BitShares Forum
Main => General Discussion => Topic started by: bitcrab on November 27, 2015, 06:30:42 am
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in the new versionn 151125, a "SETTLE" button appear under the balance tab, as stated in the help, "Holders of any bitAsset can request a settlement at a fair price at any time. The settlement closes the borrow/short positions with lowest collateral ratio and sells the collateral for the settlement."
alt told me some more detail, "if anyone request settlement with asset A, one day later he can buy BTS from the asset shorter with the lowest collateral ratio with the latest settlement price. "
I am surprised to hear this, as a big BitCNY shorter, it seems this feature put me in danger.
Why we need this feature?
yes, maybe it can really raise the collateral ratio as a whole, because each shorter will run away from the lowest collateral ratio space. but does this really do good to the whole ecosystem, MPA supply will be lowered and more BTS will be unlocked for exchange.
shorters are always in danger, they always face the danger of margin call, this feature provide each user an opportunity to rob them.
and is this kind of rule reasonable? when one put his assets into collateral, anyone can buy these collateral with a so called "fair price", not because the collateral ratio meet the maintenance ratio, but because the collateral ratio is the lowest!
and currently the settlement fed by witness is often not the fair price. say the feed price for BitCNY/BTS is 0.0205, but are there anyone can sell me BTS at 0.0205 CNY? if yes, please let me know.
as a shorter I have been hurt by the unexpected rule change at 16th,OCT, now I worry whether I will be hurt once more.
please stop robbing the shorter.
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+5%
our rules protect bta holders too much, and hurt shorter too much.
it's time to change this, we need to protect shorter more, because they provide liquility.
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So the forced settlement feature uproar arrives... I think that's great that you guys are bringing it up and it would have probably happened sooner or later..... we need a good discussion about this and @alt & @bitcrab I agree with you guys ... I feel forced settlement is unnecessary. At the very least let's just remove forced settlement for now and if there ever is a great demand for it we can add it back in. (I'm skeptical this would ever be necessary)... in any protocol design, it's better for us to start with the absolute core functions and error in the side of less rules/features whenever we are unsure if a feature will help or hurt the protocol.
Also any guarantees we want to provide to merchants can happen outside the protocol. I'm sure gateways like CCEDK & BunkerDEX will offer $1 for 1 bitUSD liquidity for a long time. Lastly one of the main interactions we at bitCash will have is with merchants so we'll know first hand what the best solutions to provide liquidity to merchants is because our business will depend on getting it right.
Thanks.
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transwiser stopped BitCNY deposit service until for sure shorters can leave away from risk of being robbed. :(
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That is not good news about Transwiser...
BTW I've been in favor of making the SQP equal the price feed, but that may actually make forced settlement more dangerous as people end up trading closer to the price feed. Hence I would only advocate changing the SQP if forced settlement is removed.
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transwiser stopped BitCNY deposit service until for sure shorters can leave away from risk of being robbed. :(
我也停止在云币bitcny--cny的挂单，免得被莫名其妙搞死。
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shorter is hurted in the long past time :'( :'(
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I think not change anything
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We had a great discussion about this in the Telegram Chat group and came to the conclusion that
a) it's not robbery
b) the features has been available way longer already
c) language barrier makes it difficult for eastern members to comprehend the settlement idea
d) chinese exchanges without trading fees should be considered as well when providing a CNY price feed
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We had a great discussion about this in the Telegram Chat group and came to the conclusion that
a) it's not robbery
b) the features has been available way longer already
c) language barrier makes it difficult for eastern members to comprehend the settlement idea
d) chinese exchanges without trading fees should be considered as well when providing a CNY price feed
this is not conclusion, it is just some peole's idea.
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d) chinese exchanges without trading fees should be considered as well when providing a CNY price feed
btc38 also have trading fees, why not use
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d) chinese exchanges without trading fees should be considered as well when providing a CNY price feed
btc38 also have trading fees, why not use
I believe that most of witnesses already included btc38 and yunbi in the price feeds.
The problem is that BTC price on CNY exchanges and USD exchanges are usually different, and a big volume of BTS is trading with BTC, so the price of BTS fed into the system is usually different to the price in CNY (on btc38 and yunbi).
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Forced settlement is essential/fundamental to the system, I believe.
But we can tune the way it works to avoid shorters being disadvantaged by short-term price fluctuations:
- Use a (e.g.) 7 day moving average for the settlement price.
