to move those notional credits. And allowing exchange above the feed price is an alternate market clearing solution to allowing negative interest rates. In other words, you could conceivable do away with cash and just have an at-call deposit market.
It is possible there are other reasons why users may choose at times to prefer to have a separate token for non-interest cash compared to just "interest bearing deposits". I feel these reasons need to be clear to justify the existence of a separate cash market. Possibilities might include increased privacy or anonymity, increased security/collateralization, or the ability to offer some cash-based services without the complication of dealing with interest payments on behalf of clients. Or I suppose we could just build both a cash and at-call deposit market and see how people use it, but as per my initial point, I don't think cash negates the need for an at-call market with interest.
Any thoughts?
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24 hour delay is to give shorts NOTICE so they can start topping off their collateral if they want to keep their position.
Shorts can always reduce their collateral after the settlement as long as it stays above maintenance.
Shorts can enter a market order to cover their entire position using their collateral at any time.
Bytemaster, this comment also confuses me. Why is there a need to give shorts notice to top up their collateral? Even if they know the timing, they are not going to know their queue position because everybody will top up their collateral just before settlement, so it depends on their willingness to hold versus others. In fact there is no reason to not place all one's spare BTS as collateral at that point in time. And then straight after, they will all be at liberty to take out all of their excess collateral again, so I'm not sure how this helps protect longs at all. If the timing were unknown however (e.g. instant, or randomised) then shorts would be competitively required to hold near the maximum they are comfortable with for as long as they hold the shorts. So instant seems better to me, at least on this basis.
I thought I understood the point raised by bitmeat and others earlier that maybe a delay helps mitigate market manipulation in the BTS market. But you don't seem to have said this is the reason at all.
Can you please clarify?
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Sorry if this has been covered, it has been a few days since I read all of this. I just want to make sure this was brought up...
So my understanding is that a bitAsset holder can call a settlement at X% Y days in advanced. That settlement executes at the price feed on expiration...Can this request be canceled?
My concern is that there should a only a short period of time where the settlement request can be canceled. The main purpose is to avoid a lot of canceling in the last minutes when the price feed happens to be skewed in the undesired direction. Given a known predictable settlement queue, shorts can plan better and decide what to do with there collateral or position.
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Sorry if this has been covered, it has been a few days since I read all of this. I just want to make sure this was brought up...
So my understanding is that a bitAsset holder can call a settlement at X% Y days in advanced. That settlement executes at the price feed on expiration...Can this request be canceled?
My concern is that there should a only a short period of time where the settlement request can be canceled. The main purpose is to avoid a lot of canceling in the last minutes when the price feed happens to be skewed in the undesired direction. Given a known predictable settlement queue, shorts can plan better and decide what to do with there collateral or position.
https://bitsharestalk.org/index.php?topic=15986.0
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Sorry if this has been covered, it has been a few days since I read all of this. I just want to make sure this was brought up...
So my understanding is that a bitAsset holder can call a settlement at X% Y days in advanced. That settlement executes at the price feed on expiration...Can this request be canceled?
My concern is that there should a only a short period of time where the settlement request can be canceled. The main purpose is to avoid a lot of canceling in the last minutes when the price feed happens to be skewed in the undesired direction. Given a known predictable settlement queue, shorts can plan better and decide what to do with there collateral or position.
Allowing people to enter/exit the line allows them to manipulate the market by sending fake signals. The settlement line is meant as a LAST RESORT. Its presence is only to guarantee USD holders a minimal level of liquidity at a fair price. Everything else is set by the market.
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To clarify, BitAssets 3.0 might replace existing BitAssets eg BitGold with a new hard fork at some stage? Will BitAssets that currently exist be mapped straight into the 3.0 system?
from BM's friday comments on beyond bitcoin: BTA3.0 will coexist with the current system, but BM expects that the new system will be preferred. The old system will naturally wind down, and if it totally winds down it could be disabled with a hardfork.
Ohhhh. So existing BitGold is not the same as BitGold 3.0?
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Ohhhh. So existing BitGold is not the same as BitGold 3.0?
We don't know yet how they will be "coexisting" .. BM hasn't told us yet .. let's see
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Ohhhh. So existing BitGold is not the same as BitGold 3.0?
