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Messages - Thom

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A brief discussion took place ( on Telegram today where Abit asked about metrics to eval BSIP42 algorithms. I hope to cultivate ideas here on how we can conduct similar experimentation for the BitUSD market as was done for BitCNY last month. Once the core MCR bug is fixed I want to be as ready as I can be to begin these experiments.

I will add to this after I have a look at Zapata's BSIP42 feed code, which I hope to find elements to expose to help us coordinate witnesses' BitUSD feeds.

It would be very useful for any of you witnesses that participated in the BitCNY experimentation to chime in here. I would like to see an explanation of the "experimentation process" that was used for BitCNY. From my observation it was messy and wasn't well coordinated. Nobody could even say with certainty which witnesses were experimenting with BSIP42 and which ones weren't, or how many different BSIP42 scripts were being used by experimenters.

Should witnesses experiment using a "reference" feed script? I think that would be easier to coordinate, and once we've come up with a reasonably stable algo, witnesses can port it or modify it to fit their operation. This is a question, not a foregone conclusion. I will probably use Zapata's script unless something else pops up that would be better.

So one item we could publish here is a list of witnesses that intend to participate in BSIP42 for BitUSD once the core is fixed to allow use of MCR in the algo.

How do we determine when algo "adjustments" are made? IIRC Abit acted as a type of coordinator to inform witnesses about adjustments / premium. Rather than relying on one person lets discuss this so we all know how that is determined so any of us could announce the info. However I think it's better for consistency that only one witness post or pin the announcements.

The most difficult part is how to guarantee the lenders can always get back their assets before a black swan event, with good enough performance. All external markets have external tools E.G. insurance to try to achieve this. BM has proposed a similar idea long before (read: bond market) but abandoned IMHO due to performance issues and other limitations.

why need to guarantee this?

Perhaps it's not required, but surely you see how having it provides an added measure of safety to the lender, which should stimulate even more lending.

General Discussion / Re: Announcement on BSIP42 relevant actions
« on: October 14, 2018, 04:52:16 pm »
No, margin call is initialized by witnesses via price feed. As I've said, whether a debt position is "well collateralized" is subjective.

> witnesses are able to feed parameters to change fully-collateralized debt positions to undercollateralized when needed.

Definitions are crucially important, so if you don't define terms we will keep going in circles. The bare minimum amount of collateral required is 100% of all short positions. Anything less and you risk a house of cards scenario like mainstream financial institutions are about to experience. We have set a standard of 175% to provide more safety to reduce margin calls, and I've seen comments we could reduce that to 130%, but for some that's not enough. 

The last statement appears to be yours abit. Putting it upon witnesses to define what they believe is too little collateral creates a conflict of power between witnesses and the Committee who sets various blockchain parameters. The minimum collateral ratio should not be determined by witnesses, it should be uniform and globally defined, and that is the role of the committee. It should not be dynamically set by each witness.

Witnesses should be explicitly "reporters of facts they observe" and block producers. Giving them the responsibility to set asset prices (and acceptable collateral levels) that differ from what can be observed in the market is manipulation and potentially opens witnesses up to liabilities and law suits.

When the MCR core bug is resolved we can experiment to achieve a tighter peg by preserving the market price feed and changing MCR or MSSR. Although some may argue that is also price manipulation b/c it achieves an almost identical effect (yet to be demonstrated, but that is general consensus), I don't see it that way.

As I've said and will continue to say, under-collateralization is my main concern regarding BSIP42. It is also Xeroc's and others who have PM'd me. Liquidity and a tight peg are obviously important, but IMHO and others not more than preserving the collateral.

I believe it would also be disastrous to the ecosystem's reputation to renig on the promise of redeemability as some are so willing to do. Yes I recognize redemption to 100% is not always possible but that is not by design as much as it is by the supply and demand of the market.

You go Yuri! Well written OP!!

I can see OL has invested a significant amount of time and effort supporting Etherium tokens and this is a logical extension if that effort.

