BitShares Forum
Main => General Discussion => Topic started by: JonnyB on October 18, 2017, 11:29:33 am
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OK i've got a new idea.
If we want to increase the supply of BitUSD and BitCNY we need to encourage people to borrow it in to existence and spend it.
The best way to encourage people to borrow MPAs into existence and spend them would be a financial incentive.
AKA Negative interest rates.
So the opposite of HERO which increases by 5% a year. We create an MPA that loses 5% each year.
This is what many central banks have been talking about doing for a while but can't because physical inhibits it.
Why would someone want to hold an asset that loses 5% a year? They won't want to hold it for long but they will like it because theres a lot of it available. Not wanting to hold an asset that has a large supply will create good liquidity.
Why would there be a lot available? Because anyone who borrowed and spent it would have a margin position that would get smaller every year.
Still thinking this idea through in my head, but theres potential here I'm sure.
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would you buy something that you KNOW is guaranteed to be less worth tomorrow?
me neither.
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Using the reserve to borrow bitUSD and bitCNY to increase liquidity is a better option. Take $20M reserve BTS and create a ton of USD and CNY, sell at the feed price.
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would you buy something that you KNOW is guaranteed to be less worth tomorrow?
me neither.
I explained in my post.
Nobody will want to hold it long term, just like nobody wants to hold cash long term. But short term its liquid and great for transactions.
If someone wants to dump $100k of bitcoin or ether they can do on uphold, bitfinex, bitstamp because they are deep liquid markets with tiny spreads. It's impossible on the BTS DEX because the supply of BitUSD is so low and illiquid.
With a NIR MPA you could sell large amounts of bitcoin, ether etc to exit your position quickly then move from the highly liquid (NIR MPA) to something else.
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The best way to encourage people to borrow MPAs into existence and spend them would be a financial incentive.
AKA High Leverage
Fixed this for you. If you want to incetivise shorters, give them leverage by reducing collateral requirement. After black swan recovery is implemented, this should not be too risky.
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The best way to encourage people to borrow MPAs into existence and spend them would be a financial incentive.
AKA High Leverage
Fixed this for you. If you want to incetivise shorters, give them leverage by reducing collateral requirement. After black swan recovery is implemented, this should not be too risky.
You didn't fix it, you suggested an alternative. lower collateral requirements might incentivise shorters but it would make BitUSD less safe.
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I have to be honest, I'm struggling to understand why anyone would want to create USD with negative interest if they barely want to create it with no interest. Where's the incentive?
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I have to be honest, I'm struggling to understand why anyone would want to create USD with negative interest if they barely want to create it with no interest. Where's the incentive?
Incentive for those who create USD would be ... the negative interest (your debt is decreasing with time). Not much of incentive to buy such asset though.
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I have to be honest, I'm struggling to understand why anyone would want to create USD with negative interest if they barely want to create it with no interest. Where's the incentive?
Incentive for those who create USD would be ... the negative interest (your debt is decreasing with time). Not much of incentive to buy such asset though.
Oh ok right. So what is the incentive to hold USD - You basically want to create and dump it.
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You didn't fix it, you suggested an alternative. lower collateral requirements might incentivise shorters but it would make BitUSD less safe.
Less safe, but probably still safe enough to not worry. It all depends on details of implementation. Who said that safety threshold is at MCR=1.75? Why not 1.5? Still far above 1.
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I have to be honest, I'm struggling to understand why anyone would want to create USD with negative interest if they barely want to create it with no interest. Where's the incentive?
Incentive for those who create USD would be ... the negative interest (your debt is decreasing with time). Not much of incentive to buy such asset though.
Oh ok right. So what is the incentive to hold USD - You basically want to create and dump it.
You always create and dump it. There is no point to create and hold it. But in case of negative interest you would have a hard time to find a buyer.
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People who keep saying nobody would hold something that loses 5% a year.
think about this.
Everyone who has a HERO margin position is doing just that. holding a position guaranteed to lose 5% a year.
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veryone who has a HERO margin position is doing just that. holding a position guaranteed to lose 5% a year.
So what? What is hero liquidity?
Setting positive/negative interest rate on MPA and UIA would be a nice feature, which could have some use cases, but don't think that negative interest would certainly solve the liquidity problem.
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I have been thinking about this more and more lately. There are most likely scenarios where users/customers are more than happy to pay a few percent depreciation. Possibly one of the biggest strengths of bitshares is that we can have many versions to see what works best. One example of a customer which might not mind is a high frequency trader looking for lower fees. In that particular case a few percent a year may be much less than a fraction of a percent of thousands of trades. The other benefit of this idea is it incentivizes a different type of use. Instead of holding an asset users would only find this valuable if they are making lots of trades, and thus generating lots of fees...
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You didn't fix it, you suggested an alternative. lower collateral requirements might incentivise shorters but it would make BitUSD less safe.
Less safe, but probably still safe enough to not worry. It all depends on details of implementation. Who said that safety threshold is at MCR=1.75? Why not 1.5? Still far above 1.
At the moment, there are only two MPAs with relatively big supply - bitUSD and bitCNY. What about decreasing MCR for these two in small decrements, e.g. 0.05 every 6 months? Both bitUSD and bitCNY survived latest big price decrease, after hard fork it would be even safer.
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You didn't fix it, you suggested an alternative. lower collateral requirements might incentivise shorters but it would make BitUSD less safe.
Less safe, but probably still safe enough to not worry. It all depends on details of implementation. Who said that safety threshold is at MCR=1.75? Why not 1.5? Still far above 1.
At the moment, there are only two MPAs with relatively big supply - bitUSD and bitCNY. What about decreasing MCR for these two in small decrements, e.g. 0.05 every 6 months? Both bitUSD and bitCNY survived latest big price decrease, after hard fork it would be even safer.
+5% I would support such gradual decrease, after black swan revival is online.
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https://bitsharestalk.org/index.php/topic,24158.msg309598.html#msg309598
Not a new idea, but I like the idea.
Effectively, shorters will experience debt destruction whilst holders experience the slow deflation of holdings.
I believe that such a proposal will have a one-sided market, with an over abundance of sellers (shorters) and a lack of buyers.
HERTZ style assets have the best of both worlds, both appreciation and deprecation.
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I believe that such a proposal will have a one-sided market, with an over abundance of sellers (shorters) and a lack of buyers.
I think in some cases it would be better to have an overabundance of sellers than buyers. Particularly for businesses which expect to buy and sell quickly(traders, remittances).
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would you buy something that you KNOW is guaranteed to be less worth tomorrow?
me neither.
Your missing the point. You wouldn’t buy it, but you would definitely sell it if you were holding. Therefore people will borrow to sell it to make a profit. This is the theory.
Sent from my iPhone using Tapatalk
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https://bitsharestalk.org/index.php/topic,24158.msg309598.html#msg309598
Not a new idea, but I like the idea.
Effectively, shorters will experience debt destruction whilst holders experience the slow deflation of holdings.
I believe that such a proposal will have a one-sided market, with an over abundance of sellers (shorters) and a lack of buyers.
HERTZ style assets have the best of both worlds, both appreciation and deprecation.
In theory if it’s opposite to the hero coin a balance should be achievable as they cancel each other out
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