We don't know yet how they will be "coexisting" .. BM hasn't told us yet .. let's see
For what its worth, my own view is that it very definitely should be the same, to enhance overall stability and trust in the network.
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"Everything should be made as simple as possible, but not simpler." ;)
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To clarify, BitAssets 3.0 might replace existing BitAssets eg BitGold with a new hard fork at some stage? Will BitAssets that currently exist be mapped straight into the 3.0 system?
from BM's friday comments on beyond bitcoin: BTA3.0 will coexist with the current system, but BM expects that the new system will be preferred. The old system will naturally wind down, and if it totally winds down it could be disabled with a hardfork.
Ohhhh. So existing BitGold is not the same as BitGold 3.0?
They need to be the same imo. Just carry over from current system to new one when the hardfork occurs for bitassets 3.0. If people don't want the new version they can sell beforehand.
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So its doing away with the concept of margin calls and replacing it with forced settlement. Unlike a margin call, which is triggered whenever the spot price (feed price in this case) moves beyond collateral amt, a forced settlement needs to meet two conditions: 1) authorization by a long holder and 2) being an account with least collateralize amt.
Are there automatic margin calls in BitAssets 3.0?
It isn't mentioned in the description of BitAssets 3.0 nor could I find any post that clarifies it. Is the above quote a correct interpretation?
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So its doing away with the concept of margin calls and replacing it with forced settlement. Unlike a margin call, which is triggered whenever the spot price (feed price in this case) moves beyond collateral amt, a forced settlement needs to meet two conditions: 1) authorization by a long holder and 2) being an account with least collateralize amt.
Are there automatic margin calls in BitAssets 3.0?
It isn't mentioned in the description of BitAssets 3.0 nor could I find any post that clarifies it. Is the above quote a correct interpretation?
Yes low collateral results in margin calls automatically.
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To clarify, BitAssets 3.0 might replace existing BitAssets eg BitGold with a new hard fork at some stage? Will BitAssets that currently exist be mapped straight into the 3.0 system?
from BM's friday comments on beyond bitcoin: BTA3.0 will coexist with the current system, but BM expects that the new system will be preferred. The old system will naturally wind down, and if it totally winds down it could be disabled with a hardfork.
Ohhhh. So existing BitGold is not the same as BitGold 3.0?
Are delegates supposed to publish feeds for the old assets? What if they refuse and nobody can unwind at market prices? Are we sure this has been thought through compketely?
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To clarify, BitAssets 3.0 might replace existing BitAssets eg BitGold with a new hard fork at some stage? Will BitAssets that currently exist be mapped straight into the 3.0 system?
from BM's friday comments on beyond bitcoin: BTA3.0 will coexist with the current system, but BM expects that the new system will be preferred. The old system will naturally wind down, and if it totally winds down it could be disabled with a hardfork.
Ohhhh. So existing BitGold is not the same as BitGold 3.0?
Are delegates supposed to publish feeds for the old assets? What if they refuse and nobody can unwind at market prices? Are we sure this has been thought through compketely?
what happens with bitUSD that are unaccessable due to lost keys?
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To clarify, BitAssets 3.0 might replace existing BitAssets eg BitGold with a new hard fork at some stage? Will BitAssets that currently exist be mapped straight into the 3.0 system?
from BM's friday comments on beyond bitcoin: BTA3.0 will coexist with the current system, but BM expects that the new system will be preferred. The old system will naturally wind down, and if it totally winds down it could be disabled with a hardfork.
Ohhhh. So existing BitGold is not the same as BitGold 3.0?
Are delegates supposed to publish feeds for the old assets? What if they refuse and nobody can unwind at market prices? Are we sure this has been thought through compketely?
what happens with bitUSD that are unaccessable due to lost keys?
Same thing that happens to BitUSD that are held by someone as savings for ever. It requires someone to be short forever and will ultimately push up the price of BitUSD above $1 if there is no-one willing to short
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I think I'm missing the crux of the problem solved by BitAssets 3.0. I feel like bitAssets have tracked pretty well considering some nasty bugs that should just now be fixed in the upcoming hard fork, the drop in BTS, shorters not realizing they can't cover with their collateral etc.
Will this peg "hold", yes it will. Will it always be worth at least $1 yes. Will the cost to buy it sometimes be far more than $1, YES.
