BitShares Forum
Main => General Discussion => Topic started by: Rune on February 12, 2015, 05:12:07 pm
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https://github.com/BitShares/bitshares/issues/1375
So it seems like the developers had some discussions about the market pegged assets and the market engine since it had become too complex and buggy, and decided that it needs to be completely revamped.
The new system proposed here will remove shorting, remove interest rate on bitassets (possibly removing yield altogether), and remove relative orders (which were apparently too problematic to implement). New market pegged assets are created by "issuing" them, creating them while locking up 3x their value as collateral in BTS. This is basically like shorting to yourself at the feed price at 0% interest rate in the current system. Once you've issued a market pegged asset you can then sell it on the open market for BTS to get leveraged exposure to BTS, just like before.
It sucks we are seeing changes like this at this point, but on the other hand this new system really is a lot more elegant and will probably allow the market to function a lot more smoothly. I suspect the issuing mechanism can also be used for the prediction markets.
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I believe this is still in suggestion phase. I think your claims are too strong without more developer input.
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WTF? Shouldn't this be done on a new chain share dropping at a snapshot or some shit. This is going to kill BTS with a major change like this.
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I believe this is still in suggestion phase. I think your claims are too strong without more developer input.
Could be, I don't know how the chain of command actually works. I just assumed that if an issue was opened this way by bytemaster it's basically what is planned to be done. Theoretical made a document that describes some of the issues with the current market engine: https://github.com/theoreticalbts/bitshares/blob/market_refactor/docs/market-engine-0.8.0.md
I like this proposed change so i think its a good idea to get it implemented. It's less complex so it might help with getting a useable product out sooner.
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I believe this is still in suggestion phase. I think your claims are too strong without more developer input.
I doubt it is part of suggestion phase. It is part of dvs/0.8.0 milestone.
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WTF? Shouldn't this be done on a new chain share dropping at a snapshot or some shit. This is going to kill BTS with a major change like this.
I'm assuming this is going to be implemented in DVS first. This has been standard procedure for all of the latest releases in the past few months.
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I believe this is still in suggestion phase. I think your claims are too strong without more developer input.
I doubt it is part of suggestion phase. It is part of dvs/0.8.0 milestone.
What's nice about DevShares is that it could be implemented into DevShares as a test, and only moved to BTS if it is in fact better. Given that this is significantly easier to implement, it is worth the time to try it.
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So we lose one of our killer features: yield. .. thats very ... unfortunate :(
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WTF? Shouldn't this be done on a new chain share dropping at a snapshot or some shit. This is going to kill BTS with a major change like this.
It's not really that big of a change, bitassets will still be the same before and after, but markets will be more flexible and have higher liquidity since there will no longer be restrictions on short selling at the feed.
Yield might still stay due to the income from market fees, though I think ultimately all fees have to go to BTS to keep the system long term sustainable. One of the issues with yield is that in the current system if there are no active short orders competing on interest then any person with BTS can short to himself and then harvest the yield for free, ensuring that yield will always be kept low. So the entire concept of yield might not really be feasible anyway.
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Interesting. This seems like a good change, but it certainly is a major one. When is 0.8.0 expected to be released?
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so if you wanted to short, you now have to sell your bitasset first, before a profit can be made?
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so if you wanted to short, you now have to sell your bitasset first, before a profit can be made?
Yep, you can sell the bitasset that you have issued, Then you're going to owe that bitasset to the blockchain and will be forced to buy it back at the feed price within 30 days, so if the price of BTS has increased over the 30 days you will have made a profit.
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so if you wanted to short, you now have to sell your bitasset first, before a profit can be made?
Yep, you can sell the bitasset that you have issued, Then you're going to owe that bitasset to the blockchain and will be forced to buy it back at the feed price within 30 days, so if the price of BTS has increased over the 30 days you will have made a profit.
How are we going to sell this feature to traders who want to use our platform?
