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Main => General Discussion => Topic started by: renkcub on October 06, 2017, 05:42:03 pm

Title: Proposal Idea for Bitshares - Use SmartCoins instead of User Assets for Altcoins
Post by: renkcub on October 06, 2017, 05:42:03 pm
Proposal Idea for Bitshares - Use SmartCoins instead of User Assets for Altcoins

TLDR:


Let's officially encourage moving volume from centralized Bitshares gateway exchanges (OpenLedger) to the Bitshares Asset Exchange itself, expanding on the successful model of BitBTC.

Background:


I've followed BTS since early PTS days and met Dan in 2013. I was instantly hooked. Even so, I had some concerns, especially about dishonest "DACs" and left the community before BTS was launched (https://bitsharestalk.org/index.php/topic,5407.msg72497.html#msg72497).

These concerns were well founded, as many "DACs" (now better known as DAOs), ICOs, or any centralized what-have-you, have eventually fallen prey to problems, whether it be hacks, mismanagement, exit scamming, or just honest error.

While, I am very impressed and thankful about what Ronny / OL have brought to the reputation of BTS and the DEX, I'd like to critique the centralization of this "gateway / UIA" model with BTS. OL is very separate and distinct from BitShares itself, and this needs to be made clear to BTS investors. We, as a whole, are becoming far too reliant on OL / Obits and some of the other upcoming gateways being "layered" on the DEX. Without some marketing changes by BTS positioning these are distinct from BTS, if one of these "gateway exchanges" were to collapse, the BTS reputation would be irrevocably damaged. When I hear "EOS is coming to BTS", I want it to actually be BTS, not OL.

As a reminder, your User-Issued coins are not yours on any BTS "Gateway". See MintPal, Crypsy, MtGOX. If OL fails to send you your "OPEN.BTC", for whatever reason, they're gone (although your BitBTC SmartCoins accessed via OL are perfectly safe). I have also witnessed some concerning service issues with OL (similar to Polo/Trex), and can't recommend OBITS as an investment in their current state. Although the attempts at transparency at admirable, they have quite a long way to go. The monthly "excel sheet' is poor (for true transparency, I suggest development of an OBITS "explorer" with tables for all fees generated by OPEN UIA, as well as signed addresses (similar to cryptofresh) so buybacks could be easily tracked in advance and crypto balance sheet assets verified).

My Suggestions:

BTS should build upon the successful example of BitBTC, and 1) immediately allow issuance of SmartCoins for major alts (BitLTC, BitETH, BitZEC) that are large and liquid enough to not be as prone to market manipulation. 2) Encourage liquidity on SmartCoins through implementation of a Maker Taker model, in which limit orders are free or receive credit back. 3. Less Important - Fund an official "bot" for users to run and add liquidity to the Dex (see BTSBOTS))

There is already a "BTC" tab in the Dex using BitBTC, so clearly I'm not the only one thinking this.  Let's ask Gateways to also support BitBTC (and perhaps BitETH) as a "base" pair (tab on UI) instead of UIAs, in addition to the Core BTS Dex, which already does this.

What are the key benefits of this switch? With SmartCoins instead of UIA, there is NO "black swan" exchange risk, so users funds will be safer (key thing here), trading fees lower, and new business opportunities arise for "Gateways"  to compete with each other to offer crypto (or fiat) in-out service for a fee in case users want to "Send" their BitAlt to an on-chain address instantly, rather than unwinding the asset back to BTS and moving value in that way (now, to send alts from BTS instantly, you'd only have to trust these "gateways" for a one-time transfer, instead of storing coins there as long as you keep them on BTS, whether for storage or active exchange).

The criticisms I've heard of the Altcoin = SmartCoin approach have centered around the volatility of altcoins not being appropriate for SmartCoins. While there is some truth to this (see "market-manipulation" on https://bitshares.org/technology/price-stable-cryptocurrencies (https://bitshares.org/technology/price-stable-cryptocurrencies).), I'm not buying it. Despite the recent "pump and dump" nature of BTS itself lately, BTS has served well as collateral for our existing SmartCoins. BitBTC has existed as a "crypto smart coin" for a long time with no issue. Besides, the genius collateral design of SmartCoins makes volatility of the asset a total non-issue, although there is a risk for cascading margin calls as things currently exist that should be discussed further (Check out the Gdax flash crash).

To sum thing sup, the most stable assets volume on the dex should all be using SmartCoins. This is NOT a critique of OL, just of the centralized exchange model. Still a huge place for centralized gateways/exchanges on BTS, such as for assets not large enough to justify a SmartCoin, and other new services.

