BitShares Forum
Main => General Discussion => Topic started by: Bitcoinfan on June 23, 2015, 05:02:38 pm
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Roger Ver has finally revealed his backing in the Truthcoin project. They have some prelim code release today as well in github. He is saying that it is the most important project since Bitcoin.
https://bitcoinmagazine.com/20971/roger-ver-backing-prediction-market-sidechain-may-important-invention-since-bitcoin/
How did bitshares ever let Roger Ver sweep down and poach this project?
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It sounds very interesting but it's still limited by Bitcoin's scaling issues.
Joshua Unseth • 29 minutes ago
Will this be merge mined? How are they going to secure the sidechain?
Joey Krug Joshua Unseth • 21 minutes ago
Sounds like a federated peg, merge mined 2 way peg sidechains are "5 years off" according to the talk Greg Maxwell gave a few weeks back at SF Bitcoin Devs meetup
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prediction markets without smart coins don't work. The volatility of the underlying asset overwhelms any profit or loss made by predicting the outcome of the event.
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How did bitshares ever let Roger Ver sweep down and poach this project?
The answer to that is easy: Bitcoin maximalism.
The real question is why aren't we able to convince Augur to use our platform rather than the much slower Ethereum (plus we already have BitUSD working while they are still working on eDollar).
Speaking of prediction markets. The use of BitAssets 2.0 for PM is unsatisfactory in many ways (although it is nice that we get it "for free" so to speak).
First, it is limited to binary outcomes rather than generally to N disjoint outcomes. That is an easy fix. Create a PM pool that let's you deposit X BitUSD to get assets X BitPM-1, X BitPM-2, ... , X BitPM-N, and also require you to burn X BitPM-1, X BitPM-2, ... X BitPM-N simultaneously in order to withdraw X BitUSD from the pool.
Second, I like that we can do traditional order book prediction markets (Ethereum will struggle with that), but a market maker is very important. I believe it should be possible to have both (is that correct? yes, should be possible [1]). So I would love to see BitShares have these BitPM-type assets trading against BitUSD but also have a liquidity sensitive LMSR autonomous agent making those markets on behalf of the PM creator (who would fund the initial liquidity, but would also be able to potentially profit from the trading fees acquired by the market maker). There wouldn't only be market orders, there would also be limit orders. A limit order might match against the LS-LMSR market maker, but could also match against other limit orders by real users sitting in the order book.
Third, using a multisig judge to provide outcomes of prediction markets is an okay start, but eventually we would need something more decentralized. We should learn from the REP token approach used in Augur. In my opinion, we can generalize this a little by allowing a special UIA type that can be used as a REP token to judge certain prediction markets. Some additional features for UIAs would be a prerequisite. First, UIAs should be allowed to elected managers the same way BTS can elect delegates. These managers would of course still have limited powers with what they could do with the UIAs. Second, there should be a built-in mechanism in the blockchain to shift the order of magnitude of the balance to the left or right as necessary to allow the max supply with desired precision to fit in a 64-bit number. This means that the token can be endlessly inflated and there won't be any overflow (instead balances would lose the starting precision of their balances over time, and very small balances would eventually completely disappear by just sitting there). This mechanism is important because redistribution from non-participating or dishonest REP holders to participating and honest REP holders can be simulated through distributing automatically inflated supply to the participating and honest REP holders, no matter if the other REP are locked in a contract or not. With these features in place for UIAs, a prediction market could be set up to choose a particular UIA as the oracle providing the outcomes. If the managers of the UIA (that represent the UIA holders) commit the UIA holders to act as an oracle to that PM (an action that the managers get compensated for from funds provided by the PM creator), then the PM opens up for trading. Eventually, once the PM expires, the UIA holders are obligated to report on the outcome of some selection of PMs that the UIA managers committed them to, and if they don't they won't receive the newly inflated UIA (thus diluting their ownership). For actual details of how this reporting process works (including details like how the consensus outcome is determined and how PCA is used to redistribute the inflated UIA) check out Augur.
These are three projects that I would absolutely vote a credible worker proposal to fund after BitShares 2.0.
[1] Here is a paper I found on integrating a market scoring rule (e.g. LMSR) with conventional limit orders: http://www.seas.upenn.edu/~hoda/HLPV.pdf
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prediction markets without smart coins don't work. The volatility of the underlying asset overwhelms any profit or loss made by predicting the outcome of the event.