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WTF? Shouldn't this be done on a new chain share dropping at a snapshot or some shit. This is going to kill BTS with a major change like this.
It's not really that big of a change, bitassets will still be the same before and after, but markets will be more flexible and have higher liquidity since there will no longer be restrictions on short selling at the feed.
Yield might still stay due to the income from market fees, though I think ultimately all fees have to go to BTS to keep the system long term sustainable. One of the issues with yield is that in the current system if there are no active short orders competing on interest then any person with BTS can short to himself and then harvest the yield for free, ensuring that yield will always be kept low. So the entire concept of yield might not really be feasible anyway.
Getting rid of yield and actual market creation of assets is a huge difference. To create bitUSD, there doesn't have to be anyone to buy it in the new version by the way it is proposed.
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I need to look at this more, but this doesnt look like a major overhaul to me, it looks like a needed clarification of how things work that will make it a lot easier to use.
Will comment more later today.
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This proposed change deeply concerns me. I am not convinced this won't break the peg. Specifically, it seems there is no longer any guarantee that you can sell your BitUSD at the price feed within 30 days, since new shorts can always be created that undercut you. Not to mention it gets rid of the main source of yield for BitAssets.
Maybe someone can convince me otherwise, but I think this is a bad and dangerous idea. Don't mess with our core product that we know works. The risk of breaking the market peg (and all the bad PR that will come with that even if we revert back) is not worth code simplicity.
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I like this proposal, because:
less blockchain bloat with feed updates - faster wallet sync;
simpler, more free market like approach like with the initial system without price feed
more opportunities for traders to arbitrage price movements
However this will be less convenient to see the actual price as you probably will have to calculate it yourself. Also, not sure how much yield there will be if i want to just buy and hold for a year.
If this new system somehow will not work, we can always go back to current one... maybe
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If it turnes out to effectively eliminate yield I would be very upset that major changes like this aren't properly proposed and discussed beforehand. I understand that at certain points decisions have to be made in favour of long term success but we have to try our best not to turn this into a complete nightmare for investors.
Maybe someone can convince me otherwise, but I think this is a bad and dangerous idea. Don't mess with our core product that we know works. The risk of breaking the market peg (and all the bad PR that will come with that even if we revert back) is not worth code simplicity.
+5%
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This proposed change deeply concerns me. I am not convinced this won't break the peg. Specifically, it seems there is no longer any guarantee that you can sell your BitUSD at the price feed within 30 days, since new shorts can always be created that undercut you. Not to mention it gets rid of the main source of yield for BitAssets.
Maybe someone can convince me otherwise, but I think this is a bad and dangerous idea. Don't mess with our core product that we know works. The risk of breaking the market peg (and all the bad PR that will come with that even if we revert back) is not worth code simplicity.
We need to maintain the rules that enforce the peg.
If we do this change is fine and could add clarity.
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If it turnes out to effectively eliminate yield I would be very upset that major changes like this aren't properly proposed and discussed beforehand. I understand that at certain points decisions have to be made in favour of long term success but we have to try our best not to turn this into a complete nightmare for investors.
+5%
We need a way to add yield back in to the system. I think the current way actually wasnt effective, because it was better for shorts to short to themself at the feed at 0% interest. What wouldve happened in time was that everyone was going to figure this out and yield wouldve gone to 0 anyway.
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Interesting...very much so.
More from me later...maybe.
PS
For all the yield criers...the yield was dead long time ago. Well it is resurrectable but most of you find other stuff more important [the 3x collateral in this case]
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This proposed change deeply concerns me. I am not convinced this won't break the peg. Specifically, it seems there is no longer any guarantee that you can sell your BitUSD at the price feed within 30 days, since new shorts can always be created that undercut you.
New shorts can always be created that undercut you? Please extrapolate on this idea.
EDIT: Ah, the holder of the expiring short can issue a new asset to themselves, and close their old short with it, and you never get the chance to sell your at BitUSD at feed price to that person? Am I on track?