What now? Let's start by beefing up liquidity on BitBTC / BTS and creating BitLTC, BitETH, and BitZEC / BitBTC markets.
Title: Re: Proposal Idea for Bitshares - Use SmartCoins instead of User Assets for Altcoins
Post by: yvv on October 06, 2017, 06:18:10 pm
Quote
Use SmartCoins instead of User Assets for Altcoins

This would be good for users, but this would create more pita for gateways. SmartCoins are more complex to issue/manage than UIA. Transwiser used SmartCoins model successfully though, may be openledger could follow? Or even better, how about p2p smartcoin gateway?

Title: Re: Proposal Idea for Bitshares - Use SmartCoins instead of User Assets for Altcoins
Post by: renkcub on October 06, 2017, 08:33:52 pm
Quote
Use SmartCoins instead of User Assets for Altcoins

This would be good for users, but this would create more pita for gateways. SmartCoins are more complex to issue/manage than UIA. Transwiser used SmartCoins model successfully though, may be openledger could follow? Or even better, how about p2p smartcoin gateway?

True, it does present a new set of challenges, foremost being the added collateral requirements (but, the upshot here is this significantly increases demand for BTS - further securing the network. Higher BTS price = more smartcoins possible.

Love that idea of a P2P smartcoin gateway.  +5%
Title: Re: Proposal Idea for Bitshares - Use SmartCoins instead of User Assets for Altcoins
Post by: severo on October 06, 2017, 08:50:04 pm
I'd like to critique the centralization of this "gateway / UIA" model with BTS. OL is very separate and distinct from BitShares itself, and this needs to be made clear to BTS investors. We, as a whole, are becoming far too reliant on OL / Obits and some of the other upcoming gateways being "layered" on the DEX. Without some marketing changes by BTS positioning these are distinct from BTS, if one of these "gateway exchanges" were to collapse, the BTS reputation would be irrevocably damaged.
.
.

There is already a "BTC" tab in the Dex using BitBTC, so clearly I'm not the only one thinking this.  Let's ask Gateways to also support BitBTC (and perhaps BitETH) as a "base" pair (tab on UI) instead of UIAs, in addition to the Core BTS Dex, which already does this.


Totally agree. Bitshares should be as fully P2P as possible. Waves uses IOUs, which maintain third party risk. With SmartCoins the user gains in security, by eliminating the risk of third parties, the gateway wins by offering a better and safer product than the competition and Bitshares gains in liquidity. If this idea is not supported, we are crazy.
Title: Re: Proposal Idea for Bitshares - Use SmartCoins instead of User Assets for Altcoins
Post by: Stan on October 06, 2017, 11:39:16 pm
Good thinking.
Title: Re: Proposal Idea for Bitshares - Use SmartCoins instead of User Assets for Altcoins
Post by: oldman on October 07, 2017, 03:24:21 am
I agree and would vote for this. Ideally Bitshares would work just like Polo - deposit, trade, withdraw any coins directly without any funny business or the user ever knowing there was a smartcoin in the middle.
Title: Re: Proposal Idea for Bitshares - Use SmartCoins instead of User Assets for Altcoins
Post by: pc on October 07, 2017, 09:51:03 am
A SmartCoin is not the same as its underlying counterpart. If you have actual bitcoins in your BTC wallet and want to exchange them for USD, the bitBTC/bitUSD market is useless to you.

SmartCoins are useful for traders (because they're derivatives), and they could be useful to merchants/users for transferring value (at least in the case of FIAT derivatives). The latter is unlikely to happen for altcoins.
Title: Re: Proposal Idea for Bitshares - Use SmartCoins instead of User Assets for Altcoins
Post by: severo on October 07, 2017, 01:02:39 pm
A SmartCoin is not the same as its underlying counterpart. If you have actual bitcoins in your BTC wallet and want to exchange them for USD, the bitBTC/bitUSD market is useless to you.

SmartCoins are useful for traders (because they're derivatives), and they could be useful to merchants/users for transferring value (at least in the case of FIAT derivatives). The latter is unlikely to happen for altcoins.