My thoughts too ..
would have stated it differently though as to calculation need to consider a wider variance including volatility .. but in essence a simple "won't work" does the job well too :P
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prediction markets without smart coins don't work. The volatility of the underlying asset overwhelms any profit or loss made by predicting the outcome of the event.
Isn't that the same thing as saying that exchanges which list other cryptos priced in BTC don't work?
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prediction markets without smart coins don't work. The volatility of the underlying asset overwhelms any profit or loss made by predicting the outcome of the event.
Isn't that the same thing as saying that exchanges which list other cryptos priced in BTC don't work?
No, it isn't.
Imagine a prediction market on a coin toss to occur 3 months from now. Imagine it is price in BTC such that heads is worth 1 BTC and tails is worth 0 BTC. You have an opportunity to buy at .45 BTC which means if you repeated this bet over and over you would make 11% return by holding until expiration. Now if BTC falls by 50% over 3 months then you only have a 11% return on BTC, but a real loss. Therefore, speculating in this coin-toss market is overwhelmed by speculation in BTC. The only thing you could do is "day trade" by buying when it deviates from expected value and selling when it returns to expected value. This may work for a coin toss, but doesn't work at all for something like an election.
If you are speculating on an election and have good information that a tight election is rigged and want to bet on it, so you put in 1 BTC worth $1000 expecting to win 2 BTC worth $2000 in 3 months. 3 months later BTC has fallen 75% leaving you with 2 BTC worth $500. You won in the prediction market but lost in the BTC market.
In other words, the noise/risk introduced by pricing a prediction market in a non-stable currency limits the market to only those who are willing to be long BTC or able to hedge their BTC position separately.
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In other words, the noise/risk introduced by pricing a prediction market in a non-stable currency limits the market to only those who are willing to be long BTC or able to hedge their BTC position separately.
+5% That's a good point
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First, UIAs should be allowed to elected managers the same way BTS can elect delegates. These managers would of course still have limited powers with what they could do with the UIAs.
This is already in BTS 2.0, can't remember what the position is called but they are basically UIA delegates.
I imagine Banx will be using the system to avoid centralization of control of their asset.
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First, UIAs should be allowed to elected managers the same way BTS can elect delegates. These managers would of course still have limited powers with what they could do with the UIAs.
This is already in BTS 2.0, can't remember what the position is called but they are basically UIA delegates.
I remember reading that in docs as well, but I don't know if those docs (see here (https://github.com/cryptonomex/graphene/wiki/design-issues#voting) and here (https://github.com/cryptonomex/graphene/wiki/blacklizard-app-finarch#app-operational-accounts)) were credible or outdated or a wish list. Can we get confirmation from bytemaster on this?
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In other words, the noise/risk introduced by pricing a prediction market in a non-stable currency limits the market to only those who are willing to be long BTC or able to hedge their BTC position separately.
Good point. The longer the time until the close of contract the more noise is introduced by the volatility of BTC vs fiat.
...However, for those long BTC, this fact doesn't really matter.
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In other words, the noise/risk introduced by pricing a prediction market in a non-stable currency limits the market to only those who are willing to be long BTC or able to hedge their BTC position separately.
Good point. The longer the time until the close of contract the more noise is introduced by the volatility of BTC vs fiat.
...However, for those long BTC, this fact doesn't really matter.
A prediction market priced in BTC can ONLY be used by people who desire to be long BTC, but a prediction market with Smartcoins can be used by anyone.
Given that some of the bets will last months, the volatility risk of BTC will be a big deal.
So we will have a better product.
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I'm interested to hear how the LMSR performs in practice - I've read a report that says although it has bounded loss by design, in practice it nearly always looses.
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Wouldn't it be possible to approach Augur to implement this in BitShares? Wouldn't it be easier? Don't we have more resources for them to build this on? Would be nice to have on article about how BitShares could implement prediction markets once 2.0 is launched (even during the test phase), maybe then it would be easier to either get Augur to join with is or to get some competition for them (which will end up surpassing it). It's just Augur has caused a lot of buzz and if it worked out on BitShares, with our smartcoins.. well, you can imagine
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prediction markets without smart coins don't work. The volatility of the underlying asset overwhelms any profit or loss made by predicting the outcome of the event.
This statement shows why BM overlooked Truthcoin in the first place. He is unclear on how Truthcoin works or at least didn't spend enough time trying to do so.
This is false, and Truthcoin achieves stability through combintorial markets. Truthcoin has Bitusd stabilitiy for any type of market as a core features. (See whitepper example 5 of paper 2 "The Power of Prediction Markets" Also featured in Pauls blogpost, truthcoin.info.) Not only that you can do all of this with Bitcoin. This is a benefit because it is way ahead in terms of network effect.