So we can now say that BitUSD has a FLOOR of $1 and can go up from there. As a merchant / consumer that is all you care about (the floor). The presence of a floor means that people can trade USD for BitUSD and purchase things with BitUSD without having to think about whether it is worth $1. The only people that actually have to think about whether to buy at $1.05 or not are traders... they take the risk that short demand will increase and push the price back down toward $1.00. On the other hand, in a bear market short demand may decrease and push BitUSD up to $1.10.
I generally disagree that the price will remain above $1 or generally trade around $1.05 when it's only convertible at 99%. I think that bitAsset holders will need to use the force settle at 99% a lot to get their value and it won't be just a theoretical backstop. Therefore I think the price feed will have more power in this system because the price feed specifically determines the price you pay when you convert.
I think the rule no shorting below the feed was a good rule because it protected the market without specifically forcing people to do something, just preventing people from doing something they shouldn't be doing anyway. I don't know why the desire to get rid of this rule, not sure if it's just for easier implementation.
I also feel like when you add extra parameters it makes the system sound more complicated to me and I feel like people want to know why these are the right numbers:
Settle at 99% of the feed
with 24hrs notice
with a maximum of 5% of supply convertible per day.
Shorts can vote to force settle the market with 30day notice
giving USD holders a 10% premium.
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I think I'm missing the crux of the problem solved by BitAssets 3.0. I feel like bitAssets have tracked pretty well considering some nasty bugs that should just now be fixed in the upcoming hard fork, the drop in BTS, shorters not realizing they can't cover with their collateral etc.
Will this peg "hold", yes it will. Will it always be worth at least $1 yes. Will the cost to buy it sometimes be far more than $1, YES.
So we can now say that BitUSD has a FLOOR of $1 and can go up from there. As a merchant / consumer that is all you care about (the floor). The presence of a floor means that people can trade USD for BitUSD and purchase things with BitUSD without having to think about whether it is worth $1. The only people that actually have to think about whether to buy at $1.05 or not are traders... they take the risk that short demand will increase and push the price back down toward $1.00. On the other hand, in a bear market short demand may decrease and push BitUSD up to $1.10.
I generally disagree that the price will remain above $1 or generally trade around $1.05 when it's only convertible at 99%. I think that bitAsset holders will need to use the force settle at 99% a lot to get their value and it won't be just a theoretical backstop. Therefore I think the price feed will have more power in this system because the price feed specifically determines the price you pay when you convert.
I think the rule no shorting below the feed was a good rule because it protected the market without specifically forcing people to do something, just preventing people from doing something they shouldn't be doing anyway. I don't know why the desire to get rid of this rule, not sure if it's just for easier implementation.
I also feel like when you add extra parameters it makes the system sound more complicated to me and I feel like people want to know why these are the right numbers:
Settle at 99% of the feed
with 24hrs notice
with a maximum of 5% of supply convertible per day.
Shorts can vote to force settle the market with 30day notice
giving USD holders a 10% premium.
Low liquidity is the issue .
If BTA demands more premium , then it'll lose attractiveness at this early age . If no premium , even with the bug fix , the high demand for BTA brings covering pressure will still makes shorts not wanting to continue anymore . Without liquidity , BTA is useless for the outside world .
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Low liquidity is the issue .
If BTA demands more premium , then it'll lose attractiveness at this early age . If no premium , even with the bug fix , the high demand for BTA brings covering pressure will still makes shorts not wanting to continue anymore . Without liquidity , BTA is useless for the outside world .
Ok, I just think getting rid of bugs in the current system would give shorts more confidence
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Low liquidity is the issue .
If BTA demands more premium , then it'll lose attractiveness at this early age . If no premium , even with the bug fix , the high demand for BTA brings covering pressure will still makes shorts not wanting to continue anymore . Without liquidity , BTA is useless for the outside world .
Ok, I just think getting rid of bugs in the current system would give shorts more confidence
4290 USD worth of BitCNY sold at transwiser.com by range of 1.007 CNY~ 1.01 CNY today ...many of them is for covering short orders
There are lots of BitCNY being stockpiled by some ordinary users who wants to hold it or use it , I will not be surprised if most of BitCNY produced by the new shorts even after the bug fix will be hold by actual buyers for a long time , then it'll be like users and short-coverers fighting for BitCNY .... so there will still be premium , and shorts will lose incentive to do it anymore coz they don't want to pay premium to cover .