It is not the same an accounting note that a real BTC and nevertheless millions of operations are done with these notes in the centralized exchanges. With SmartCoins it will be the same, but without counterpart risk.
Title: Re: Proposal Idea for Bitshares - Use SmartCoins instead of User Assets for Altcoins
Post by: oco101 on October 07, 2017, 07:45:45 pm
To me, that was the main idea of the DEX and only smart coins give you true decentralized exchange. Imagine if OL is going down and all these people are stuck with open.xxx. This will just kill completely Bitshares. OL much better then a classic exchange it is still a single point of failure for the DEX.
I guess the smart coin idea never caught up for alts because of the low liquidity of smart coins, not sure how your proposal solves that.  Imagine OL issuing smart coins instead of UA.
Title: Re: Proposal Idea for Bitshares - Use SmartCoins instead of User Assets for Altcoins
Post by: renkcub on October 08, 2017, 06:07:17 am
To me, that was the main idea of the DEX and only smart coins give you true decentralized exchange. Imagine if OL is going down and all these people are stuck with open.xxx. This will just kill completely Bitshares. OL much better then a classic exchange it is still a single point of failure for the DEX.
I guess the smart coin idea never caught up for alts because of the low liquidity of smart coins, not sure how your proposal solves that.  Imagine OL issuing smart coins instead of UA.

Thanks for the comments!  I don't think liquidity is the main hurdle... it's just that nobody ever made and supported SmartCoins for Altcoins, so all volume went to OL
 by default (which actually hurts MM's and liquidity, due to brutal fees, and partially thanks to OL marketing, also)

So, I need help from those who know how to submit a proper BTS Proposal to get the SmartCoins and maintained, and added to the default DEX BitBTC trading tab that already exists, as well as the below suggestions... any ideas?

2) Encourage liquidity on SmartCoins through implementation of a Maker Taker model, in which limit orders are free or receive credit back. 3. Less Important - Fund an official "bot" for users to run and add liquidity to the Dex (see BTSBOTS))
Title: Re: Proposal Idea for Bitshares - Use SmartCoins instead of User Assets for Altcoins
Post by: renkcub on October 08, 2017, 06:51:36 am
A SmartCoin is not the same as its underlying counterpart. If you have actual bitcoins in your BTC wallet and want to exchange them for USD, the bitBTC/bitUSD market is useless to you.

SmartCoins are useful for traders (because they're derivatives), and they could be useful to merchants/users for transferring value (at least in the case of FIAT derivatives). The latter is unlikely to happen for altcoins.

I'm not understanding your argument. First of all, I disagree, and believe the BitBTC / BitUSD has no downsides currently (besides liquidity) for anyone looking to speculate between the value of BTC and USD, even with actual bitcoins (you would simply need to exchange those bitcoins for BitBTC first on the Dex, then trade for BitUSD. Or,  even better, trade for BitUSD directly, although this doesn't seem to currently be offered anywhere).

Also, you didn't give any reasons why SmartCoins are not effective for Altcoins. Personally, I totally disagree with you, and even believe the reverse is true - that SmartCoins would be MORE effective for Altcoins than Fiat, Gold, etc., in small part because their value is correlated to BTS (less volatile against the collateral), and largely because  "instant send gateways" would be easier to support by companies like OL for crypto than Fiat (less regulatory requirements and no traditional banking required). Merchants could eventually also alternatively simply support payment in Smartcoins, if BTS became dominant enough.

Additionally, they would have all the usual benefits over UIA including no "exchange black swan", less fees, decentralized...

Not trying to criticize. Just honestly trying to understand and get people onboard to this idea. If we don't go this way, I see much less value in BTS long term. Why leave Crypto off the BitShares current number one value add (Dex)?
Title: Re: Proposal Idea for Bitshares - Use SmartCoins instead of User Assets for Altcoins
Post by: pc on October 08, 2017, 07:55:12 am
A SmartCoin is not the same as its underlying counterpart. If you have actual bitcoins in your BTC wallet and want to exchange them for USD, the bitBTC/bitUSD market is useless to you.

SmartCoins are useful for traders (because they're derivatives), and they could be useful to merchants/users for transferring value (at least in the case of FIAT derivatives). The latter is unlikely to happen for altcoins.

First of all, I disagree, and believe the BitBTC / BitUSD has no downsides currently (besides liquidity) for anyone looking to speculate between the value of BTC and USD,

That's what I said - they are interesting for traders.

even with actual bitcoins (you would simply need to exchange those bitcoins for BitBTC first on the Dex, then trade for BitUSD. Or,  even better, trade for BitUSD directly, although this doesn't seem to currently be offered anywhere).

I think you are contradicting yourself here. HOW would you exchange BTC for bitBTC or trade BTC for bitUSD without a centralized gateway? I thought that's exactly what you're proposing to get rid of.

Also, you didn't give any reasons why SmartCoins are not effective for Altcoins.

Oh, they would be as effective as they are for BTC/USD/CNY. I just don't see a use for altcoins at all.
Providing feeds for additional coin means additional work for the witnesses, so we should only add SmartCoins if there's a benefit to be expected. I don't expect significant volume from altcoins, and therefore no benefit either.