- Require the forced settler waits (e.g.) 7 days for settlement.
- Only allow 1/x of total BTS to be settled within a x period of days (not sure if this is already in place with x=30?)
Thoughts?
The system is in place to anchor the price, but it is made inconvenient enough to use no-one can use it to 'game' the system.
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d) chinese exchanges without trading fees should be considered as well when providing a CNY price feed
btc38 also have trading fees, why not use
I believe that most of witnesses already included btc38 and yunbi in the price feeds.
The problem is that BTC price on CNY exchanges and USD exchanges are usually different, and a big volume of BTS is trading with BTC, so the price of BTS fed into the system is usually different to the price in CNY (on btc38 and yunbi).
No. Most of the witnesses are using xeroc's price feed script and this script derived volumed-based prices from btcaverage which in turn does not take into consideration of sites (eg OKCoin) which have zero trading fees.
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I believe a working price floor for future merchants is really needed. In a situation like in bitCNY right now, there are not enough buyers for bitCNY at feed price, and bitCNY holders can still redeem at feed price with a 24 hour delay.
Without a price floor, we're going back to the 0.9.x bitAsset where everyone will be afraid to trade in that market. And it will not gain any traction because the peg is not working at all - if you cannot redeem your bitUSD for at least 1 USD, you're not going to use that token as a merchant, are you?
The shorter bears the risk of being margin called or being settled at a fair price. They're charging a premium over price feed for this risk. Some people claim this is a new feature, but it was in the cli wallet since the very beginning, and first discussed in https://bitshares.org/blog/2015/06/08/lessons-learned-from-bitshares-0.x/#bitassets-need-a-floor-not-a-perfect-peg. It's the shorter's responsibility to do due dilligence before investing any money. Claiming they did not know is not a valid argument IMHO.
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d) chinese exchanges without trading fees should be considered as well when providing a CNY price feed
btc38 also have trading fees, why not use
I believe that most of witnesses already included btc38 and yunbi in the price feeds.
The problem is that BTC price on CNY exchanges and USD exchanges are usually different, and a big volume of BTS is trading with BTC, so the price of BTS fed into the system is usually different to the price in CNY (on btc38 and yunbi).
No. Most of the witnesses are using xeroc's price feed script and this script derived volumed-based prices from btcaverage which in turn does not take into consideration of sites (eg OKCoin) which have zero trading fees.
I thought BTC price is fetched from https://bitcoinaverage.com/ which excludes OKCoin and Huobi and BTCC.
And BTS price is fetched from yunbi/btc38/poloniex/bitfinex with volumed-based weight.
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Update: committee members have come to a compromise in this situation and are preparing a detailed argument list & actual proposal to the community how to solve this issue shortly.
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These are all tunable parameters and don't require a hard fork. Any one can create a bitasset with the exact Params they think will magically solve all problems. Hint: everything is a trade off
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I believe a working price floor for future merchants is really needed. In a situation like in bitCNY right now, there are not enough buyers for bitCNY at feed price, and bitCNY holders can still redeem at feed price with a 24 hour delay.
Without a price floor, we're going back to the 0.9.x bitAsset where everyone will be afraid to trade in that market. And it will not gain any traction because the peg is not working at all - if you cannot redeem your bitUSD for at least 1 USD, you're not going to use that token as a merchant, are you?
The shorter bears the risk of being margin called or being settled at a fair price. They're charging a premium over price feed for this risk. Some people claim this is a new feature, but it was in the cli wallet since the very beginning, and first discussed in https://bitshares.org/blog/2015/06/08/lessons-learned-from-bitshares-0.x/#bitassets-need-a-floor-not-a-perfect-peg. It's the shorter's responsibility to do due dilligence before investing any money. Claiming they did not know is not a valid argument IMHO.
actually I remember there is something called "forced settlement" when bts2.0 announced, but when the light wallet, launched, it is not inside, so I think "maybe it is now removed from the plan", so haven't put much mind, I think I am a man that follow Bitshares closely, then how about the common users?
not enough buyers buy BitCNY because there's little usage, do not because there is no price floor, now normally people can redeem BitCNY from transwiser in 2 hours.
from any perspective I don't think the force settlement is a good solution to provide a price floor to merchants, on the other side, it may provide a good tool for speculators.
does merchant need BTS? if not why they force settlement to get BTS? to sell in another exchange to get usd?