Although I do agree that EOS is in too early a state of evolution for stability and broad consensus (the EOS community is very diverse and many in that community operate under opposing principles and visions of what they want the platform to become), my view is like your #1, and BitShares shouldn't be trying to be all things to all people or businesses. Lets let EOS evolve and if it moves in a direction favorable to BitShares community, integrate with it using atomic cross-chain swaps and run the smart contracts on a platform optimized for it. IDK, but seems to me it will be much easier to implement an interface to the EOS chain than to ETH.

I tend to think BitShares needs to A) define target audiences and B) list the features and functionality (in priority order) required for each audience identified, including completed, in development and what's next. Yes, that's marketing, but unless we can all point to a document or source that embodies these things BitShares will bounce from one pinball bumper to the next in reaction to the community concern of the day. We won't be focused and progress will be what it is now.

How does the upcoming HTLC functionality affect this discussion? Will you utilize HTLC to accomplish this?

Why pay for SSL certs when you can get them for free using certbot?

I'm not sure of the neccessity of the newsletter, email nor professional inquiry panel, these feel like centralizing BTS around this website.

1) Paid SSL at inbound price of 10ish Dollar per certificate for a year with signature of the domain on it is not same security as free ssl certbot.

2) Newsletter is common in any normal business in the world. Its being used for signups and monthly notifications to its clients/partners.

Everything but "centralizing" is included in this worker.

Many thanks for your opinion and support.

1> Cost of certs is no big deal here. I agree with @customminer LetsEncrypt / certbot is free and reliable (I use LetsEncrypt with getssl bash script on all of my nodes, have used certbot in past also, but more options I don't need with certbot)

2> I would say the newsletter is worth trying out to see if many find it useful. If not it should be discontinued. Jonathon Ba'hai and CryptoPrometheus created a very nice newsletter which the community really enjoyed. It became too time consuming to manage as content was growing rapidly. They also wanted to start building a replacement tool called DPOSHUB which launched but never really went anywhere.

Love your work on the new site and if Micheal doesn't vote for it I will temporarily remove him as proxy and vote for it directly myself. 

Stakeholder Proposals / Re: Proxy: xeroc
« on: October 11, 2018, 03:41:56 pm »
Just to be totally clear, do I understand correctly that you evaluate risk of undercollateralization as very low?
I do believe undercollatarlization must be avoided at all costs!
But I also realize that
a) black swan isn't as bad as world armageddon, but in fact can be recovered through BSIP18 and
b) the risk of *OVER-ALL* undercollateralization is much smaller than the risk of an individual position going below 100% collateral.

Point b) is very crucial to understand and while I do not believe we should bail out individual short positions with too little collateral (but instead would rather penalize
them), I do see a fine line between risking the entire asset through global settlement just because of a single position being undercollateralized and temporarily tune
price feeds to potentially "hide" a few undercollateralized positions (that will have a margin call that can be filled!).

Again, to me, this is a short-term solution and I would prefer any undercollateralization to be *obvisous* and *transparent*, but we first need to fix the backend to provide us
with the necessary means to get there. In the mean time, plenty of discussion is being done to figure out the "how"

So glad to see you make these points clear Fabian. I see collateralization is a crucial, bedrock principle that must be maintained. Lets not allow BitShares to become like Bitcoin, with its whitepaper principles ignored and the platform no longer useful for why it was created.

I'm not saying the platform shouldn't evolve, ofc it should nothing is ever perfect. I'm just saying its evolution should take place according to sound economic and individual freedom promoting principles (Austrian, not Keynesian, individuals not collectives) and not forget the lessons learned over the centuries and in particular the last 100 or so years of just how counter to individual freedom and prosperity centralized planning is.

