BitShares Forum
Main => General Discussion => Topic started by: JonnyB on November 02, 2017, 08:00:18 pm
-
Our stablecoins/MPAs/BitAssets cost more than they should do.
The purpose of a stablecoin like BitUSD should be to track the price of USD.
Our BitAssets are successful in making sure the value never drops below the price feed that the asset tracks. (This is because anyone can force settle BitAssets for BTS if there are no willing buyers)
But there is no mechanism to stop the peg drifting above the feed price.
Most BitAssets are constantly trading at a premium to the asset they track and sometimes this premium is up to 20%.
If we want people to use BitAssets surely we need to fix this. I mean why would you want to pay 1.1 BTC to buy 1 BitBTC or $1.10 to buy 1 BitUSD?
-
Very good point.
-
Our BitAssets are successful in making sure the value never drops below the price feed that the asset tracks. (This is because anyone can force settle BitAssets for BTS if there are no willing buyers)
In fact, the value of bitAssets drop below the price feed quite often. But yes, you can force settle them (with delay, offset and volume limit), so it is easy to correct the price when it drops below the feed.
If we want people to use BitAssets surely we need to fix this.
Exactly! And to fix this, we need to fix margin trading mechanics, which is awkward in BTS. Then, all those margin traders will hopefully come from other exchanges and issue a hell of bitAssets on us.
-
definitely!! I remember talking a couple of years ago to a colleague who wanted some bitcny and then when we checked the premium he had to pay (which was like 5% not even 10%-20% like in btc) he was laughing and ofcourse didn't proceed..Any attempts to convince him that bitassets are superior to fiat, more secure in terms of storage, he is his own bank, no counterparty risk, no capital controls etc etc where fruitless..
-
(...) I mean why would you want to pay 1.1 BTC to buy 1 BitBTC or $1.10 to buy 1 BitUSD?
because bitBTC (and other MPA) is counterparty risk free, and OPEN.BTC is not.
-
(...) I mean why would you want to pay 1.1 BTC to buy 1 BitBTC or $1.10 to buy 1 BitUSD?
because bitBTC (and other MPA) is counterparty risk free, and OPEN.BTC is not.
1 real BTC is counterparty risk free too
-
Exactly! And to fix this, we need to fix margin trading mechanics, which is awkward in BTS. Then, all those margin traders will hopefully come from other exchanges and issue a hell of bitAssets on us.
Any specific suggestion?
IMHO the only real problem is the lack of liquidity... and we are back to chicken-egg problem. At the moment I could buy 2126 bitUSD at feed price +3% and sell 835 bitUSD at feed price -3%. Can we increase these numbers to 1 million on both sides?
-
Exactly! And to fix this, we need to fix margin trading mechanics, which is awkward in BTS. Then, all those margin traders will hopefully come from other exchanges and issue a hell of bitAssets on us.
Any specific suggestion?
IMHO the only real problem is the lack of liquidity... and we are back to chicken-egg problem. At the moment I could buy 2126 bitUSD at feed price +3% and sell 835 bitUSD at feed price -3%. Can we increase these numbers to 1 million on both sides?
You are just stating the obvious, we all know we need better liquidity and market depth. What we need to discuss is how?
This post is about the fact BitAssets are not pegged to stop them rising above the asset they are supposed to be tracking. This is an issue that effects both liquidity and market depth.
Does anyone have any suggestions on how we could fix this issue?
-
Does anyone have any suggestions on how we could fix this issue?
I will never stop repeating: fix margin trading flaws first. Debt should be created ONLY when bitAsset leaves the issuing account. bitUSD sell order is not your debt and should not be counted in total bitUSD supply until this order is filled. We should not need to deposit 2x collateral upfront to issue bitAsset. If you have 1000 USD worth of BTS, you should be able to go ahead and put 1000 bitUSD sell order for BTS, and when this order is (partially) filled, BTS should be automatically added to collateral. We should not need to add funds on top of 2x collateral to close the position, because this is ridiculous. And there is really no need to keep a separate collateral pool for each bitAsset, because all you care about is that your total debt is properly backed. In case the value of collateral falls, the most liquid bitAssets should be margin called first.
-
Does anyone have any suggestions on how we could fix this issue?
I will never stop repeating: fix margin trading flaws first. Debt should be created ONLY when bitAsset leaves the issuing account. bitUSD sell order is not your debt and should not be counted in total bitUSD supply until this order is filled. We should not need to deposit 2x collateral upfront to issue bitAsset. If you have 1000 USD worth of BTS, you should be able to go ahead and put 1000 bitUSD sell order for BTS, and when this order is (partially) filled, BTS should be automatically added to collateral. We should not need to add funds on top of 2x collateral to close the position, because this is ridiculous. And there is really no need to keep a separate collateral pool for each bitAsset, because all you care about is that your total debt is properly backed. In case the value of collateral falls, the most liquid bitAssets should be margin called first.
+5% Combined with BSIP-18 would be perfect.
-
For those of us who want to chip in but don’t fully understand the mechanics. How are the bit assets pegged above the price at the moment? What has been put in place to stop it dropping and why can’t it be used on the opposite side to stop it rising. Just so we all understand the situation and problem better. Thanks.
Sent from my iPhone using Tapatalk
-
For those of us who want to chip in but don’t fully understand the mechanics. How are the bit assets pegged above the price at the moment? What has been put in place to stop it dropping and why can’t it be used on the opposite side to stop it rising. Just so we all understand the situation and problem better. Thanks.