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This proposed change deeply concerns me. I am not convinced this won't break the peg. Specifically, it seems there is no longer any guarantee that you can sell your BitUSD at the price feed within 30 days, since new shorts can always be created that undercut you. Not to mention it gets rid of the main source of yield for BitAssets.
Maybe someone can convince me otherwise, but I think this is a bad and dangerous idea. Don't mess with our core product that we know works. The risk of breaking the market peg (and all the bad PR that will come with that even if we revert back) is not worth code simplicity.
Perhaps the devs can comment on that. We need an 'official' clarification of what lies ahead.
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Will the newly proposed market changes allow for multi-tabbed markets out of the gate (or shortly after)?
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This proposed change deeply concerns me. I am not convinced this won't break the peg. Specifically, it seems there is no longer any guarantee that you can sell your BitUSD at the price feed within 30 days, since new shorts can always be created that undercut you.
New shorts can always be created that undercut you? Please extrapolate on this idea.
EDIT: Ah, the holder of the expiring short can issue a new asset to themselves, and close their old short with it, and you never get the chance to sell your at BitUSD at feed price to that person? Am I on track?
I think this can also be done now any time there are no active short orders, which you can't expect to have if markets are at equilibrium. Ultimately I think this change reflects the economic reality better.
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This proposed change deeply concerns me. I am not convinced this won't break the peg. Specifically, it seems there is no longer any guarantee that you can sell your BitUSD at the price feed within 30 days, since new shorts can always be created that undercut you.
New shorts can always be created that undercut you? Please extrapolate on this idea.
Let's say I buy X BitUSD at the price feed at 100 BTS/BitUSD. Then the price of BTS goes up and the price feed goes to 90 BTS/BitUSD and stays like that for 30 days. Under the current system, I can put my BitUSD sell order at 89.9 BTS/BitUSD and be guaranteed within 30 days to sell my X BitUSD for close to $X worth of BTS (which I can then sell for close to $X worth of fiat for example). This is because all shorts need to cover within 30 days. If they do not the system will force them to cover by buying up any BitUSD sell orders up to and including the price feed. In the current system, the BitUSD sell orders that can exist up to but not including the price feed (which includes my sell order) are actual BitUSD that someone has rather than short sells. The amount of actual BitUSD sell orders that can exist is limited by the collective debt owed by the shorts, so I have a guarantee that my actual BitUSD sell order will be matched in 30 days.
But under this new proposed system, someone can undercut me with new shorts to rollover their short position. They issue a new X BitUSD to themselves by locking the appropriate amount of collateral. They use that X BitUSD to cover their old short (or alternatively undercut my BitUSD sell order so that their expired old short is covered by buying their new BitUSD rather than mine). Since that old short is now covered, it won't be forced to buy up to the price feed of 90 BTS/BitUSD when it expires (or alternatively it did but mine did not get matched because I was undercut by new BitUSD brought into existence). So, even after 30 days, my BitUSD sell order remains unmatched.
Let me put it in another way. Let's say there was zero BitUSD supply, then some amount of BitUSD was shorted into existence and sold to some people, but then immediately afterward they all decided they wanted to sell their BitUSD (just under the price feed) and no one else wanted to buy BitUSD. Under the current system the BitUSD supply would unwind back down to zero in at most 30 days. Under the new proposed system, there is no such guarantee.
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Let me put it in another way. Let's say there was zero BitUSD supply, then some amount of BitUSD was shorted into existence and sold to some people, but then immediately afterward they all decided they wanted to sell their BitUSD (just under the price feed) and no one else wanted to buy BitUSD. Under the current system the BitUSD supply would unwind back down to zero in at most 30 days. Under the new proposed system, there is no such guarantee.
I agree that it is important that holders of a bitasset are guaranteed the ability to convert it back into BTS, at a price very near the feed, within 30 days. If the new system wouldnt allow this, it needs to be added.
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TLDR, ticket in OP is still under discussion.