Not sure if you're aware of it, but *anyone* can create SmartCoins. No need to lobby for this - if you want them, just go ahead and create them.
Title: Re: Proposal Idea for Bitshares - Use SmartCoins instead of User Assets for Altcoins
Post by: bitcrab on October 08, 2017, 11:25:45 am
bitBTC is not a successful example.

BTC is not as stable as CNY/USD, so borrowing or holding bitBTC means much more risk  than doing the same to bitCNY/bitUSD, and BTC itself is a blockchain token, no enough necessity to create other token to peg it.

OpenLedger is good, but what they do is far from enough, as a gateway, they should do much more market making work to their UIA but they do not, that's why I am preparing another gateway, the name is GDEX.

one key point for BTS to grow is the demand for smart coins grow, which means there should be many assets in DEX for traders to trade. in other words, we need to make DEX an exchange with liquidity and depth similar to central exchange.

surely if we can realize side chain or some other cross-chain way to move tokens from otherchains to BTS, we may not need most of the UIA, but now in my view we still need to rely on UIA to make DEX to grow.

the other key point for BTS is to be listed in more central exchanges, we need more volume for BTS, we need BTS price to grow, only then it's possible for smartcoin supply to grow and attract more people to accept it.

for example, as China banned cryptocurrency exchange, now it's not  easy for people to buy tokens with CNY, some exchanges outside China are considering to open bitCNY markets, their main concern is that bitCNY supply is too low.

that's also what I am trying to do: make BTS be listed in more exchanges and create a gateway to make DEX have much more trading volume.
 
Title: Re: Proposal Idea for Bitshares - Use SmartCoins instead of User Assets for Altcoins
Post by: yvv on October 08, 2017, 01:33:08 pm


even with actual bitcoins (you would simply need to exchange those bitcoins for BitBTC first on the Dex, then trade for BitUSD. Or,  even better, trade for BitUSD directly, although this doesn't seem to currently be offered anywhere).

I think you are contradicting yourself here. HOW would you exchange BTC for bitBTC or trade BTC for bitUSD without a centralized gateway? I thought that's exactly what you're proposing to get rid of.



Such a gateway would centralized, but trustless. This is much better, than centralized gateway, which requires to trust your funds to it.

And surely, if OL offered deposits/withdrawals in bitBTC instead of OPEN.BTC, bitBTC volume would be as high as OPEN.BTC volume now.
Title: Re: Proposal Idea for Bitshares - Use SmartCoins instead of User Assets for Altcoins
Post by: pc on October 08, 2017, 03:43:56 pm
even with actual bitcoins (you would simply need to exchange those bitcoins for BitBTC first on the Dex, then trade for BitUSD. Or,  even better, trade for BitUSD directly, although this doesn't seem to currently be offered anywhere).

I think you are contradicting yourself here. HOW would you exchange BTC for bitBTC or trade BTC for bitUSD without a centralized gateway? I thought that's exactly what you're proposing to get rid of.



Such a gateway would centralized, but trustless.

Care to explain? I cannot imagine how that would work.

And surely, if OL offered deposits/withdrawals in bitBTC instead of OPEN.BTC, bitBTC volume would be as high as OPEN.BTC volume now.

But that's a completely different business model, with a whole bunch of additional risks (on the side of the gateway owner). I perfectly understand that they do not offer such a service.

Again, BTS provides only infrastructure. Anyone can use it. You are free to provide such a gateway if you think it's worth it.
Title: Re: Proposal Idea for Bitshares - Use SmartCoins instead of User Assets for Altcoins
Post by: yvv on October 08, 2017, 05:02:58 pm


Such a gateway would centralized, but trustless.

Care to explain? I cannot imagine how that would work.

If a gateway gives bitBTC in exchange of BTC, you don't need to trust it. It still stays a centralized business.

Quote
But that's a completely different business model, with a whole bunch of additional risks (on the side of the gateway owner). I perfectly understand that they do not offer such a service.

This business model may be actually not that risky as it seems. Gateway don't need to keep 100% BTC reserve in this case, just enough to satisfy daily withdrawal volume. When users deposit BTC, gateway would buy bitBTC on DEX, if the offer exists, or issue in other case. Risk of margin call would not be a problem for them, because they would keep BTC and bitBTC reserves, and if BTS price falls, they would sell a fraction of their reserves and add to collateral. When users withdraw their bitBTC, gateway would settle its debt. They don't offer such a service because they think that everybody should be happy with their IOU, and they don't need to bother to improve their service, but evidently many people are not happy with the current business model.
Title: Re: Proposal Idea for Bitshares - Use SmartCoins instead of User Assets for Altcoins
Post by: sudo on October 09, 2017, 08:46:56 am
bitBTC is not a successful example.