General Discussion / Re: Announcement on BSIP42 relevant actions
« on: October 11, 2018, 05:58:43 am »
If we have the technology to implement a dynamic MCR we should absolutely proceed with it.  In my opinion, there is far more upside than downside.  It can still remain overcollateralized, so that bitCNY/USD don't become a 'house of cards' like other synthetic/fractional reserve systems.

Thank you JohnR, for understanding of the dangers of under-collateralization. It's a point that can't be over emphasized and shouldn't be ignored IMHO, and requires a longer term view and respect for the ecosystem than most traders appear to have. Why this isn't obvious to everyone here given the numerous failures of centralized economic control is baffling.

I intended to, and tried using a BROWNIE.PTS instead of a WLS since I didn't have one. I couldn't locate a market on the DEX for WLS to get one either.

How / where to get the 1 WLS required to register a new account?

whaleshares/bts market
whaleshare/bts market in DEX (remove the `s`)

Trying to locate it in light wallet.

I went to Exchange-> Find markets-> put 'WLS' in as asset name, but no data. Then I used WHALESHARE as the name and now I see the data and several other names for whale assets.

Thanks abit.

General Discussion / Re: Announcement on BSIP42 relevant actions
« on: October 09, 2018, 02:39:42 pm »
If you understood the impossible trinity, you'll see why we need to allow <100% collateral if we always want a tight peg.

My understanding of "impossible trinity" is that the 3 variables can never be in harmony, at least 1 will oppose the other 2 so all 3 are not useful as feedback to maintain the peg. That's why bitcrab says it would be complicated.

If the tradeoff is between allowing collateral to drop below 100% and a tight peg (not proven yet) it's better (safer for system integrity) to allow peg to be less tight. The systemic problem of unstable markets is made worse when collateral drops below 100%, and the problem can cascade when under collateralized assets are used to invest with leverage in other assets. Under collateralized derivatives are the primary reason mainstream financial markets are a "house of cards" waiting to fall.

General Discussion / Re: Announcement on BSIP42 relevant actions
« on: October 09, 2018, 05:07:41 am »
Define "hurt"? Debt positions are attached with responsibilities, we can't deny it.
<exactly Abit - Thom comment>

when the debt position is in sufficient collateral, a smartcoin holder can forcibly buy the collateral, this is definitely hurting.

Define "sufficient collateral"? Almost all the time all debt positions have more collateral than debt, from this perspective, they should never be "hurt" in terms of margin calls or forced settlements? Apparently this is not our rule.
Agreed, don't see the hurt either. Not sure why you say "Apparently this is not our rule."

If you mean 175% is sufficient, I disagree. 175% perhaps is sufficient sometimes, however, when a smartcoin is oversupplied, IMHO that means 175% is NOT sufficient; when under-supplied, I'd say 175% is too high.

So, if we adjust MCR dynamically and keep feed price unchanged, for debt position holders, it's not always "safe" to keep their positions if they have only 175% collateral ratio or even 200%.
Also exactly right.

This what is called "responsibility" of debt position owners according to the initial design of BTS

Maintaining & balancing the collateral ratio in relation to the market volatility and risk tolerance of the investor, THAT is the responsibility inherent in the design.  Thus it is up to each investor what level of risk of being margin s/he is willing to take. EACH trader is in full control of the level of risk they will take.

You do raise a valid point tho when you say there is little capital to increase collateral with in a bear trend. I agree, but that's not an argument against the need to maintain at least 100% collateral at all times to stay truly "safe". Safety is a myth in a highly volatile market. I also believe it's a bad practice to subsidize poor trades, unless you want more of them.

I intended to, and tried using a BROWNIE.PTS instead of a WLS since I didn't have one. I couldn't locate a market on the DEX for WLS to get one either.

How / where to get the 1 WLS required to register a new account?

General Discussion / Re: Announcement on BSIP42 relevant actions
« on: October 03, 2018, 12:26:05 pm »

BitShares has been around and around trying to come up with a SmartCoin algorithm that strikes that balance but I fear due to differences in economic principles there will always be a strong tension by one camp or another to change the rules to their advantage. Remember, before the promise of redeem-ability through forced settlement people were creating sock puppet accounts and draining the reserve pool. That problem is no more.

