BitShares Forum
Main => General Discussion => Topic started by: bytemaster on May 21, 2015, 06:32:12 pm
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A peg is meaningless if you do not consider volume:
You can have $1.00 pegged to 1 BitUSD *or* You can have $100,000 pegged to 100,000 BitUSD but you cannot do both at the same time.
My argument is that we should prefer to peg $100,000 to 100,000 BitUSD rather than pegging $1.00 to 1 BitUSD because large merchants and people that wish to trade in large quantities of BitUSD need to know that they can accept it at face value.
Think of it as the difference in premium between 1 oz units of gold and and a gold bar with 400 oz of gold.
So long as the discussion is clouded with illusions that you can peg ALL volumes at the same price we will continue to talk in circles.
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Once we recognize that the price must MOVE as a result of volume we must ask how much should it move and should it ever be able to move below $1.00 at any volume?
A BitAsset with a force settlement limit of 1% per day will have a lower premium than one that allows 100% per day.
A BitAsset with a force settlement fee of 10% will sometimes trade below $1.00 but be less likely to trade at $1.10.
Two markets can have the same price feed but vastly different order books depending upon whether there is a Buy Wall or a Sell Wall and which side has the long low, volume tail reaching toward the feed.
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A BitAsset with a force settlement limit of 1% per day will have a lower premium than one that allows 100% per day.
Not sure if I see eye to eye on that. I see limiting to 1% creates a liquidity bottleneck that translates as a higher premium. Therefore a 100% per day should have no premium, since all the liquidity is there at the price feed.
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A BitAsset with a force settlement limit of 1% per day will have a lower premium than one that allows 100% per day.
Not sure if I see eye to eye on that. I see limiting to 1% creates a liquidity bottleneck that translates as a higher premium. Therefore a 100% per day should have no premium, since all the liquidity is there at the price feed.
Premium demanded by the shorts to CREATE the BitUSD in the first place.
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A BitAsset with a force settlement limit of 1% per day will have a lower premium than one that allows 100% per day.
Not sure if I see eye to eye on that. I see limiting to 1% creates a liquidity bottleneck that translates as a higher premium. Therefore a 100% per day should have no premium, since all the liquidity is there at the price feed.
Premium demanded by the shorts to CREATE the BitUSD in the first place.
I think the system needs to be designed to try to keep the price as close to $1 as possible. We dont want to expect that bitUSD is usually 1.05 or 1.10. Ideally we want it to be about $1.00 to $1.01 almost all the time.
Forced settlement at $0.99 keeps the price from falling below $0.99. I think only allowing 1% of supply to do this isnt enough, it doesnt release enough pressure if the price is getting far below $1.00. 5% of supply being convertable is better imo. That can equalize the situation pretty quickly.
If the price gets much above $1.00 its a profit opportunity, so profit seeking keeps it in line. As long as the rules dont punish shorts too much, they will be willing to take this profit. (Recently rules punished them too much, which is why we had $1.10 bitUSD). With fair rules it shouldnt rise this much.
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A BitAsset with a force settlement limit of 1% per day will have a lower premium than one that allows 100% per day.
Not sure if I see eye to eye on that. I see limiting to 1% creates a liquidity bottleneck that translates as a higher premium. Therefore a 100% per day should have no premium, since all the liquidity is there at the price feed.
Premium demanded by the shorts to CREATE the BitUSD in the first place.
Good clarification. Makes sense. To your point I see this situation sorta playing out. Large net wealth holders will be 1st to stuff their short positions early on. They are inherently bullishly on BTS since they are holding bitshares. They are most collateralize to prevent a force settlement. These traders will likely short at the peg price, (they don't care able premium per say, they care about the # of shorts they can get in). But once these types of shorters dry up, a second more speculative shorter will enter.
This second type could be a medium or lower sized bts holders, who could be just Bullish, but are in it to play intermediate volatilities, as they will likely play long positions as well. They will likely charge a premium, since they cant never collateralize as much as the large position holders. Being at the bottom rung of the collateralize positions, they are going to charge a premium to safeguard against forced settlement.