Some history. A feature which has been on our road-map for some time is relative orders, where people can place a bid or ask at a given percentage of the feed, like "I want to buy at 95% of the feed and I want to sell at 105% of the feed," without having to run scripts and spam the blockchain with a ton transactions.
I was tasked with implementing relative orders (more specifically, rehauling bytemaster's implementation to use percentages of the feed instead of absolute difference from the feed, and thoroughly testing it in preparation for release).
During the testing, I found certain fundamental architectural limitations of our matching algorithm prevented us from properly matching relative orders. The same limitations also prevent certain combinations of existing order types from matching correctly in certain circumstances, which subsequently occurred on the main network. A community contributor (pmconrad) advised us of this, which I already suspected due to what I knew about the architecture, and confirmed in testing.
My solution was to embark on a significant refactoring of our market engine to make orders execute the way we always intended them to. I had hoped to have it ready for initial testing this week, however I've been hugely distracted upgrading my own delegate for the 0.6.x hardfork.
bytemaster thinks I am being overly optimistic about the timetable for my refactoring, and thus is looking for a change that will fix the problems but be much less expensive (in terms of developer time). This ticket is the solution he's hit upon.
What we need to do is sit down and discuss the options, which will happen just as soon as I finish dealing with my obstreperous delegate VPS.
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TLDR, ticket in OP is still under discussion.
Some history. A feature which has been on our road-map for some time is relative orders, where people can place a bid or ask at a given percentage of the feed, like "I want to buy at 95% of the feed and I want to sell at 105% of the feed," without having to run scripts and spam the blockchain with a ton transactions.
I was tasked with implementing relative orders (more specifically, rehauling bytemaster's implementation to use percentages of the feed instead of absolute difference from the feed, and thoroughly testing it in preparation for release).
During the testing, I found certain fundamental architectural limitations of our matching algorithm prevented us from properly matching relative orders. The same limitations also prevent certain combinations of existing order types from matching correctly in certain circumstances, which subsequently occurred on the main network. A community contributor (pmconrad) advised us of this, which I already suspected due to what I knew about the architecture, and confirmed in testing.
My solution was to embark on a significant refactoring of our market engine to make orders execute the way we always intended them to. I had hoped to have it ready for initial testing this week, however I've been hugely distracted upgrading my own delegate for the 0.6.x hardfork.
bytemaster thinks I am being overly optimistic about the timetable for my refactoring, and thus is looking for a change that will fix the problems but be much less expensive (in terms of developer time). This ticket is the solution he's hit upon.
What we need to do is sit down and discuss the options, which will happen just as soon as I finish dealing with my obstreperous delegate VPS.
So the solution to implementing relative orders, is to not implement them, sacrificing yield, and only allow shorting against yourself?
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bytemaster thinks I am being overly optimistic about the timetable for my refactoring, and thus is looking for a change that will fix the problems but be much less expensive (in terms of developer time). This ticket is the solution he's hit upon.
I agree, this system does seem easier. It has the upside of being easier to explain to people.
There is no need for confusing "shorting" and "covering" which are basically "creating bitAsset" and "redeeming bitAsset to unlock BTS used as collateral". The new way seems a lot easier to explain to people.
We just have to make sure that the new system works, maintains the peg, and cannot result in a bitAsset being shorted down to 0 value, or holders being unable to ever sell it at the feed price.
Also we need to re-add yield in some way (that works better than old way).
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Let me put it in another way. Let's say there was zero BitUSD supply, then some amount of BitUSD was shorted into existence and sold to some people, but then immediately afterward they all decided they wanted to sell their BitUSD (just under the price feed) and no one else wanted to buy BitUSD. Under the current system the BitUSD supply would unwind back down to zero in at most 30 days. Under the new proposed system, there is no such guarantee.
I agree that it is important that holders of a bitasset are guaranteed the ability to convert it back into BTS, at a price very near the feed, within 30 days. If the new system wouldnt allow this, it needs to be added.