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Low liquidity is the issue .
If BTA demands more premium , then it'll lose attractiveness at this early age . If no premium , even with the bug fix , the high demand for BTA brings covering pressure will still makes shorts not wanting to continue anymore . Without liquidity , BTA is useless for the outside world .
Ok, I just think getting rid of bugs in the current system would give shorts more confidence
And you're right imo, mainly because there is still that old bug with shorts if im not mistaken. covers not getting matched with shorts,
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Low liquidity is the issue .
If BTA demands more premium , then it'll lose attractiveness at this early age . If no premium , even with the bug fix , the high demand for BTA brings covering pressure will still makes shorts not wanting to continue anymore . Without liquidity , BTA is useless for the outside world .
Ok, I just think getting rid of bugs in the current system would give shorts more confidence
do you think one of them is the ability to use existing collateral to cover?
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Low liquidity is the issue .
If BTA demands more premium , then it'll lose attractiveness at this early age . If no premium , even with the bug fix , the high demand for BTA brings covering pressure will still makes shorts not wanting to continue anymore . Without liquidity , BTA is useless for the outside world .
Ok, I just think getting rid of bugs in the current system would give shorts more confidence
do you think one of them is the ability to use existing collateral to cover?
I think being able to cover with collateral would help things, I know there are people that forget to separate their balances or keep enough BTS to cover so they just wait it out until their short expires.
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Low liquidity is the issue .
If BTA demands more premium , then it'll lose attractiveness at this early age . If no premium , even with the bug fix , the high demand for BTA brings covering pressure will still makes shorts not wanting to continue anymore . Without liquidity , BTA is useless for the outside world .
Ok, I just think getting rid of bugs in the current system would give shorts more confidence
do you think one of them is the ability to use existing collateral to cover?
Absolutely, this.
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To clarify, BitAssets 3.0 might replace existing BitAssets eg BitGold with a new hard fork at some stage? Will BitAssets that currently exist be mapped straight into the 3.0 system?
from BM's friday comments on beyond bitcoin: BTA3.0 will coexist with the current system, but BM expects that the new system will be preferred. The old system will naturally wind down, and if it totally winds down it could be disabled with a hardfork.
Ohhhh. So existing BitGold is not the same as BitGold 3.0?
Are delegates supposed to publish feeds for the old assets? What if they refuse and nobody can unwind at market prices? Are we sure this has been thought through compketely?
what happens with bitUSD that are unaccessable due to lost keys?
Same thing that happens to BitUSD that are held by someone as savings for ever. It requires someone to be short forever and will ultimately push up the price of BitUSD above $1 if there is no-one willing to short
BTA1.0 and 3.0 should be able to use the same price feed because they peg to the same asset (e.g USD).
I have concern that having old and new BTA running together will weaken the confidence that people want to accept BTA. As the BTA 1.0 isn't working well, who knows if BTA 3.0 is working well or not?
If we have confidence that both BTA 1.0 and BTA 3.0 can peg to 1 USD eventually, why not we convert BTA1.0 to BTA3.0 to keep things simple.
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I think the biggest issue with BitAssets right now is the forced cover at 110% feed on expiration. If we're going to have expiration at all, it should force a cover at the feed. As it is now, longs have no reason to sell at the feed, since with a little patience they can expect a forced buy at +10%. Now that shorts have figured this out, they're mostly only shorting at a price limit of about +10%, so the peg is actually being maintained pretty effectively at around $1.10.
The new BitAssets 3.0 proposal mostly fixes this by moving forced cover to -1% instead of +10%, but it seems like a major overhaul where a few fixes would be sufficient. If it's necessary for longer range plans for the bond market it may make sense anyway.
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To clarify, BitAssets 3.0 might replace existing BitAssets eg BitGold with a new hard fork at some stage? Will BitAssets that currently exist be mapped straight into the 3.0 system?
from BM's friday comments on beyond bitcoin: BTA3.0 will coexist with the current system, but BM expects that the new system will be preferred. The old system will naturally wind down, and if it totally winds down it could be disabled with a hardfork.
Ohhhh. So existing BitGold is not the same as BitGold 3.0?
Are delegates supposed to publish feeds for the old assets? What if they refuse and nobody can unwind at market prices? Are we sure this has been thought through compketely?
what happens with bitUSD that are unaccessable due to lost keys?