BTC is not as stable as CNY/USD, so borrowing or holding bitBTC means much more risk  than doing the same to bitCNY/bitUSD, and BTC itself is a blockchain token, no enough necessity to create other token to peg it.

OpenLedger is good, but what they do is far from enough, as a gateway, they should do much more market making work to their UIA but they do not, that's why I am preparing another gateway, the name is GDEX.

one key point for BTS to grow is the demand for smart coins grow, which means there should be many assets in DEX for traders to trade. in other words, we need to make DEX an exchange with liquidity and depth similar to central exchange.

surely if we can realize side chain or some other cross-chain way to move tokens from otherchains to BTS, we may not need most of the UIA, but now in my view we still need to rely on UIA to make DEX to grow.

the other key point for BTS is to be listed in more central exchanges, we need more volume for BTS, we need BTS price to grow, only then it's possible for smartcoin supply to grow and attract more people to accept it.

for example, as China banned cryptocurrency exchange, now it's not  easy for people to buy tokens with CNY, some exchanges outside China are considering to open bitCNY markets, their main concern is that bitCNY supply is too low.

that's also what I am trying to do: make BTS be listed in more exchanges and create a gateway to make DEX have much more trading volume.


 +5% +5% +5%
Title: Re: Proposal Idea for Bitshares - Use SmartCoins instead of User Assets for Altcoins
Post by: severo on October 09, 2017, 12:35:18 pm
There is at least one possibility to exchange BitBTC and BTC in the DEX, without any need of Gateway or third parties.

For example: Alice, Bob and the witness create a 2-of-3 multisign BTS address. Two signatures are required, the witness and Alice or Bob to withdraw the deposit.

A has 0.1 BTC and B has 0.1 BitBTC and both want to exchange them. For this, A and B deposit an escrow of 0.12 BitBTC each in the BTS multisign address. A and B report their bitcoin addresses to the DEX and both close the operation. The DEX checks periodically if the bitcoin has been transferred between the specified addresses and if so and there is a confirmation, he signs and returns the escrow to A. It also checks if BitBTC has been transferred. In that case he signs and returns the escrow to B and the operation ends completely.

It is necessary to have BitBTC to buy BitBTC, but as it is possible to iterate the procedure, a very small amount is enough. The Dex could handle this iteration, performing the interchange in stages.
Title: Re: Proposal Idea for Bitshares - Use SmartCoins instead of User Assets for Altcoins
Post by: Methodise on October 11, 2017, 01:17:34 am
There is at least one possibility to exchange BitBTC and BTC in the DEX, without any need of Gateway or third parties.

For example: A has 0.1 BTC and B has 0.1 BitBTC and both want to exchange them. For this, A and B deposit an escrow of 0.12 BitBTC each in the  witness account. A and B report their bitcoin addresses to the DEX and both close the operation. The DEX checks periodically if the bitcoin has been transferred between the specified addresses and if so and there is a confirmation, returns the escrow to A. It also checks if BitBTC has been transferred. In that case it returns the escrow to B and the operation ends completely.

It is necessary to have BitBTC to buy BitBTC, but as it is possible to iterate the procedure, a very small amount is enough. The Dex could handle this iteration, performing the interchange in stages.

The witness account is a third party, but I like the method, and this thread.

I want to trade bitETH. That should be so simple, compared with the wider liquidity problem. And there's a chicken and egg aspect to the liquidity problem.

Frankly, there are coins that you can't short on Poloniex. Bitshares should serve those clients.
Title: Re: Proposal Idea for Bitshares - Use SmartCoins instead of User Assets for Altcoins
Post by: severo on October 11, 2017, 08:06:07 am
The witness account is a third party, but I like the method, and this thread.

I want to trade bitETH. That should be so simple, compared with the wider liquidity problem. And there's a chicken and egg aspect to the liquidity problem.

Frankly, there are coins that you can't short on Poloniex. Bitshares should serve those clients.

No, the witness is not a third party because he could never spend those coins. Alice, Bob and the witness create a 2-of-3 multisign BTS address. Two signatures are required, the witness and Alice or Bob to withdraw the deposit.