Sent from my iPhone using Tapatalk
BitAssets are pegged from blow by forced settlement, which means that any holder can exchange them for BTS at a feed price (with offset, delay and limit on volume). This peg works pretty well, because when the value of bitAsset drops below the peg, you buy and force settle -> collect fast profit. There is pretty much nothing which keeps the peg from above. To keep the peg from above, some whales need to issue and short sell more, which means that they need to have motivation to do this, and this is a difficult part, because there is no easy way to make profit from short selling.
-
On traditional exchanges margin traders are gamblers who are attracted by high leverage. They invest $5K to make $50K trade. Bitshares can't offer similar leverage because of volatile collateral. Bitshares can't even offer similar leverage to other crypto exchanges.
-
Does anyone have any suggestions on how we could fix this issue?
I will never stop repeating: fix margin trading flaws first. Debt should be created ONLY when bitAsset leaves the issuing account. bitUSD sell order is not your debt and should not be counted in total bitUSD supply until this order is filled. We should not need to deposit 2x collateral upfront to issue bitAsset. If you have 1000 USD worth of BTS, you should be able to go ahead and put 1000 bitUSD sell order for BTS, and when this order is (partially) filled, BTS should be automatically added to collateral. We should not need to add funds on top of 2x collateral to close the position, because this is ridiculous. And there is really no need to keep a separate collateral pool for each bitAsset, because all you care about is that your total debt is properly backed. In case the value of collateral falls, the most liquid bitAssets should be margin called first.
I think this is a sound suggestion and I can see it increasing the supply side.
Are you able to make a BSIP regarding this? That would be a proper push to further the case.
-
Could we pay some worker in BitUSD borrowed by the committee? That would increase the amount of BitUSD in circulation. Now we are doing the opposite: buying BitUSD from the market to pay for workers. So workers are effectively exaggerating the problem.
-
Could we pay some worker in BitUSD borrowed by the committee? That would increase the amount of BitUSD in circulation. Now we are doing the opposite: buying BitUSD from the market to pay for workers. So workers are effectively exaggerating the problem.
workers are already paid in bitusd via escrows
-
Does anyone have any suggestions on how we could fix this issue?
I will never stop repeating: fix margin trading flaws first. Debt should be created ONLY when bitAsset leaves the issuing account. bitUSD sell order is not your debt and should not be counted in total bitUSD supply until this order is filled. We should not need to deposit 2x collateral upfront to issue bitAsset. If you have 1000 USD worth of BTS, you should be able to go ahead and put 1000 bitUSD sell order for BTS, and when this order is (partially) filled, BTS should be automatically added to collateral. We should not need to add funds on top of 2x collateral to close the position, because this is ridiculous. And there is really no need to keep a separate collateral pool for each bitAsset, because all you care about is that your total debt is properly backed. In case the value of collateral falls, the most liquid bitAssets should be margin called first.
+5% Combined with BSIP-18 would be perfect.
This is actually a very good suggestion to address this issue. I don't think there is a "true" fix, we just need to encourage a lot more liquidity on SmartCoins.
I think the best fix for this, in addition to the above, is for someone to jump on the business opportunity to allow people to buy smartcoins without having to buy BTS first, and taking a fee (USD Wire to SmartCoins gateway).
May I also entice the readers to my thread encouraging use of SmartCoins for Altcoins instead of UIAs here for more evening reading:
https://bitsharestalk.org/index.php/topic,25083.0.html (https://bitsharestalk.org/index.php/topic,25083.0.html)
-
Could we pay some worker in BitUSD borrowed by the committee? That would increase the amount of BitUSD in circulation. Now we are doing the opposite: buying BitUSD from the market to pay for workers. So workers are effectively exaggerating the problem.
workers are already paid in bitusd via escrows
But the bitUSD is bought from the market at a premium, not borrowed. By buying from the market the committee effectively helps push the price further from the peg.
-
You can't short bitAssets without first owning mad collateral which is why nobody has had the guts to enter the smartAsset ring to duke it out with us yet! (this is why BTS = BTC2.O)(remember?)
Be proud of your economic moat, and only lower the drawbridge once it looks like competitors are approaching. Until that time, BEWARE THE BLACK SWAN!
Now, should we offer incentives for people to tie up mad collateral for smart assets?
Of course, the block rewards should go toward bitAsset shorters, why would you want to have such a boring coin that only the miners/delegates get a cut of all the profits (at least STEEM gives money to others who are not dedicated miners/witnesses). Why can't we do things that are unselfish like that? (becasue we didn't want Dan to code the benefits of STEEM and EOS for the benefit of the BitShares community)
oops, sorry, I forgot where I was for a moment.....silly me to forget the selfish greed that made Dan leave here just as he was discussing this very same subject (being less greedy to reduce the spread on bitAssets but you would not allow him to take from the miners)...So go back to choosing your Lambo colors and discussing the removal of the BLACK SWAN PROTECTION so that you can game and then kill Dan's baby.
This is the first time I read a severe and argumentative criticism towards bitshares.
I am new to bitshares and I do not understand very well all the mechanisms yet.
But,for me, it makes sense to say that if SmartAssets are important for bitshares, bitshares have to reward those who take risks engaging collateral.
It looks like "proof of risk", the more volume of SmartCoin you generate, the more important and risky you are, the more you deserve to be rewarded.
-
Make a disincentive for holding a bitAsset when it can only be bought above 5% of the spread. An immediate idea that pops into my head for such a disincentive is demurrage.