And to BM's statement, having a 1% settlement limit will protect these short-term speculative shorters, and thus reduce the amount of premium charged.
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More new rules?
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More new rules?
Hopefully simpler and better rules, replacing the old rules that didnt work well.
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More new rules?
Hopefully simpler and better rules, replacing the old rules that didnt work well.
Hopefully. But it does make one wonder. Will the new new rules be replaced by new new new rules as well?
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Who said anything about "new rules". This thread is only about understanding reality independent of any rules.
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I think the system needs to be designed to try to keep the price as close to $1 as possible. We dont want to expect that bitUSD is usually 1.05 or 1.10. Ideally we want it to be about $1.00 to $1.01 almost all the time.
You missed the point entirely. Never again mention a price without specifying a quantity. You need to peg a high enough volume of BitUSD to $1.00 for it to be a meaningful number.
If the lowest short is $1.10 and there is a $10 buy order at $1.09 and then a $10000 buy order at $1.00 the "price" is $1.09.
In reality there is a $0.10 spread and everything in-between is meaningless noise.
Feed producers need to consider what the order book would look like if someone dumped BTS worth 10% of the BitUSD on it over 24 hours. This tells BitUSD holders that if they own 10% of the BitUSD supply that everything they own can be priced at $1.00.
If I have 100,000 BitUSD right now.... and I sold it for $105,000 worth of BTS and then I sold the $105,000 BTS for USD (or BTC equivalent) I would probably get $50,000. Now the fact remains that those who hold BitUSD are not selling even though most of the shorts currently have a "instant force settlement" at the price feed. This is GOOD for BTS because it is supporting the BTS price.
Bottom line, when you look at the BitUSD price, the quantity available over $1.00 is VERY SMALL and thus meaningless. That means that right now BitUSD is "perfectly pegged" and the premium for creating new BitUSD is VERY HIGH. This is a good and healthy position and indicates what it will look like with force settlement enabled. Everything else just depends upon trading volume and market making.
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I'm not up to speed on current bitAsset implementation. I'd just add - the value of bitUSD is "one dollars worth of BTS". When demand exceeds supply (which hopefully will be temporary in the new implementation) bitUSD will trade at a premium, when it is the opposite, bitUSD will trade at a discount.
I don't see the importance of a "peg" concept.
What's important, is there is a functioning primary market... which obviously we don't have. but I heard talk of a bond market and that's my inclination too.
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Who said anything about "new rules". This thread is only about understanding reality independent of any rules.
The force is strong with this one.
Sent from my iPhone using Tapatalk
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Dan, I feel the question should be - In the platform how easy is it to do something or know something?
Polonium just released lending and I'm a lender. There is more supply than demand but if you set low enough youn can make 14% a year. My point is not about the price but about how easy it is on Poloniex to initiate a price (do a command) on there platform.
They lack though on specifying the rules.
Maybe even the question should be rephrased should we incorporate a lending mechanism that Poloniex has done into the platform, for say bitshares.
The lending works where it puts up lenders and margin wanders together.
It would add another layer to the mix.
Buyers and sellers will come together if there is a market, all that needs to be understood is how price and volume discovery works for NYSE or NASDAQ then copy it.
We need a coordinated effort when releasing.
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Bottom line, when you look at the BitUSD price, the quantity available over $1.00 is VERY SMALL and thus meaningless. That means that right now BitUSD is "perfectly pegged" and the premium for creating new BitUSD is VERY HIGH. This is a good and healthy position and indicates what it will look like with force settlement enabled. Everything else just depends upon trading volume and market making.
I'm not satisfied. I would want a bitAsset that can be traded on any day against the real asset with a tight spread. If I'm just a moderate sized buyer, I want to be able to buy a bitUSD today or any other day for not much more than $1. And have the knowledge that I can sell it again on any future day for not much less. Sure big volume transactions need to pay a higher spread, but there should be arbitragers tripping over themselves to meet this at any meaningful deviation from fair value. I won't stop working toward a better solution until this is what we have, or its shown to be impossible.