I think this system would work very well and revolutionize Bitshares, taking it to another level. I edit the proposal to include the multisign system.
Title: Re: Proposal Idea for Bitshares - Use SmartCoins instead of User Assets for Altcoins
Post by: fav on October 11, 2017, 08:20:42 am
so you want atomic swaps ... yeah, why not. nothing new though, and no need for witnesses
Title: Re: Proposal Idea for Bitshares - Use SmartCoins instead of User Assets for Altcoins
Post by: severo on October 11, 2017, 08:51:21 am
so you want atomic swaps ... yeah, why not. nothing new though, and no need for witnesses
Sí, pero parece ser que la implementación de atomic swaps es muy compleja, mientras tanto mi propuesta funcionaría
Title: Re: Proposal Idea for Bitshares - Use SmartCoins instead of User Assets for Altcoins
Post by: fav on October 11, 2017, 08:56:29 am
so you want atomic swaps ... yeah, why not. nothing new though, and no need for witnesses
Sí, pero parece ser que la implementación de atomic swaps es muy compleja, mientras tanto mi propuesta funcionaría

I'm not too sure if it's complicated. bitshares keys deviate from bitcoin, may be easier than expected
Title: Re: Proposal Idea for Bitshares - Use SmartCoins instead of User Assets for Altcoins
Post by: renkcub on October 11, 2017, 09:58:29 pm
I think you are contradicting yourself here. HOW would you exchange BTC for bitBTC or trade BTC for bitUSD without a centralized gateway? I thought that's exactly what you're proposing to get rid of.

True, my suggestion doesn't eliminate all centralization.

But it does eliminate 99% of it.

Isn't it still better to only have to "trust" a gateway long enough for an instant deposit/withdraw (or, just trade/settle to BTS and skip the Gateway) instead of leaving "alts" on a centralized Gateway indefinitely? Plus, there are more decentralized solutions for converting things coming out - atomic swap, sidechain(?), or something like the 0x OTC ERC20 tool.

Gateway still makes money, as they can charge for this conversion.

For me, it would be well worth paying OL a small fee to convert my BitBTC to real BTC rather than holding and withdrawing Open.BTC as real BTC "for free". That's the point here.

Along these lines, see Ronny's project "https://www.cryptofresh.com/a/OCASH", which somewhat matches my vision of a way to "cash out" SmartCoins.

Quote
Also, you didn't give any reasons why SmartCoins are not effective for Altcoins.
Quote
Oh, they would be as effective as they are for BTC/USD/CNY. I just don't see a use for altcoins at all.
Providing feeds for additional coin means additional work for the witnesses, so we should only add SmartCoins if there's a benefit to be expected. I don't expect significant volume from altcoins, and therefore no benefit either.

Not sure if you're aware of it, but *anyone* can create SmartCoins. No need to lobby for this - if you want them, just go ahead and create them.

I don't understand your argument here at all.

OL/Ronny has proved there is a significant market for alts on the Dex. Worldwide, besides Dex, over 50%+ of ALL crypto trading volume was Alts. If you don't think there is a market for alts on the dex, but people are going to line up for BitSilver and BitGold, then I frankly find that nonsensical :o But, you did give yourself away as a maximalist  ;)

Interesting point by you on creating SmartCoins. Are they identical to "real" Committee-issued Smartcoins, in this case? In any case, my specialty is liquidity, making markets, not creating SmartCoins.

Thanks for the discussion.
Title: Re: Proposal Idea for Bitshares - Use SmartCoins instead of User Assets for Altcoins
Post by: renkcub on October 11, 2017, 10:11:37 pm
bitBTC is not a successful example.
BTC is not as stable as CNY/USD, so borrowing or holding bitBTC means much more risk  than doing the same to bitCNY/bitUSD, and BTC itself is a blockchain token, no enough necessity to create other token to peg it.
OpenLedger is good, but what they do is far from enough, as a gateway, they should do much more market making work to their UIA but they do not, that's why I am preparing another gateway, the name is GDEX.
one key point for BTS to grow is the demand for smart coins grow, which means there should be many assets in DEX for traders to trade. in other words, we need to make DEX an exchange with liquidity and depth similar to central exchange.
surely if we can realize side chain or some other cross-chain way to move tokens from otherchains to BTS, we may not need most of the UIA, but now in my view we still need to rely on UIA to make DEX to grow.
the other key point for BTS is to be listed in more central exchanges, we need more volume for BTS, we need BTS price to grow, only then it's possible for smartcoin supply to grow and attract more people to accept it.
for example, as China banned cryptocurrency exchange, now it's not  easy for people to buy tokens with CNY, some exchanges outside China are considering to open bitCNY markets, their main concern is that bitCNY supply is too low.
that's also what I am trying to do: make BTS be listed in more exchanges and create a gateway to make DEX have much more trading volume.

