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Messages - Sapiens

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I posted this in BitShares DAC telegram group about liquidity pools, and I will post it here again:
Also, liqudity pools are set up by individuals, not the blockchain. Why would someone want to set up a pool for profit, then have that profit taken from them to keep people who chose to use margin afloat?
Also, profit should not be spread to the debtors, they did nothing to earn the profit from a debt arbitrage done by a smart contract. If a smart contract is to be implemented to deal with bad debt, those holding debt are not entitled to that, but the blockchain due to the smart contract.

Hey Brendan! Good to hear from you!

Point (4) of the proposal doesn't imply that fees collected by the pool are to be given to the debtors. Far from it, It suggest that a bot buys the smart asset from any of the available pools (thus generates profit for that pool holders) and sells it to the margin wall generated whenever a debt position with CR < MSSR appears. This single operation helps to reduce the probability of GS.

Now, during that very specific single operation, a small profit may be obtained, that profit may be given to the debt holders. Point (4) also makes clear that such bots may already be running by individuals so, the whole point is optional and may be unnecessary.

My line of reasoning along the whole proposal is that debtors are incurring in a risk that, weather they notice or not, is higher than the probable reward obtained under the current protocol. So, there is need to further incentivize debtors to keep appearing, even during harsh bear markets, and so reduce the probability of GS.


It means the debtors who have maintained their positions better will be forced to buy the bad debts. I don't think it's desirable by those people.

Under the current protocol the strongest positions are closed because of the weakest ones. And they are forced to sell at the worse possible price. Let them decide what's desirable for them!

As long as a debtor has collateral above MCR, he will never be force-settled.
Debt asset holders will be unhappy to see this.

The conclusion "peg is maintained" is not proven.

They are much more unhappy now, given that in BitEuro, for example, they cannot force-settle more than 10 Euros each hour.

Now, regarding the peg, it will always be maintained unless the last, strongest position breaks. This is much better than current situation when peg is broken when the weakest position defaults which, naturally, happens much more frequently.

What LP? Who deposited to the LPs so that there are sufficient debt token to be used to buy or force settle the margin wall?
To be honest, I think it's just wishful wish. Simply speaking, when the market is in a bear trend, the debt assets are being hoarded, there is no liquidity in the market nor in liquidity pools, no supply to be used to close debt positions nor to buy into the margin wall.

Every LP that has the corresponding smart-Asset. And they don't have to have enough of it. Reducing the size of the margin wall is already an accomplishment. Please keep in mind that this is not a proposal to eliminate global settlement, but to drastically reduce the probability of it happening. Anyway, as the initial post says, this point is optional. Other players, not necessarily at core level, can do this arbitrage.

Best for all!


Dear Bitshares community,

Much has been said and suffered regarding the debt system currently operating the smart asset creation on the bitshares platform. The following proposed mechanism of this margin call system has the following advantages over the current system:

  • As long as a debtor has collateral above MSSR, he will never be margin called nor fall victim of Global Settlement, independently of the state of other debtors.
  • As long as a debtor has collateral above MCR, he will never be force-settled.
  • If implemented before, the proposed mechanism would have avoided most, if not all, of previous Global Settlements .
  • With the new protocol, debtors are incentivized to adjust their positions for the benefit of the community. This is much better than the current mechanism which punishes them whenever harsh conditions appear. 
  • Holders of smart assets are protected and the peg is maintained until the very last possible moment.
  • Dex's liquidity and liquidity pools usage is increased.
  • A new, innovative market of debt positions is created and with it, a new source of income for the DAC appears.
  • Committee is released from the urgency to randomly adjust parameters in order to prevent GS, thus creating better stability for the whole ecosystem and avoiding much of the recent drama

The proposed new mechanism operates as follows:
  • GS is not activated whenever CR of the least collateralized position falls below 1 but when (total collateral in existence) < (total debt in existence)x(MSSR). This way, GS would not happen as a consequence of the state of the weakest debtor but from the behavior of all debtors as a whole.   
  • The above alone implies that some positions could have negative CR. To prevent this, those positions are simply deleted once they reach CR<1 and their debt and collateral is transferred to the remaining, better collateralized positions. This would reduce the CR of those better positions, but it also increases their total debt and total collateral. So, if those positions (which are most likely held by more experienced traders) manage to keep themselves open during sharp declines in bts price, their reward will be much more bigger. 
  • Whenever (2) happens, in order to alleviate the burden on the remaining, active positions, all fees for the corresponding market are distributed among them.This way, those positions get compensated for taking on the collateral and debt of the deleted positions. Also, this creates an incentive for those who are willing to open new positions with fresh collateral and so, push BTS price upward.
  • Whenever any position has CR < MSSR, an automatic operation (or a bot) is activated that takes the smart Asset from LPs and either buys the corresponding margin wall or force settles that low collateral position, which, at that moment should be at a premium price. Probably there are already some bots doing similar arbitrage. So, this point is optional. In case of implemented, profits from this operation can also be distributed among the remaining debtors.
  • Processes (3) and (4) are run until CR > MCR for all existing positions.
  • Force settling positions whose collateral is above MCR constitutes unfair and terrible customer service to the users that lend themselves to the hustle of creating smart assets. However, force-settling cannot be totally eliminated because it is a competitive advantage over other platforms that don't have it and, if we don't have a plus over them, then people won't see a need to switch to us. So, force settling is allowed only upto the debt of those positions with CR < MCR. That new condition would required that, If someone wants to get rid of his smart assets and there is no such low CR positions, he must use the markets or the LPs. This has the additional benefit of increasing activity in the DEX.
  • In order to allow debtors to exit their positions when they simply are not willing to hold them any longer, an auction system for those positions is created, So, any debtor can sell his position at any time. Also, a system in which any member of the community can offer to buy any debt position is implemented.
  • Finally, if under the most super extreme conditions, all positions, one by one, are deleted, and after having all debt and collateral being transferred to the last, most stronger debtor, and after receiving help from fees and bots, he also falls below CR=1, then GS happens and bidding for collateral is allowed. Manipulating feed producers in order to prevent collateral bidding is also terrible costumer service, in my opinion.