What bytemaster calls smart coins, Paul infers as dimensions. Maybe the difference is time of expiration date versus continuous markets. However the limitation of Bitshares 2.0 is that it can't do Bayesian type of Markets. Baysian markets are a major feature of Truthcoin.
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I'm interested to hear how the LMSR performs in practice - I've read a report that says although it has bounded loss by design, in practice it nearly always looses.
Considering that it only profits if the outcome is contrary to what the market predicts at the very end, I would expect this to be true. The point of an LMSR is mostly that the initial liquidity provider is not doing it to make profit but rather altruistically for the good of getting accurate predictions on the question being asked.
However, if the market maker charges trading fees that go to the initial liquidity provider, then profit becomes very possible. In fact, since the loss is bounded, after some amount of trading occurs, the initial liquidity provider will break even and anything after that is pure profit. So if the initial liquidity provider is not creating the prediction market altruistically, they need to bet on whether their particular PM will generate enough trading volume to make back their investment.
Also, a liquidity sensitive LMSR is an improvement on regular LMSR that allows some fraction of the trading fees to instead go back into the liquidity pool. This means that with more trading the liquidity of the market automatically increases (slippage decreases).
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First, UIAs should be allowed to elected managers the same way BTS can elect delegates. These managers would of course still have limited powers with what they could do with the UIAs.
This is already in BTS 2.0, can't remember what the position is called but they are basically UIA delegates.
I remember reading that in docs as well, but I don't know if those docs (see here (https://github.com/cryptonomex/graphene/wiki/design-issues#voting) and here (https://github.com/cryptonomex/graphene/wiki/blacklizard-app-finarch#app-operational-accounts)) were credible or outdated or a wish list. Can we get confirmation from bytemaster on this?
Yes, there is certain amount of silence regarding 'blacklizard'... I asked the question in the last mumble but the question was quietly ignored by both BM and the host.
[edit] what I mean is - it is probably just simply raw idea more than anything else of now. As for the host he has not even heard of it, I guess. No offence this is more or less not advertised or discussed anywhere.
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Yes, there is certain amount of silence regarding 'blacklizard'... I asked the question in the last mumble but the question was quietly ignored by both BM and the host.
I think "Black Lizard" is just the code name for Graphene before it became Graphene. The more important thing beyond the name is how much of the (IMHO) really cool stuff discussed in those docs is actually part of the roadmap for Cryptonomex (meaning they are seriously planning to submit a worker proposal to implement after BitShares 2.0 has launched that they hope stakeholders will approve) and how much of it are ideas floating around among the devs that they haven't actually reached consensus on.
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LSMR markets are a future feature that we will be creating a proposal to fund.
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However, if the market maker charges trading fees that go to the initial liquidity provider, then profit becomes very possible. In fact, since the loss is bounded, after some amount of trading occurs, the initial liquidity provider will break even and anything after that is pure profit. So if the initial liquidity
It all depends on whether the average trading fee exceeds the average loss per trade, I guess.
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prediction markets without smart coins don't work. The volatility of the underlying asset overwhelms any profit or loss made by predicting the outcome of the event.
That's a slightly arrogant and profound statement. It's one thing to say "I think I have a decent solution X for problem Y". But to state "Unless you use my solution X, Y can not be solved" demonstrates a close minded mentality.
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prediction markets without smart coins don't work. The volatility of the underlying asset overwhelms any profit or loss made by predicting the outcome of the event.
That's a slightly arrogant and profound statement. It's one thing to say "I think I have a decent solution X for problem Y". But to state "Unless you use my solution X, Y can not be solved" demonstrates a close minded mentality.
I used smart coins in the general sense... namely that they must be priced in a stable asset. Apparently Truthcoin has something equivalent to smartcoins.
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just saw this http://www.reddit.com/r/Bitcoin/comments/3au8rz/roger_ver_backing_prediction_market_sidechain_may/csg1q4h
"bitusd isn't worth the trouble" http://www.truthcoin.info/blog/bitusd/
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Truthcoin....what a shitty name. What is this, 2013?
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prediction markets without smart coins don't work. The volatility of the underlying asset overwhelms any profit or loss made by predicting the outcome of the event.