Same thing that happens to BitUSD that are held by someone as savings for ever. It requires someone to be short forever and will ultimately push up the price of BitUSD above $1 if there is no-one willing to short
BTA1.0 and 3.0 should be able to use the same price feed because they peg to the same asset (e.g USD).
I have concern that having old and new BTA running together will weaken the confidence that people want to accept BTA. As the BTA 1.0 isn't working well, who knows if BTA 3.0 is working well or not?
If we have confidence that both BTA 1.0 and BTA 3.0 can peg to 1 USD eventually, why not we convert BTA1.0 to BTA3.0 to keep things simple.
I can't imagine trying to explain why we have two kinds of bitAssets that are the same thing but that are not compatible. It's impossible to market that.
Finding a fair way to convert current shorts into 3.0 shorts (and probably ask the community to vote about it) is all we need. Is it possible ?
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I can't imagine trying to explain why we have two kinds of bitAssets that are the same thing but that are not compatible. It's impossible to market that.
We're used to it in America. We have two kinds of politicians that are the same thing but that are not compatible (when in view). It's actually very easy to market and is working quite well for TPTB. ;)
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I think the biggest issue with BitAssets right now is the forced cover at 110% feed on expiration. If we're going to have expiration at all, it should force a cover at the feed. As it is now, longs have no reason to sell at the feed, since with a little patience they can expect a forced buy at +10%. Now that shorts have figured this out, they're mostly only shorting at a price limit of about +10%, so the peg is actually being maintained pretty effectively at around $1.10.
The new BitAssets 3.0 proposal mostly fixes this by moving forced cover to -1% instead of +10%, but it seems like a major overhaul where a few fixes would be sufficient. If it's necessary for longer range plans for the bond market it may make sense anyway.
Is this not gonna be fixed after tuesday's hardfork? That was my impression but i am uncertain about it..
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I think the biggest issue with BitAssets right now is the forced cover at 110% feed on expiration. If we're going to have expiration at all, it should force a cover at the feed. As it is now, longs have no reason to sell at the feed, since with a little patience they can expect a forced buy at +10%. Now that shorts have figured this out, they're mostly only shorting at a price limit of about +10%, so the peg is actually being maintained pretty effectively at around $1.10.
The new BitAssets 3.0 proposal mostly fixes this by moving forced cover to -1% instead of +10%, but it seems like a major overhaul where a few fixes would be sufficient. If it's necessary for longer range plans for the bond market it may make sense anyway.
Is this not gonna be fixed after tuesday's hardfork? That was my impression but i am uncertain about it..
I think Tuesday's hardfork was fixing the market freeze when shorts expire, but not the fact that they're forced to cover at 110%, hopefully I'm wrong on that.
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110% forced cover is a feature, not a bug...
101%-105% max would clearly be nice.
I can't imagine trying to explain why we have two kinds of bitAssets that are the same thing but that are not compatible. It's impossible to market that.
We're used to it in America. We have two kinds of politicians that are the same thing but that are not compatible (when in view). It's actually very easy to market and is working quite well for TPTB. ;)
Hilarious :P That's a very clever analogy, no doubt it'll help our marketing team !
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110% forced cover is a feature, not a bug...
101%-105% max would clearly be nice.
I can't imagine trying to explain why we have two kinds of bitAssets that are the same thing but that are not compatible. It's impossible to market that.
We're used to it in America. We have two kinds of politicians that are the same thing but that are not compatible (when in view). It's actually very easy to market and is working quite well for TPTB. ;)
Hilarious :P That's a very clever analogy, no doubt it help our marketing team !
No, not a bug. I'd call it a design flaw.
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110% forced cover is a feature, not a bug...
101%-105% max would clearly be nice.
I can't imagine trying to explain why we have two kinds of bitAssets that are the same thing but that are not compatible. It's impossible to market that.
We're used to it in America. We have two kinds of politicians that are the same thing but that are not compatible (when in view). It's actually very easy to market and is working quite well for TPTB. ;)
Hilarious :P That's a very clever analogy, no doubt it'll help our marketing team !
IMHO this is not a good analogy.
In USA there are two and only two parties.
In our world we have too many altcoins that claim to have stable value, such as nubit, tether, etherum etc. Having 2 different bitUSD will easily confuse people and drive them to use other altcoins.