Interesting, I wasn't here back then. Why did people have to make sock accounts to get their collateral back? Were SmartCoins backed by the reserve pool?

It was dubbed "yield harvesting". I just couldn't think of the name for it.

General Discussion / Re: Announcement on BSIP42 relevant actions
« on: October 03, 2018, 12:43:20 am »
I'd say blaming won't get things done. It's counterproductive.

It's natural that human beings make mistakes. They're not god.

I agree, blaming won't get things done and yes it's counterproductive. So is not answering questions, and I couldn't help but notice you didn't answer any of his.

General Discussion / Re: Announcement on BSIP42 relevant actions
« on: October 03, 2018, 12:35:00 am »
We can say the promises were made by BM. Then BM left. We have to make our own decisions.
It wasn't ONLY BM, we ALL were there, it was a community consensus we all (including you) have been living with for at least 3 years, so it is totally inappropriate to blame the redeem-ability or collateral requirements on BM alone.

According to the analysis I made earlier in this thread (please read), some of the promises were too heavy, we're unable to keep all of them. You can't have your cake and eat it. You want the 10M bitUSD in your wallet be fully backed, but in case when BTS market cap dropped to below 10M, they're simply unable to be fully backed if you, as a holder, do nothing other than hold.

Changing strategy is hard, but when it's needed, we have to do so, otherwise there is no future. I'm well aware of the risks.

I am not sure you do understand the risks. If you do, you're willing to risk others funds in this haphazardly conducted experiment. I do agree if both bears and bulls are promised they can't loose it's a problem. However to some degree that is indeed the situation. One or the other is going to complain there is no balance or it is skewed and needs to be "adjusted". I agree with you in your last sentence, except "they're simply unable to be fully backed if you, as a holder, do nothing other than hold." People that use leverage to trade with are used to the broken, under collateralized mainstream system and thus object to BitShares policies. Sorry, when you come to BitShares it's different for reasons, mostly the safety of funds, and you must maintain your collateral or you will be margin called. We don't need any changes that weaken investors collateral or allows fractional reserves, incentivizes accumulation of debt or skews the market via collusion or manipulation.

If course if a leveraged trader refuses to manage his collateral, well, should know the risks and not do that. It's the trader's responsibility to know the rules of the platform / game. If s/he fails to do so and the market accelerates its downward trend, the loss is on his/her back. It's not proper to blame the ecosystem for not being a mainstream institution. It wasn't intended or designed to be the same. Why can't people understand that? Do they want to repeat the mistakes all over again anew?

Witnesses are paid positions, meant to contribute. Witnesses (read: including you) are the nearest to price data because they produce price feeds, and data is all over there, just need some time/efforts to collect them and summarize and show them to people who asks. Keep asking others to report the result/findings IMHO is not very good behavior.
Why is asking not good behavior? Why is providing a coherent report / summary being avoided so much? Why (as Thul3 comprehensively asked) are the BSIP42 advocates using such coercion and force to change the ecosystem rather than playing by the consensus rules OR make a solid case why they need to be changed that is persuasive enough to gain the consensus sought? Could it possibly be b/c our principles are not aligned? I have to ask, since you said nothing to me about them. Principles are important, do you disagree with that?

If want the process to be more methodical and systematic, please propose the methods and see whether others will follow or convince them. There is a 30+page thread (and other threads) in Chinese forum shows how the algorithm is evolving: , a translator would help.

Actually some "findings" were posted, perhaps not in your favorite format:
Yes, a translator would help. The language barrier is tough for most of us. However, it isn't the place for BSIP42 opponents to fix the BSIP, it's for the authors of it to make their case with facts and data, and make sure that info is made available widely. The links you provided don't do that IMO. It's far from the data and analysis a financial system needs to make a quality engineering decision. The billions of funds invested deserve much better.