Bitusd exist for long, and is always expensive than USD, why there is a "price floor" problem? why there is not a redeem business for bitusd grow up?
in the force settlement, there is always the user with lowest collateral ratio that exposed to the risk. if the feed price does not reflect the market price now and then, the speculators will always have chance to make profit from the shorter, but why should the shorter lose?
I wonder whether the feature is asset-specific, if possible please disable BitCNY forcesettlement feature, but leave the BitUSD forcesettlement there.
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I believe a working price floor for future merchants is really needed. In a situation like in bitCNY right now, there are not enough buyers for bitCNY at feed price, and bitCNY holders can still redeem at feed price with a 24 hour delay.
Without a price floor, we're going back to the 0.9.x bitAsset where everyone will be afraid to trade in that market. And it will not gain any traction because the peg is not working at all - if you cannot redeem your bitUSD for at least 1 USD, you're not going to use that token as a merchant, are you?
The shorter bears the risk of being margin called or being settled at a fair price. They're charging a premium over price feed for this risk. Some people claim this is a new feature, but it was in the cli wallet since the very beginning, and first discussed in https://bitshares.org/blog/2015/06/08/lessons-learned-from-bitshares-0.x/#bitassets-need-a-floor-not-a-perfect-peg. It's the shorter's responsibility to do due dilligence before investing any money. Claiming they did not know is not a valid argument IMHO.
actually I remember there is something called "forced settlement" when bts2.0 announced, but when the light wallet, launched, it is not inside, so I think "maybe it is now removed from the plan", so haven't put much mind, I think I am a man that follow Bitshares closely, then how about the common users?
not enough buyers buy BitCNY because there's little usage, do not because there is no price floor, now normally people can redeem BitCNY from transwiser in 2 hours.
from any perspective I don't think the force settlement is a good solution to provide a price floor to merchants, on the other side, it may provide a good tool for speculators.
does merchant need BTS? if not why they force settlement to get BTS? to sell in another exchange to get usd?
Bitusd exist for long, and is always expensive than USD, why there is a "price floor" problem? why there is not a redeem business for bitusd grow up?
in the force settlement, there is always the user with lowest collateral ratio that exposed to the risk. if the feed price does not reflect the market price now and then, the speculators will always have chance to make profit from the shorter, but why should the shorter lose?
I wonder whether the feature is asset-specific, if possible please disable BitCNY forcesettlement feature, but leave the BitUSD forcesettlement there.
+5% +5% +5% +5%
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we need to protect shorter more, because they provide liquidity.
shorter provides liquidity, but "forced settlement feature" GUARANTEES liquidity.
This allows for maximum security for the product (bitAssets), otherwise, we are no different than Nubits where we continually hope that humans will continue to provide liquidity for our product instead of having the guaranteed liquidity that the "forced settlement" feature provides through the power of the robotic banker (smartchain).
This feature is what makes us unique and the most secure (least counterparty risk) bitAsset on the planet (no matter what country you are from)
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actually I remember there is something called "forced settlement" when bts2.0 announced, but when the light wallet, launched, it is not inside, so I think "maybe it is now removed from the plan", so haven't put much mind, I think I am a man that follow Bitshares closely, then how about the common users?
So you have been investing to a financial instrument without first learning how it works? In this case you can blame only yourself on your losses.
This is exactly the reason why I haven't borrowed any smartcoins into existence. If I don't understand all the risks, I'm not going to take them.
This also confirms my suspicion that the biggest obstacle for Bitshares gaining more users is the lack of documentation. It really sucks if even the members of the committee don't understand how one of our most important product works.
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we need to protect shorter more, because they provide liquidity.
shorter provides liquidity, but "forced settlement feature" GUARANTEES liquidity.
This allows for maximum security for the product (bitAssets), otherwise, we are no different than Nubits where we continually hope that humans will continue to provide liquidity for our product instead of having the guaranteed liquidity that the "forced settlement" feature provides through the power of the robotic banker (smartchain).
This feature is what makes us unique and the most secure (least counterparty risk) bitAsset on the planet (no matter what country you are from)
I haven't used BitAssets 2.0, as I got stuck with illiquid BitAssets in 1.0 a few times.
I actually forgot about the forced settlement feature tbh until these threads brought it up. It does make me a lot more comfortable holding BitAssets, so I hope we can find a solution that is acceptable to the shorters.
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actually I remember there is something called "forced settlement" when bts2.0 announced, but when the light wallet, launched, it is not inside, so I think "maybe it is now removed from the plan", so haven't put much mind, I think I am a man that follow Bitshares closely, then how about the common users?
