BitShares Forum
Main => Technical Support => Topic started by: mike623317 on December 07, 2014, 06:35:06 pm
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I'm trying to explain BitShares to a friend and i need to clarify something.
I think interest earned from holding BitGold or BitUSD comes from other peoples transaction fees because i'm providing liquidity but i'm not sure. Please can someone clarify where the interest comes from if i buy BitUSD and hold it for a few years.
Appreciate peoples help.
Thanks
M
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It comes from shorts who borrowed the BitAsset into existence and it comes from transaction fees on that asset.
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It comes from shorts who borrowed the BitAsset into existence and it comes from transaction fees on that asset.
I still find this explanation of interest confusing, and I doubt its helpful for beginners.
I prefer this simpler explanation: shorts are super bullish on BTS, so they are willing to pay interest to whoever takes the opposite side of their trade, which bribes/incentives them not to dump their shares.
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It comes from shorts who borrowed the BitAsset into existence and it comes from transaction fees on that asset.
I still find this explanation of interest confusing, and I doubt its helpful for beginners.
I prefer this simpler explanation: shorts are super bullish on BTS, so they are willing to pay interest to whoever takes the opposite side of their trade, which bribes/incentives them not to dump their shares.
Thank you for replying.
So, primarily its from Shorts and some transaction fees. How high are these fees associated with Bitshares? Fractions i would assume.
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It comes from shorts who borrowed the BitAsset into existence and it comes from transaction fees on that asset.
I still find this explanation of interest confusing, and I doubt its helpful for beginners.
I prefer this simpler explanation: shorts are super bullish on BTS, so they are willing to pay interest to whoever takes the opposite side of their trade, which bribes/incentives them not to dump their shares.
Thank you for replying.
So, primarily its from Shorts and some transaction fees. How high are these fees associated with Bitshares? Fractions i would assume.
The bitUSD transaction fee was about half a cent, last time I checked.
In the long run, the lion's share of interest will probably come from the interest paid by shorts. Source: my intuition.
Sent from my SCH-S720C using Tapatalk 2
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It comes from shorts who borrowed the BitAsset into existence and it comes from transaction fees on that asset.
I still find this explanation of interest confusing, and I doubt its helpful for beginners.
I prefer this simpler explanation: shorts are super bullish on BTS, so they are willing to pay interest to whoever takes the opposite side of their trade, which bribes/incentives them not to dump their shares.
Thank you for replying.
So, primarily its from Shorts and some transaction fees. How high are these fees associated with Bitshares? Fractions i would assume.
The bitUSD transaction fee was about half a cent, last time I checked.
In the long run, the lion's share of interest will probably come from the interest paid by shorts. Source: my intuition.
Sent from my SCH-S720C using Tapatalk 2
Agreed, so when shorts are competing, interest on a bitAsset should reflect the average consensus among shorters of how rapidly BTS will appreciate relative to that asset.
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Thanks guys, appreciate the clarification.
+5%
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Don't forget the wiki!
What's the deal with DAC profits?
http://wiki.bitshares.org/index.php/BitShares#What.E2.80.99s_the_deal_with_DAC_profits_.3F
Market Rules for Shorts
http://wiki.bitshares.org/index.php/BitShares/Short#Market_Rules_for_Shorts
Yield on BitAssets
http://wiki.bitshares.org/index.php/BitShares/bitAssets#Yield_on_BitAssets
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Oh yea, thanks for the links