I think even at our current very low DEX volume this won't be necessary. As long as a bitasset is used for trade of any kind it should be possible to exchange it to BTS due to market expectations becoming a self fulfilling promise. If you want to exchange your bitasset to BTS quickly than you can just overpay and your order will be matched quickly.
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Soo...what becomes of +5%? I don't follow all the technical stuff too well but what I'm hearing is interest may be phased out entirely...so why would I want to bank with BTS when I could bank with a bank and at least get 0.1% interest or whatever it's down to now?
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It is simple enough to disable shorting to yourself if there is an order below the feed. This would maintain the convertibility guarantee.
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Soo...what becomes of +5%? I don't follow all the technical stuff too well but what I'm hearing is interest may be phased out entirely...so why would I want to bank with BTS when I could bank with a bank and at least get 0.1% interest or whatever it's down to now?
You buy bitUSD @ ~5/12% below the feed with amount of BTS equal to 100% feed price. Issue yourself the same amount bitUSD. Cover your cover order. You have your 5% anually, mind you in advance.
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Soo...what becomes of +5%? I don't follow all the technical stuff too well but what I'm hearing is interest may be phased out entirely...so why would I want to bank with BTS when I could bank with a bank and at least get 0.1% interest or whatever it's down to now?
You buy bitUSD @ ~5/12% below the feed with amount of BTS equal to 100% feed price. Issue yourself the same amount bitUSD. Cover your cover order. You have your 5% anually, mind you in advance.
Thats more just a profitable trade though, not a yield on bitassets. The goal is that everyone who holds them gets yield, not just those who make good trades.
I'm not sure how we add this back in, but I will say that the current system wasnt actually going to keep working in the long term either, once people realized that it was pretty easy to short at 0% interest.
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Soo...what becomes of +5%? I don't follow all the technical stuff too well but what I'm hearing is interest may be phased out entirely...so why would I want to bank with BTS when I could bank with a bank and at least get 0.1% interest or whatever it's down to now?
You buy bitUSD @ ~5/12% below the feed with amount of BTS equal to 100% feed price. Issue yourself the same amount bitUSD. Cover your cover order. You have your 5% anually, mind you in advance.
Is 1 BitUSD is generally accepted to be worth strictly less than 1 USD? If not, then this scenario (find an offer below price feed) should be an anomaly, not a common occurrence.
Anyone selling below price feed is taking a loss -- is that the norm? Should it be? Does it have to be?
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Is 1 BitUSD is generally accepted to be worth strictly less than 1 USD? If not, then this scenario (find an offer below price feed) should be an anomaly, not a common occurrence. Anyone selling below price feed is taking a loss -- is that the norm? Should it be? Does it have to be?
Basically in the old system the 'create bitUSD' and 'sell bitUSD' orders were combined into one thing called 'shorting'. But what actually happened was that people shorted to themself. This added a lot of complexity, and showed that we actually do not want the create bitUSD and sell bitUSD orders to be linked. We should have a way to just create it, and then have the bitUSD yourself. This is a LOT simpler for new users and could help drive adoption of the decentralized exchange / hedgewlalet idea.
The price ideally should fluctuate near 1 USD, slightly below or above it.
If the price is above it, the market has a good way to profit from that: You generate bitUSD and sell it into the market. (Whether by 'shorting' i the old system, or doing essentially the exact same thing in the proposed system, and then selling the resulting bitUSD).
The trick is, we need a way for you to be able to easily profit if the price is below the feed. (For bitUSD , if its below $1).
So far, the idea has been "buy the bitUSD, wait for a short to be forced to cover in up to 30 days".
We need to make sure that there is such a way to profit on the price being too low.
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The best I can come up with for getting yield to work is that delegates decide an interest rate that is then enforced by the blockchain somehow. It would be badly centralized but it could have limits that ensured it wouldnt change too fast if there was an attack.