Thanks for your great post.

First, I completely disagree with your bolded comment. I keep hearing that crypto is "too volatile" for SmartCoins, but what everyone seems to be missing is that this is completely the opposite, since BTS itself moves with these "volatile assets" - the end result being that USD is actually more volatile against BTS, our collateral, making you more likely to suffer margin calls being a BitUSD issuer than BitBTC (same goes for BitETH, etc...)

Proof that BTS is more volatile against USD/Fiat than BTC/Alts based on 6 month low and high, for a crypto vs fiat pair:

BTS/BTC

3/12/2017 - .00000289 low
6/12/2017 - .00016511 high

57.13x move

BTS/USD

3/12/2017 - .00337205
6/12/2017 - .48908884

145.04x move --- you would have been a lot better off issuing BitBTC than BitUSD!

Next, I agree with pretty much everything else you said, and especially agree with the italicized section - that is one of the topreasons why I am encouraging moving from UIA --> SmartCoins (besides security, user experience, and BTS reputation). If the liquidity is better on SmartCoins - and someone wants to trade and get assets cheaper (by issuing more) - they will be FORCED to buy MORE BTS and support the network by further drive up the price to both issue and collateralize SmartCoins. Essentially, more FOCUS on SmartCoin use = Higher BTS Market Cap = More SmartCoins can be made = More BTS Market Cap --- it's a self-fulfilling hypothesis that has already helped BTS this year with the success of BitCNY. Essentially this model forces you to have a sizable BTS position (although you can simply buy your SmartCoins at market if you don't want to collateralize).

I differ with you in that I believe the only reason BitBTC has not been very successful (volume) thus far has been due to lack of first mover advantage against Open.BTC, marketing, and thus, any incentive to make a market or add liquidity to that market.
Title: Re: Proposal Idea for Bitshares - Use SmartCoins instead of User Assets for Altcoins
Post by: renkcub on October 11, 2017, 10:19:19 pm

But that's a completely different business model, with a whole bunch of additional risks (on the side of the gateway owner). I perfectly understand that they do not offer such a service.

This business model may be actually not that risky as it seems. Gateway don't need to keep 100% BTC reserve in this case, just enough to satisfy daily withdrawal volume. When users deposit BTC, gateway would buy bitBTC on DEX, if the offer exists, or issue in other case. Risk of margin call would not be a problem for them, because they would keep BTC and bitBTC reserves, and if BTS price falls, they would sell a fraction of their reserves and add to collateral. When users withdraw their bitBTC, gateway would settle its debt. They don't offer such a service because they think that everybody should be happy with their IOU, and they don't need to bother to improve their service, but evidently many people are not happy with the current business model.

This man gets it.  +5%
Title: Re: Proposal Idea for Bitshares - Use SmartCoins instead of User Assets for Altcoins
Post by: pc on October 12, 2017, 03:30:02 pm
Interesting point by you on creating SmartCoins. Are they identical to "real" Committee-issued Smartcoins, in this case?

Not necessarily, but they can be made identical, i. e. with identical flags + permissions etc.. You can also create them and assign ownership to the committee.
Title: Re: Proposal Idea for Bitshares - Use SmartCoins instead of User Assets for Altcoins
Post by: renkcub on October 12, 2017, 05:02:21 pm
Interesting point by you on creating SmartCoins. Are they identical to "real" Committee-issued Smartcoins, in this case?

Not necessarily, but they can be made identical, i. e. with identical flags + permissions etc.. You can also create them and assign ownership to the committee.

Very interesting. I wonder if there are any examples of successful SmartCoins that are "user created" but eventually transitioned to being "official"? In any case, I'd rather see any SmartCoins be launched officially as they probably have a better chance of success that way..

Title: Re: Proposal Idea for Bitshares - Use SmartCoins instead of User Assets for Altcoins
Post by: yvv on October 12, 2017, 05:21:33 pm


Very interesting. I wonder if there are any examples of successful SmartCoins that are "user created" but eventually transitioned to being "official"?

RUBLE

We need more efforts like this.

Title: Re: Proposal Idea for Bitshares - Use SmartCoins instead of User Assets for Altcoins
Post by: severo on October 13, 2017, 09:39:24 am
I differ with you in that I believe the only reason BitBTC has not been very successful (volume) thus far has been due to lack of first mover advantage against Open.BTC, marketing, and thus, any incentive to make a market or add liquidity to that market.