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Bottom line, when you look at the BitUSD price, the quantity available over $1.00 is VERY SMALL and thus meaningless. That means that right now BitUSD is "perfectly pegged" and the premium for creating new BitUSD is VERY HIGH. This is a good and healthy position and indicates what it will look like with force settlement enabled. Everything else just depends upon trading volume and market making.
I'm not satisfied. I would want a bitAsset that can be traded on any day against the real asset with a tight spread. If I'm just a moderate sized buyer, I want to be able to buy a bitUSD today or any other day for not much more than $1. And have the knowledge that I can sell it again on any future day for not much less. Sure big volume transactions need to pay a higher spread, but there should be arbitragers tripping over themselves to meet this at any meaningful deviation from fair value. I won't stop working toward a better solution until this is what we have, or its shown to be impossible.
Wow if Dan was thinking it bitassets pegged to bitUSD would create the bitUSD market
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Bottom line, when you look at the BitUSD price, the quantity available over $1.00 is VERY SMALL and thus meaningless. That means that right now BitUSD is "perfectly pegged" and the premium for creating new BitUSD is VERY HIGH. This is a good and healthy position and indicates what it will look like with force settlement enabled. Everything else just depends upon trading volume and market making.
Right now there is over 70,000 bitusd in bids at the feed price, which represents almost half of all bitusd in existence. If this were force settled right now at the feed price and all else remaining constant, then nearly half of all short sellers would be forced into a transaction that they did not agree to, or at least a transaction that they did not initiate. IMO, this would further shake the confidence of short sellers and the market in general.
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Bottom line, when you look at the BitUSD price, the quantity available over $1.00 is VERY SMALL and thus meaningless. That means that right now BitUSD is "perfectly pegged" and the premium for creating new BitUSD is VERY HIGH. This is a good and healthy position and indicates what it will look like with force settlement enabled. Everything else just depends upon trading volume and market making.
Right now there is over 70,000 bitusd in bids at the feed price, which represents almost half of all bitusd in existence. If this were force settled right now at the feed price and all else remaining constant, then nearly half of all short sellers would be forced into a transaction that they did not agree to, or at least a transaction that they did not initiate. IMO, this would further shake the confidence of short sellers and the market in general.
How should we solve this?
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Bottom line, when you look at the BitUSD price, the quantity available over $1.00 is VERY SMALL and thus meaningless. That means that right now BitUSD is "perfectly pegged" and the premium for creating new BitUSD is VERY HIGH. This is a good and healthy position and indicates what it will look like with force settlement enabled. Everything else just depends upon trading volume and market making.
Right now there is over 70,000 bitusd in bids at the feed price, which represents almost half of all bitusd in existence. If this were force settled right now at the feed price and all else remaining constant, then nearly half of all short sellers would be forced into a transaction that they did not agree to, or at least a transaction that they did not initiate. IMO, this would further shake the confidence of short sellers and the market in general.
+5% I'm deeply concerned with this forced settlement design. The current orderbook is already so unbalanced I'm not sure what to think. Who really is going to want to short & create BitUSD? Will these speculators know what situation they are getting into by creating BitUSD? Aside from a speculative surge of BitUSD creation up until June 8th and a short time after, I think shorts are going to be in for a rude awakening.
I have such a different perspective on the idea of a peg... any effort to enforce the 'peg' without moving the market is price fixing, whether it's $1 or $100,000. It's just way worse at $100,000. The only good thing about a higher amount is the design may just break down faster and we can move on to BitAsset 3.0... :(
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Bottom line, when you look at the BitUSD price, the quantity available over $1.00 is VERY SMALL and thus meaningless. That means that right now BitUSD is "perfectly pegged" and the premium for creating new BitUSD is VERY HIGH. This is a good and healthy position and indicates what it will look like with force settlement enabled. Everything else just depends upon trading volume and market making.
Right now there is over 70,000 bitusd in bids at the feed price, which represents almost half of all bitusd in existence. If this were force settled right now at the feed price and all else remaining constant, then nearly half of all short sellers would be forced into a transaction that they did not agree to, or at least a transaction that they did not initiate. IMO, this would further shake the confidence of short sellers and the market in general.