So you have been investing to a financial instrument without first learning how it works? In this case you can blame only yourself on your losses.
This is exactly the reason why I haven't borrowed any smartcoins into existence. If I don't understand all the risks, I'm not going to take them.
This also confirms my suspicion that the biggest obstacle for Bitshares gaining more users is the lack of documentation. It really sucks if even the members of the committee don't understand how one of our most important product works.
I think Clouts response is a good one - https://bitsharestalk.org/index.php/topic,20299.msg261478.html#msg261478
BitCrabs business is the only CNY gateway AFAIK. There are few people & businesses willing to use BitAssets at the present time. Outside of the developers, people like BitCrab who are willing to use the core product for business are one the main reasons our BitShares have any value imo. I think he's currently stopped accepting deposits because he's now taking your (& my) position of not risking using BitAssets. BTS will likely drop in value as a result.
We should try understand the problems people willing to risk using BitAssets at this stage are having in practice and try to find solutions of necessary. Some of the new features & large changes probably weren't clearly communicated especially for the Chinese community, so I don't think he is purely at fault for not understanding every detail of the product.
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I believe a working price floor for future merchants is really needed. In a situation like in bitCNY right now, there are not enough buyers for bitCNY at feed price, and bitCNY holders can still redeem at feed price with a 24 hour delay.
Without a price floor, we're going back to the 0.9.x bitAsset where everyone will be afraid to trade in that market. And it will not gain any traction because the peg is not working at all - if you cannot redeem your bitUSD for at least 1 USD, you're not going to use that token as a merchant, are you?
The shorter bears the risk of being margin called or being settled at a fair price. They're charging a premium over price feed for this risk. Some people claim this is a new feature, but it was in the cli wallet since the very beginning, and first discussed in https://bitshares.org/blog/2015/06/08/lessons-learned-from-bitshares-0.x/#bitassets-need-a-floor-not-a-perfect-peg. It's the shorter's responsibility to do due dilligence before investing any money. Claiming they did not know is not a valid argument IMHO.
actually I remember there is something called "forced settlement" when bts2.0 announced, but when the light wallet, launched, it is not inside, so I think "maybe it is now removed from the plan", so haven't put much mind, I think I am a man that follow Bitshares closely, then how about the common users?
not enough buyers buy BitCNY because there's little usage, do not because there is no price floor, now normally people can redeem BitCNY from transwiser in 2 hours.
from any perspective I don't think the force settlement is a good solution to provide a price floor to merchants, on the other side, it may provide a good tool for speculators.
does merchant need BTS? if not why they force settlement to get BTS? to sell in another exchange to get usd?
Bitusd exist for long, and is always expensive than USD, why there is a "price floor" problem? why there is not a redeem business for bitusd grow up?
in the force settlement, there is always the user with lowest collateral ratio that exposed to the risk. if the feed price does not reflect the market price now and then, the speculators will always have chance to make profit from the shorter, but why should the shorter lose?
I wonder whether the feature is asset-specific, if possible please disable BitCNY forcesettlement feature, but leave the BitUSD forcesettlement there.
@bitcrab I agree with you 100% and I would not want forced settlement with bitUSD either. I've been arguing against it for a very long time. We're creating bitCash and we will be dealing with merchants and I do not want forced settlement and my expectation was that it would be voted away. We will look to gateways like you to provide liquidity to merchants. Your business is the correct model to create liquidity outside the protocol and that's precisely how it should work. I'd vote to remove forced settlement. We will have some natural settlement on margin calls (should be at the price feed) and the rest would be traded at the market.
@mindphlux Please consider those that are running businesses on the platform. If new businesses come out that support such a feature we can have a debate, but at the moment Transwiser is our only CNY gateway. We'll be running a bitUSD-only wallet and one of the few hosted wallet solutions that will be out soon.
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I've been writing this for months and, ironically, forced settlement is the one thing that "works" economically and is an important feature. A missing feature is the equivalent for shorts, a "seller of last resort" just as the forced settlement is the "buyer of last resort."
The general theory:
Arbitrage is required for a properly working market
If there is an oversupply of CNY, there must be a mechanism to destroy CNY and reward the one that destroyed it.
Forced settlement is the way to enforce destruction while rewarding the one that started the settlement.
What does this mean?
Shorts should protect their position by upping their collateral, or settling themselves, when CNY is in oversupply.
