BitShares Forum

Main => Technical Support => Topic started by: Samupaha on March 11, 2015, 04:39:43 pm

Title: Incentives for shorting?
Post by: Samupaha on March 11, 2015, 04:39:43 pm

MPA's will be created when somebody thinks that the price of BTS is going up. But what about in the bear market? What kind of problems might follow if lots of people who usually short lose their interest to do that?

Are there any other incentives to create MPA's?

Title: Re: Incentives for shorting?
Post by: starspirit on March 11, 2015, 11:42:23 pm

The only other known incentive is arbitrage profit.
If shorts don't care to take a directionally bullish view on BTS, they can hedge it by buying the real asset with BTS on another exchange. Their incentive to go through this process is that if there is demand for the BitAsset, and they are able to short the MPA above its fair value, they make a net profit from this process. So in theory, if there are not enough BTS bulls shorting at the feed price, arbitragers can sit above that. In practice however, arbitrage is not simple for most people to do.

Title: Re: Incentives for shorting?
Post by: Markus on March 12, 2015, 12:01:15 am

Wait until a short expires and sell him some (newly shorted) MPA for 10% above peg.