That's what the multidemnsional msr is for. The interface can handle making it look like a dollar-denominated bet for a single event. There are disadvantages (you need to "sync" with usd price close time) but it's not nearly as bad as you're implying
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prediction markets without smart coins don't work. The volatility of the underlying asset overwhelms any profit or loss made by predicting the outcome of the event.
That's what the multidemnsional msr is for. The interface can handle making it look like a dollar-denominated bet for a single event. There are disadvantages (you need to "sync" with usd price close time) but it's not nearly as bad as you're implying
Can you explain how MD MSR work?
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There are disadvantages (you need to "sync" with usd price close time) but it's not nearly as bad as you're implying
I still haven't wrapped my head around the details of how combinatorial prediction markets compensate for the betting asset's price volatility (despite reading Paul's (http://www.truthcoin.info/papers/2_PM_Types.pdf) papers (http://www.truthcoin.info/papers/3_PM_Applications.pdf)), but it still seems clear to me that it is the inferior solution compared to betting with stablecoins directly. For one, collateral levels backing BitUSD can continuously be updated over long periods of time as the collateral asset price drops significantly over this time. I am not sure how this would work in a combinatorial prediciton market, but I would imagine there should be some lower bound for how low the price could drop from the initial price at the start of the PM before the peg would break. Second, there can be considerable delay from the date at which the USD price is reported and the time the payments are actually settled. For example, in Augur it seems this delay is 2 months. Obviously the reporters cannot report a USD price that has not yet happened, so that means the earliest access the winners will have to the collateral asset is 2 months after the fair settlement price was determined. In those 2 months the price of the collateral asset could have dropped even more relative to USD. Also, they would be forced to dump it in exchange for USD as soon as possible after settlement to no longer be exposed to the price changes of the collateral asset, whereas with BitUSD the holders can take their time to incrementally trade fractions of their BitUSD holdings into USD (via the collateral asset if necessary), assuming they even want to bother when they already have the option of just holding it as BitUSD, without needing to worry as much about slippage in the market.
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IMHO, Roger Ver has always come across as a pompous ass.
Sent from my iPhone using Tapatalk
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prediction markets without smart coins don't work. The volatility of the underlying asset overwhelms any profit or loss made by predicting the outcome of the event.
Where is your twitter account? You should tweet that.
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IMHO, Roger Ver has always come across as a pompous ass.
Sent from my iPhone using Tapatalk
Do you know Roger personally or are you commenting on his online persona (tweets/post)?
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IMHO, Roger Ver has always come across as a pompous ass.
i'm disagree with your opinion here!
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prediction markets without smart coins don't work. The volatility of the underlying asset overwhelms any profit or loss made by predicting the outcome of the event.
No-order book prediction markets can work only if the underlying asset is an IOU. That IOU in turn is only stable if it is a representation of another IOU. It needs to be a recursive system in time rather than a self-referential system. I can only think of one way how to do that on a blockchain.
A no-order book prediction market has several advantages to the smartcoin setup for actual predictive value. As far as I am up to date, the current smartcoin setup isn't technically a *prediction" market as it has no predictive value, it's more like an advanced schelling coin setup which pushed all market members towards a information focal point.
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How did bitshares ever let Roger Ver sweep down and poach this project?
The answer to that is easy: Bitcoin maximalism.
The real question is why aren't we able to convince Augur to use our platform rather than the much slower Ethereum (plus we already have BitUSD working while they are still working on eDollar).
As far as I am informed they aren't actually building on top of Etheruem. They plan on forking Ethereum and doing an ethereum-bitcoin sidechain that supports both eth sha3 as well as btc sha2.
Additionally the Ethereum VM is being used for experimentation purposes by most institutions looking into blockchain tech at this point as the barriers to entry are practically zero. It's developing into a standard. That said, based on what I've read so far on BTS2.0, the technical decisions that have gone into 2.0 are superior in almost every way to the EVM.
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aaannnnd that's the reason I'm moving on. Good luck friends.
(http://i.imgur.com/bbu08Jz.jpg)
see you in 40 days!
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prediction markets without smart coins don't work. The volatility of the underlying asset overwhelms any profit or loss made by predicting the outcome of the event.
No-order book prediction markets can work only if the underlying asset is an IOU. That IOU in turn is only stable if it is a representation of another IOU. It needs to be a recursive system in time rather than a self-referential system. I can only think of one way how to do that on a blockchain.
No Truthcoin bets are not IOU's.... Its no different than having one market ask: what is the Bitcoin Price in Usd at the End of September, and who will win the first Monday Night Football game. The crossroad of answers between these two is the winning bet.