CNY was trading BELOW settlement (oversupply), and thus presented opportunity for instant profit. (arbitrage). Several traders took advantage of this, and helped "fix" the market. They were rewarded.
If you've read anything written on the subjection, you should know exchanges should not do a 1:1 smartcoin:fiat exchange (see my post on why market making BTC:OPENBTC at 1:1 is not a good idea). UIA is what should be used, like openbtc, trade.btc, unless you properly account for the behaviour of a smartcoin.
Conclusion:
Don't think of 1 smartcoin = 1 fiat; that leads to these errors. Smartcoins are simply something that is worth the underlying value in BTS, at a minimum.
Honest questions:
Without forced settlement, why would 1 smartcoin be worth anything at all? Margin calls don't know anything about over- or under-supply of smartcoins. Without forced settlment, how do you calculate smartcoin valuation?
The blockchain must include incentives to control supply to maintain peg. Margin calls don't incentivize maintaining peg.
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I've been writing this for months and, ironically, forced settlement is the one thing that "works" economically and is an important feature. A missing feature is the equivalent for shorts, a "seller of last resort" just as the forced settlement is the "buyer of last resort."
The general theory:
Arbitrage is required for a properly working market
If there is an oversupply of CNY, there must be a mechanism to destroy CNY and reward the one that destroyed it.
Forced settlement is the way to enforce destruction while rewarding the one that started the settlement.
What does this mean?
Shorts should protect their position by upping their collateral, or settling themselves, when CNY is in oversupply.
CNY was trading BELOW settlement (oversupply), and thus presented opportunity for instant profit. (arbitrage). Several traders took advantage of this, and helped "fix" the market. They were rewarded.
If you've read anything written on the subjection, you should know exchanges should not do a 1:1 smartcoin:fiat exchange (see my post on why market making BTC:OPENBTC at 1:1 is not a good idea). UIA is what should be used, like openbtc, trade.btc, unless you properly account for the behaviour of a smartcoin.
Conclusion:
Don't think of 1 smartcoin = 1 fiat; that leads to these errors. Smartcoins are simply something that is worth the underlying value in BTS, at a minimum.
Honest questions:
Without forced settlement, why would 1 smartcoin be worth anything at all? Margin calls don't know anything about over- or under-supply of smartcoins. Without forced settlment, how do you calculate smartcoin valuation?
The blockchain must include incentives to control supply to maintain peg. Margin calls don't incentivize maintaining peg.
I disagree. All you need is natural margin-call settlement at the price feed if anything to kick start activity at the price feed. The rest would be market participants balancing supply and demand based on gateways and bitAsset users treating 1 bitUSD as one dollar. The very original design of Bitshares with no price feed at all probably would have worked with liquidity, but without ever having sufficient liquidity a bull market created a significant discount and a bear market created a premium. The forced settlement creates extreme uncertainty on one-side and is designed to favor illiquidity.
BTW I disagree it's a way of fixing an undersupply or oversupply. It's more so an unnecessary tool that can be used by a big whale to manipulate the market at the expense of shorts.
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look at the market
ccedkbts want to buyback 10,000 USD to quit his short porsition now.
btareserve already stop the gateway business, and is waitting to quit hist short position, about 200,000 CNY
the fact will teaching you what's right, the rules you think you are right is totally unreasonable.
I want to ask all for you, who want to short more bitUSD/bitCNY now?
you think you are right, but you never do it, what a joke.
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look at the market
ccedkbts want to buyback 10,000 USD to quit his short porsition now.
btareserve already stop the gateway business, and is waitting to quit hist short position, about 200,000 CNY
the fact will teaching you what's right, the rules you think you are right is totally unreasonable.
I want to ask all for you, who want to short more bitUSD/bitCNY now?
you think you are right, but you never do it, what a joke.
The sad joke is that in a sheet load of stupidity you chose a single rule to blame... and decided to do it by persuading a mindless committee to do so.
I will not comment on the strange timing of this 10K USD purchases - right AFTER you stopped the forced settlement . It should have fixed the problem doesn't it?
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look at the market
ccedkbts want to buyback 10,000 USD to quit his short porsition now.
btareserve already stop the gateway business, and is waitting to quit hist short position, about 200,000 CNY
the fact will teaching you what's right, the rules you think you are right is totally unreasonable.
I want to ask all for you, who want to short more bitUSD/bitCNY now?
you think you are right, but you never do it, what a joke.
+5%