Agree. So why do not we make the DEX directly exchange BTC for BitBTC? can be done with Atomic Swaps or very easily with my proposal.
Title: Re: Proposal Idea for Bitshares - Use SmartCoins instead of User Assets for Altcoins
Post by: TheSchrammHIT on October 14, 2017, 03:31:31 am
What about CryptoBridge who claims to be a Fully-Decentralized Gateway...

Here's what they say... Very Interesting...

1--- Q: How are gateways decentralized in CryptoBridge?
A: CryptoBridge is using a federated network of many gateways connected to each other, all issuing the same multi-signature proxy-assets. A super majority of agreeing gateways is needed to publish a transaction on the blockchain. In this trust-reduced setup, you don't have to trust a single entity to hold your funds. Each gateway node is independently verifying the transactions of the other nodes to make sure gateways stay honest.

2 ---CryptoBridge provides more decentralisation when it comes to the gateways, normally a BTS Gateway is a central point of failure because the Gateway is just operated by the company owning the exchange. The user is dependant on the gateway to deposit/withdraw his funds. In CryptoBridge, a federated distributed network of gateways, operating world-wide, makes sure that there is no single point of failure whatsoever. In fact, this network will continue to operate if CryptoBridge (the development company) goes out of business.

---

So... Should we only use the Bridge Gateway then ?
Title: Re: Proposal Idea for Bitshares - Use SmartCoins instead of User Assets for Altcoins
Post by: mostar on October 14, 2017, 04:14:59 pm
federated network of many gateways connected to each other, all issuing the same multi-signature proxy-assets. A super majority of agreeing gateways is needed to publish a transaction on the blockchain. In this trust-reduced setup, you don't have to trust a single entity to hold your funds. Each gateway node is independently verifying the transactions of the other nodes to make sure gateways stay honest.

So is BridgeCoin miner also king of bithsares  gateway?
Title: Re: Proposal Idea for Bitshares - Use SmartCoins instead of User Assets for Altcoins
Post by: renkcub on October 14, 2017, 08:03:29 pm
I differ with you in that I believe the only reason BitBTC has not been very successful (volume) thus far has been due to lack of first mover advantage against Open.BTC, marketing, and thus, any incentive to make a market or add liquidity to that market.

Agree. So why do not we make the DEX directly exchange BTC for BitBTC? can be done with Atomic Swaps or very easily with my proposal.

Have you made a detailed proposal? Or is this still in the idea stage?

By the way, BitBTC/BTS is #4 dex market today, on minimal volume. Let's support this pair, people. Run your bots on it so we can get more momentum!
Title: Re: Proposal Idea for Bitshares - Use SmartCoins instead of User Assets for Altcoins
Post by: severo on October 14, 2017, 08:53:28 pm
Have you made a detailed proposal? Or is this still in the idea stage?

No. It's just an idea, I do not understand how something so obvious is not working from the beginning. I would like someone with better knowledge of bitshares to fully develop it.

There is at least one possibility to exchange BitBTC and BTC in the DEX, without any need of Gateway or third parties.

For example: Alice, Bob and the witness create a 2-of-3 multisign BTS address. Two signatures are required, the witness and Alice or Bob to withdraw the deposit.

A has 0.1 BTC and B has 0.1 BitBTC and both want to exchange them. For this, A and B deposit an escrow of 0.12 BitBTC each in the BTS multisign address. A and B report their bitcoin addresses to the DEX and both close the operation. The DEX checks periodically if the bitcoin has been transferred between the specified addresses and if so and there is a confirmation, he signs and returns the escrow to A. It also checks if BitBTC has been transferred. In that case he signs and returns the escrow to B and the operation ends completely.

It is necessary to have BitBTC to buy BitBTC, but as it is possible to iterate the procedure, a very small amount is enough. The Dex could handle this iteration, performing the interchange in stages.
Title: Re: Proposal Idea for Bitshares - Use SmartCoins instead of User Assets for Altcoins
Post by: renkcub on October 17, 2017, 12:38:56 am
Can someone advise how to petition the Bitshares Network to create Smartcoins for BitETH, BitZEC, and BitLTC OFFICIALLY? Would this be something that would require an approved proposal?

If so, is there anyone here who has done so before, and would know how to create such a submission (with my help)? Preferably someone with a lot of clout (votes)?

In that proposal - could you detail BitBTC as an example, and include the feeds the witnesses are using for that (is any of that information public - like which exchange(s) they are drawing from for the BitBTC price? Might be easy to simply apply those same feeds for these alts.

I believe this is the first crucial step in this mission of wider Alt/SmartCoin awareness.

(meanwhile - please add liquidity to BitBTC people. Issue some of your own!)