How should we solve this?
I think a KISS method similar to the original design would work because the original design wasn't given enough time to work IMHO. Force all trades to occur within 1% of the price feed. Allow users to place orders outside of that 1% range but the order wont be activated until their price comes within 1% of the feed. Don't force short sellers to cover at any time. Give sell orders priority over short sell orders when being filled. Allow users to place market orders that float at the price feed. No one is forced into a trade unless margin called. I don't see any reason why it wouldn't work.
Adoption and liquidity are a function of time. Everyone wants to try all these complex approaches when the simplest approach may be best. Now that the bts market has settled down, it may be worth a try.
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Bottom line, when you look at the BitUSD price, the quantity available over $1.00 is VERY SMALL and thus meaningless. That means that right now BitUSD is "perfectly pegged" and the premium for creating new BitUSD is VERY HIGH. This is a good and healthy position and indicates what it will look like with force settlement enabled. Everything else just depends upon trading volume and market making.
Right now there is over 70,000 bitusd in bids at the feed price, which represents almost half of all bitusd in existence. If this were force settled right now at the feed price and all else remaining constant, then nearly half of all short sellers would be forced into a transaction that they did not agree to, or at least a transaction that they did not initiate. IMO, this would further shake the confidence of short sellers and the market in general.
How should we solve this?
I think a KISS method similar to the original design would work because the original design wasn't given enough time to work IMHO. Force all trades to occur within 1% of the price feed. Allow users to place orders outside of that 1% range but the order wont be activated until their price comes within 1% of the feed. Don't force short sellers to cover at any time. Give sell orders priority over short sell orders when being filled. Allow users to place market orders that float at the price feed. No one is forced into a trade unless margin called. I don't see any reason why it wouldn't work.
Adoption and liquidity are a function of time. Everyone wants to try all these complex approaches when the simplest approach may be best. Now that the bts market has settled down, it may be worth a try.
+5% +5% +5%
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Should strive to enhance the user experience, so that more users to participate in the transaction。No one is willing to open the wallet to participate in the transaction, saying nothing is empty talk
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Bottom line, when you look at the BitUSD price, the quantity available over $1.00 is VERY SMALL and thus meaningless. That means that right now BitUSD is "perfectly pegged" and the premium for creating new BitUSD is VERY HIGH. This is a good and healthy position and indicates what it will look like with force settlement enabled. Everything else just depends upon trading volume and market making.
Right now there is over 70,000 bitusd in bids at the feed price, which represents almost half of all bitusd in existence. If this were force settled right now at the feed price and all else remaining constant, then nearly half of all short sellers would be forced into a transaction that they did not agree to, or at least a transaction that they did not initiate. IMO, this would further shake the confidence of short sellers and the market in general.
How should we solve this?
I think a KISS method similar to the original design would work because the original design wasn't given enough time to work IMHO. Force all trades to occur within 1% of the price feed. Allow users to place orders outside of that 1% range but the order wont be activated until their price comes within 1% of the feed. Don't force short sellers to cover at any time. Give sell orders priority over short sell orders when being filled. Allow users to place market orders that float at the price feed. No one is forced into a trade unless margin called. I don't see any reason why it wouldn't work.
Adoption and liquidity are a function of time. Everyone wants to try all these complex approaches when the simplest approach may be best. Now that the bts market has settled down, it may be worth a try.
Helikopterben, you may have missed a previous response I made to this idea when you raised it in another thread - there is nothing to stop people exchanging these assets somewhere else at very different prices in a free market. [edit: I think it could be achievable though if you allowed something else to float to change the relative attractiveness for longs and shorts]
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A peg is meaningless if you do not consider volume:
You can have $1.00 pegged to 1 BitUSD *or* You can have $100,000 pegged to 100,000 BitUSD but you cannot do both at the same time.
According to starspirit, you can only enforce the peg on an external exchange anyway, so this is largely out of your control. You have to rely on their orderbooks being thick enough to support the traded volume you want at the prices you want.