About redeem-ability:
I already acknowledged if inappropriate promises are made to 2 contrary positions it's a problem. You have a different take on how to resolve it than I do. You want promise A to be forgotten and I want promise B to be forgotten or reduced. Both of us want more liquidity, we're just not sure how to get it without upsetting someone.

I also think it's quite interesting that there is almost no talk about why things are the way they are now, no consideration of history. Your reference to BM wasn't analysis to facts to say why his reasoning was [all] wrong, you just used him as a scape goat. I'm not saying he was right, but you didn't show where his reasoning is wrong. WHY is an extremely important question. You may be annoyed by it, but it is essential to have the freedom to ask it and explore alternatives.

If there is indeed an "impossible trinity" of promises to community, it needs to be fixed. The question is which leg of the trinity needs to go? Why not add a 4th leg (as discussed at BitFest to publish an additional adjustment value to apply to market feeds)? We all know how unstable 3 legged chairs are.

I advocate for a position that provides the best balance between bears and bulls. I favor Austrian economic principles over the debt based Keynsian model that uses oligarchs to centrally "manage" an economy which has over a century of demonstrating how poorly that model works to help people live freely.

General Discussion / Re: Announcement on BSIP42 relevant actions
« on: October 02, 2018, 08:45:24 pm »
@Thom, IMHO it's not your questioning about the changes that mattered, it's your tone and your attitude that mattered.

We're not afraid of rational/professional questioning on the rules/issues/solutions at all. But you were usually asking with doubt without understanding after I explained again and again, and even turned to question me (personal) but not the issues we're facing, which is not *that* rational/professional. I admit I'm unable to remain calm all the time.

Just like @Thul3, if he politely ask and focus on the issues themselves, rather than keeping attacking bitcrab the person, the issues he brought up would be discussed much deeper and broader. Current situation is, many community members chose to ignore his new posts, no matter whether the posts make sense, because, most of posts made by him in the past were garbage and don't worth reading.

It's hard to build a good conversation environment, but easy to destroy it.

Thank you abit for your comments. I recognize that I too let my emotions color my language more often than it should, and I am trying to do better with that.

This feed situation is stirring up emotions on both sides. I do understand the desire for more liquidity and adoption, but I'm not sure BSIP42 advocates appreciate how important it is to maintain derivatives with at least 100% collateral at all times, or about why there are differences between typical centralized mainstream financial institutions and the BitShares ecosysem. The distinctions are important to understand. Promises should not be made and broken, it introduces distrust and has a negative impact on reputation (as do many other things).

Crypto was created to disrupt corrupt mainstream financial institutions and provide an alternative to them that is based on sound monetary policies. Some think sound policies are debt based Keynesian policies and others believe the Austrian perspective is better. Both can't be right, and it is very difficult for me to understand how anyone can support a Keynesian view with the 100+ years of evidence it doesn't work (except for the oligarchs). Can we all come to consensus that we want more financial freedom not less? Can we all come to consensus we can't replicate a mainstream approach or we will find ourselves right back to the same problems running rampant in mainstream financial institutions?

As I said before, I believe there will always be a tension between traders and savers. It is up to us to establish criteria that both sides can live with. Is that possible? I actually don't know. When force and coercion are the tools used I don't think a consensus is possible. Force is divisive.

We all need to take a step back and be more thoughtful and cooperative to achieve consensus. Attitudes are indeed difficult to smooth out when there are strong disagreements. I have questioned from the start why we can't be more methodical and systematic in our efforts to conduct the BSIP42 experimentation so witnesses would enthusiastically participate. When force and coercion entered the picture it drove a wedge into the community.

As xeroc said, those who oppose BSIP42 do so b/c there is such a huge push to adopt it so fast, without *any* findings published before moving on to try same approach on another asset. Again, without regard to broken smartcoins promise of fair redeem-ability market rate) or that other assets have far less liquidity. 

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