Getting yield to work autonomously in the market is a really difficult task...
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The best I can come up with for getting yield to work is that delegates decide an interest rate that is then enforced by the blockchain somehow. It would be badly centralized but it could have limits that ensured it wouldnt change too fast if there was an attack.
Hehe, and do we now end up copying Nubits? ;)
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I don't think yield is important enough to take those measures.
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We need a way to add yield back in to the system. I think the current way actually wasnt effective, because it was better for shorts to short to themself at the feed at 0% interest. What wouldve happened in time was that everyone was going to figure this out and yield wouldve gone to 0 anyway.
I dont understand how yield would have gone to 0% - shorters have to compete with each other to give the highest yield before they can make a short - why would that competition not work?
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The best I can come up with for getting yield to work is that delegates decide an interest rate that is then enforced by the blockchain somehow.
This interest would be paid by inflation, which isn't really a net gain of wealth, since money supply grows at the same rate that your balance grows. In the current system, the interest is paid by the shorting parties, which does not inflate supply. Key difference.
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I don't think yield is important enough to take those measures.
Seriously?
Bitshares. You can bank on it.
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Okay I have an idea for yield and for forcing shorts to cover, here goes:
Every so often (details to be determined), the system looks at what the price feed is for an asset, and what the highest price bid for the asset is.
For example, lets say we are talking about bitUSD. The feed is $1.00, and lets imagine that the highest bid right now is $0.99, which is 1% below the feed.
The system therefore declares that the interest rate charged to short bitUSD is 1% annualized. If it did this every day, it would then calculate what the daily equivalent of a 1% APR is, and declare this to be the daily yield.
The system would then take this amount of daily yield collectively from the BTS collateral of all the shorts, and would divide it among all the bitAsset holders.
This achieves several goals:
1) BitAssets have yield. If the price of bitUSD is $1.00 or more, there is no yield at that time. If the price is 0.99 then there is 1% yield. If the price is 0.98, there is 2% yield, etc.
2) If the bitAsset falls too far below the feed, Shorts (creators of the bitAsset - they arent called 'shorts' anymore I guess) are pressured to cover because they are having the interest taken from their BTS collateral until they do.
3) This acts as a stabilizer pushing up on the price any time that it is too low, because not only do you have the hope of a possible gain, you also get interest. This counterbalances the force that pushes down on the price any time it is above the peg, which is that you can convert BTS into the asset and sell it for instant profit.
There would be some technical details to work out if this was accepted, such as how often the interest needs to be calculated, how to avoid having it be manipulated (randomness in the time interval?) etc.
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Okay I have an idea for yield and for forcing shorts to cover, here goes:
Every so often (details to be determined), the system looks at what the price feed is for an asset, and what the highest price bid for the asset is.
For example, lets say we are talking about bitUSD. The feed is $1.00, and lets imagine that the highest bid right now is $0.99, which is 1% below the feed.
The system therefore declares that the interest rate charged to short bitUSD is 1% annualized. If it did this every day, it would then calculate what the daily equivalent of a 1% APR is, and declare this to be the daily yield.
The system would then take this amount of daily yield collectively from the BTS collateral of all the shorts, and would divide it among all the bitAsset holders.
This achieves several goals:
1) BitAssets have yield. If the price of bitUSD is $1.00 or more, there is no yield at that time. If the price is 0.99 then there is 1% yield. If the price is 0.98, there is 2% yield, etc.
2) If the bitAsset falls too far below the feed, Shorts (creators of the bitAsset - they arent called 'shorts' anymore I guess) are pressured to cover because they are having the interest taken from their BTS collateral until they do.
3) This acts as a stabilizer pushing up on the price any time that it is too low, because not only do you have the hope of a possible gain, you also get interest. This counterbalances the force that pushes down on the price any time it is above the peg, which is that you can convert BTS into the asset and sell it for instant profit.
There would be some technical details to work out if this was accepted, such as how often the interest needs to be calculated, how to avoid having it be manipulated (randomness in the time interval?) etc.