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Helikopterben, you may have missed a previous response I made to this idea when you raised it in another thread - there is nothing to stop people exchanging these assets somewhere else at very different prices in a free market. [edit: I think it could be achievable though if you allowed something else to float to change the relative attractiveness for longs and shorts]
Arbitrage?
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A peg is meaningless if you do not consider volume:
You can have $1.00 pegged to 1 BitUSD *or* You can have $100,000 pegged to 100,000 BitUSD but you cannot do both at the same time.
According to starspirit, you can only enforce the peg on an external exchange anyway, so this is largely out of your control. You have to rely on their orderbooks being thick enough to support the traded volume you want at the prices you want.
You can enforce it with a user issued asset on the internal exchange.
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Bottom line, when you look at the BitUSD price, the quantity available over $1.00 is VERY SMALL and thus meaningless. That means that right now BitUSD is "perfectly pegged" and the premium for creating new BitUSD is VERY HIGH. This is a good and healthy position and indicates what it will look like with force settlement enabled. Everything else just depends upon trading volume and market making.
Right now there is over 70,000 bitusd in bids at the feed price, which represents almost half of all bitusd in existence. If this were force settled right now at the feed price and all else remaining constant, then nearly half of all short sellers would be forced into a transaction that they did not agree to, or at least a transaction that they did not initiate. IMO, this would further shake the confidence of short sellers and the market in general.
Exuse my ignorance, but is this 70,000 composed of margin calls?
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Bottom line, when you look at the BitUSD price, the quantity available over $1.00 is VERY SMALL and thus meaningless. That means that right now BitUSD is "perfectly pegged" and the premium for creating new BitUSD is VERY HIGH. This is a good and healthy position and indicates what it will look like with force settlement enabled. Everything else just depends upon trading volume and market making.
Right now there is over 70,000 bitusd in bids at the feed price, which represents almost half of all bitusd in existence. If this were force settled right now at the feed price and all else remaining constant, then nearly half of all short sellers would be forced into a transaction that they did not agree to, or at least a transaction that they did not initiate. IMO, this would further shake the confidence of short sellers and the market in general.
Exuse my ignorance, but is this 70,000 composed of margin calls?
Expired orders. Right now BitAssets work with "forced settlement at the price feed" after 30 days. So the totality of the change is to change it from 30 days to 0 days and then prioritize by collateral.
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You can enforce it with a user issued asset on the internal exchange.
If the UIA represented an external exchange's IOU for a fiat currency I can see how this would work... But getting an external exchange to develop the infrastructure to support externalisation of their internal IOUs would be rather hard I think, since they are just database values.
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Expired orders. Right now BitAssets work with "forced settlement at the price feed" after 30 days. So the totality of the change is to change it from 30 days to 0 days and then prioritize by collateral.
Not sure if I understand this or not - does 0 mean that shorts will always be forced to settle at the feed price, even on the day they shorted, or that they will never be forced to settle?
I was just thinking while looking at the orderbook: Right now 70,000 is >0.5% of all BTS held in collateral within this forced settlement queue. Given that a lot of BTS is probably held long term, or at least not being actively traded today, this probably represents several percent of all actively traded BTS at the very least.
Surely if the present situation continues, with shorts refusing to settle at feed price and this figure therefore building up, then pretty soon the amount of actively traded BTS on the exchanges is going to really plummet and the price will have to rise due to the laws of supply and demand?
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I think this need more help derivatives.
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A peg is meaningless if you do not consider volume:
You can have $1.00 pegged to 1 BitUSD *or* You can have $100,000 pegged to 100,000 BitUSD but you cannot do both at the same time.
According to starspirit, you can only enforce the peg on an external exchange anyway, so this is largely out of your control. You have to rely on their orderbooks being thick enough to support the traded volume you want at the prices you want.
You can enforce it with a user issued asset on the internal exchange.
Isn't this what the price feed is for? Arbitration should keep prices relatively uniform across external exchanges and the price feed is grabbed by the internal exchange to enforce the peg.