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prediction markets without smart coins don't work. The volatility of the underlying asset overwhelms any profit or loss made by predicting the outcome of the event.
No-order book prediction markets can work only if the underlying asset is an IOU. That IOU in turn is only stable if it is a representation of another IOU. It needs to be a recursive system in time rather than a self-referential system. I can only think of one way how to do that on a blockchain.
No Truthcoin bets are not IOU's.... Its no different than having one market ask: what is the Bitcoin Price in Usd at the End of September, and who will win the first Monday Night Football game. The crossroad of answers between these two is the winning bet.
Yes, we looked into doing these kinds of prediction markets. I think it will work so long as the initial collateral is sufficient to handle the change in price over the period of the bet.
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There are disadvantages (you need to "sync" with usd price close time) but it's not nearly as bad as you're implying
I still haven't wrapped my head around the details of how combinatorial prediction markets compensate for the betting asset's price volatility (despite reading Paul's (http://www.truthcoin.info/papers/2_PM_Types.pdf) papers (http://www.truthcoin.info/papers/3_PM_Applications.pdf)), but it still seems clear to me that it is the inferior solution compared to betting with stablecoins directly. For one, collateral levels backing BitUSD can continuously be updated over long periods of time as the collateral asset price drops significantly over this time. I am not sure how this would work in a combinatorial prediciton market, but I would imagine there should be some lower bound for how low the price could drop from the initial price at the start of the PM before the peg would break. Second, there can be considerable delay from the date at which the USD price is reported and the time the payments are actually settled. For example, in Augur it seems this delay is 2 months. Obviously the reporters cannot report a USD price that has not yet happened, so that means the earliest access the winners will have to the collateral asset is 2 months after the fair settlement price was determined. In those 2 months the price of the collateral asset could have dropped even more relative to USD. Also, they would be forced to dump it in exchange for USD as soon as possible after settlement to no longer be exposed to the price changes of the collateral asset, whereas with BitUSD the holders can take their time to incrementally trade fractions of their BitUSD holdings into USD (via the collateral asset if necessary), assuming they even want to bother when they already have the option of just holding it as BitUSD, without needing to worry as much about slippage in the market.
TLDR
Short answer is look at this demo. Any of these markets can be combined combinatorially. Therefore QID10 can be combined with QID7&/QID6. Since the bet requires two answers (DJIA Price) and (Who wins Superbowl), you get the market for sports betting with the stability of DJIA.
https://lyoshenka.ocpu.io/truthcoindemo/www/
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prediction markets without smart coins don't work. The volatility of the underlying asset overwhelms any profit or loss made by predicting the outcome of the event.
No-order book prediction markets can work only if the underlying asset is an IOU. That IOU in turn is only stable if it is a representation of another IOU. It needs to be a recursive system in time rather than a self-referential system. I can only think of one way how to do that on a blockchain.
No Truthcoin bets are not IOU's.... Its no different than having one market ask: what is the Bitcoin Price in Usd at the End of September, and who will win the first Monday Night Football game. The crossroad of answers between these two is the winning bet.
Yes, we looked into doing these kinds of prediction markets. I think it will work so long as the initial collateral is sufficient to handle the change in price over the period of the bet.
That's probably where the Liquidity Sensitive LSMR comes in handle. Unless I'm mistaken, it doesn't matter as much what the initial collateral is.
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How did bitshares ever let Roger Ver sweep down and poach this project?
The answer to that is easy: Bitcoin maximalism.
The real question is why aren't we able to convince Augur to use our platform rather than the much slower Ethereum (plus we already have BitUSD working while they are still working on eDollar).
Why would you want Augur on your platform? What makes you so sure Augur have the right talent when of all the groundwork was from Paul?
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How did bitshares ever let Roger Ver sweep down and poach this project?
The answer to that is easy: Bitcoin maximalism.
The real question is why aren't we able to convince Augur to use our platform rather than the much slower Ethereum (plus we already have BitUSD working while they are still working on eDollar).
Why would you want Augur on your platform? What makes you so sure Augur have the right talent when of all the groundwork was from Paul?
I would love it if Paul wanted to build a prediction market system for BitShares. I'm not holding my breath though. He seems to really dislike BitShares and pretty much any other system that could potentially compete with Bitcoin.
The Augur team seems less antagonistic against altcoins considering they're currently building their technology on Ethereum and also they are coin-agnostic as far as which coins their platform will support for betting.
Nevertheless, I predict the BitShares devs will have to end up doing the prediction market work all by themselves.