(This post ended up at the end of a page, and its really important, so reposting on new page).
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I just updated the github commit with a simpler approach that works around the difficult spots.
Bottom line: I don't think we will change things.
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Okay I have an idea for yield and for forcing shorts to cover, here goes:
Every so often (details to be determined), the system looks at what the price feed is for an asset, and what the highest price bid for the asset is.
For example, lets say we are talking about bitUSD. The feed is $1.00, and lets imagine that the highest bid right now is $0.99, which is 1% below the feed.
The system therefore declares that the interest rate charged to short bitUSD is 1% annualized. If it did this every day, it would then calculate what the daily equivalent of a 1% APR is, and declare this to be the daily yield.
The system would then take this amount of daily yield collectively from the BTS collateral of all the shorts, and would divide it among all the bitAsset holders.
This achieves several goals:
1) BitAssets have yield. If the price of bitUSD is $1.00 or more, there is no yield at that time. If the price is 0.99 then there is 1% yield. If the price is 0.98, there is 2% yield, etc.
2) If the bitAsset falls too far below the feed, Shorts (creators of the bitAsset - they arent called 'shorts' anymore I guess) are pressured to cover because they are having the interest taken from their BTS collateral until they do.
3) This acts as a stabilizer pushing up on the price any time that it is too low, because not only do you have the hope of a possible gain, you also get interest. This counterbalances the force that pushes down on the price any time it is above the peg, which is that you can convert BTS into the asset and sell it for instant profit.
There would be some technical details to work out if this was accepted, such as how often the interest needs to be calculated, how to avoid having it be manipulated (randomness in the time interval?) etc.
(This post ended up at the end of a page, and its really important, so reposting on new page).
An interesting approach, unfortunately it seems too much like price fixing... you might as well have the delegates publish the interest rate.
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Here is bytemasters new github comment:
"
1) Create new operation "issue_bitasset" that specifies an amount in USD and an amount of collateral
- this operation will give the creator the requested USD and a corresponding cover order provided that (collateral/3)/usd is greater than the price feed.
2) Remove all relative orders and all short orders and corresponding indexes.
The end result will be a system with 3 order types: bid, ask, and cover with cover being triggered by either price, expiration or both.
When a cover order expires it buys back the USD at the feed price.
When a cover order is called it buys back USD below the feed at up to a 10%
This system is SIGNIFICANTLY simpler to implement. A side effect is that shorts will no longer pay interest and in theory can sell below the feed. What keeps them honest is the need to buy back AT THE FEED within 30 days. In the evolution of the current system we originally had shorts that never had to cover which meant selling below the feed could end in a death spiral toward 0. The 30 day buy back rule was added after the other rules but ultimately makes the other rules unnecessary. No short will sell too far below the feed unless they think they can exit their position below that price within 30 days. "Interest" is now "paid" to those who buy below the feed and wait to sell at the feed.
Removing relative orders and the "short wall" makes the system far more resistant to errors in the price feed. The price feed only needs to update a couple of times per day rather than continuously like it does now. The price feed only serves the role of judge in extreme situations and keeps everyone honest.
1) It enforces reasonable collateral around 3x. If the feed is off a little then the initial collateral may be 2.9 or 3.1x but in any event the exact amount of initial collateral is not important.
2) It protects shorts against market manipulation in thin markets that create "fake" margin calls, in practice as BitAsset markets grow the feed will only serve to confirm a price move and not actually trigger the margin call.
3) It keeps shorts honest in the event they refuse to cover within 30 days. In this case if the feed is wrong then shorts may lose some money by being forced to pay more than necessary to buy back their BitUSD or the buy back price may be too low in which case other market participants are the judge on whether or not they want to wait for the next feed update. Shorts can completely mitigate the risk of being exposed to a feed price that is off by 5 to 10% by covering prior to expiration.
"
TLDR; Idea abandoned.