Of the above points, the most controversial is (2), in which positions whose CR falls below 1 are deleted and both collateral and debt are transferred to the remaining, more collateralized positions. Despite this, (3) and (4) are thought to alleviate the burden of this transfer for the remaining higher-collateral positions and increase their possible reward. Overall, the proposed new protocol is way better than the current one. It has better treatment for both holders and debtors of the smart asset and also stronger incentives and better guarantees for all the involved players.

Expecting the best of you all,


I just realized that the University of Nicosia will be willing to accept payments for fees on BitShares or BitShares STABLE assets as a consequence of this partnership. 

The faking is snowballing and the legal implications will eventually appear.

I wish for all the fakers the ability to find great lawyers to defend themselves.

Stakeholder Proposals / Re: Proxy: xeroc
« on: October 22, 2019, 05:15:49 pm »
I support the following BSIPs:

    BSIP 73: Match force-settlement orders with margin calls and limit orders
    BSIP 72: Tanks and Taps: A General Solution for Smart Contract Asset Handling
    BSIP 70: Peer-to-Peer Leveraged Trading
    BSIP 69: Additional Assert Predicates
    BSIP 64: Optional HTLC preimage length, HASH160 addition, and memo field
    BSIP 62: Close margin position
    BSIP 61: Operation to Update Limit Orders
    BSIP 57: Managed Vesting Balances
    BSIP 47: Vote Proxies for Different Referendum Categories and explicit voting operation
    BSIP 45: Add BitAsset as Backing Collateral flag/permission
    BSIP 39: Automatically approve proposals by the proposer
    BSIP 22: Vote Decay for Witnesses, Committee members & Proxies

Also, I am not 100% sure vote-decay will change things to the better, but I am willing to support this experiment.

Thanks man, very appreciated your effort and time is here.

Good that you gave a chance to vote decay too.

General Discussion / Re: Some questions
« on: October 21, 2019, 12:23:01 pm »
I can see a lot of this trouble is consequence of an ineffective communication between west and China. Given that most of the development is done by the west and no translations are efficiently conducted, a great part of Chinese community just see the price spriraling down and workers spending incessantly. That, together with the corrupt interest of some individuals that capitzalized on this information bottleneck, has created the whole situation.

General Discussion / Re: Committee Fund Operation Review
« on: October 20, 2019, 09:09:49 pm »
so that means we need another BSIP to set the threshold feed price for eternity, or it can be increased but not be lowered?

0.202 bitCNY/BTS is cheap even when the market price is 0.19, we can buy at 0.22bitCNY/BTS when market price go to 0.22 without pay additional price , but I think it's not hard to tell which price is better.

Man, I really feel compassion for you. You have become an addict to gambling and now you are trying to gamble with committee's account, under the exact same strategy that got your ass burned. It doesn't matter at this moment if your strategy works or not. You have lost any sense of ethics or truthfulness.

They aren't be delisted now simply because the current mechanism IS better.

Maybe is better for people who went into debt and are intending to never pay pack and transfer all their loses to others, but not for the ecosystem. Maybe is better for people who is paying their bills with BitCNY to counterparties that are unaware of the peg being lost, but not for Bitshares in long run. 

* It does NOT keep/recover peg when BTS price is low enough.
* It's essentially automatic-GS, but not eliminates GS.

As far as Bts is used as collateral, no mechanism on this universe will work if Bts price is low enough. And no, this is not GS Because in GS, positions are taken all at once, thence the 'Global' in GS.

This is different, one position is liquidated at a time and its collateral is shared between all BitAsset holders, who will now have a little less of that asset.

Please think carefully, if you're talking about the idea proposed by Sahkan.
One scenario: assuming there are 1 million accounts holding 1 million bitUSD, when there is one debt position with 1K USD to be forcefully liquidated, whose bitUSD will be forcefully converted to BTS? Unless you mean all of them, technically it doesn't scale well (performance-wise) if considered fairness.

In your example, and assuming Sahkan idea, each of the BitUSD holder will have 0.001 BitUSD converted to BTS, they won't even notice. There would be no GS, No low collateral positions to worry about. It's a pretty neat idea.


1.Delisting of all bitassets outside of DEX
2.Dumping of BTS for other stable coins on CEX
3.Dead market on DEX ,starting from ZERO

Pure FUD. BitAssets situation cannot possibly worsen. As of today, they are pegged to nothing but debtors whim. Yet, no delisting has happened and none of your 3 points have occurred.

The proposed protocol recovers peg, eliminates GS, avoids hurting all debtors because it can be implemented to liquidate only the very lowest CR position once its CR falls below 1. What else do you want?


The debt would be replaced by Joe's collateral. So Joe's debt gets settled to Ana, his debt is 0, and Ana has 1000BTS instead of BitUSD. Joe gets to keep 500BTS that he was trading with + the profits he made on trading. That's in that scenario, if CEX is holding bitAssets and they get settled then yes they would have to swap funds for users, but that would be their problem to solve; DEX is build for DEX not for CEX.

Sounds like a plan to me. Simple and slick. Solves a lot of our problems and no pool implementation is needed.

Now, in the real scenario the whole bunch of 500 BitUSD will not be in the hands of Ana but of 100 diferent people, each of them with a certain amount of BitUSD. So, the distribution of the liquitated collateral would have to be in accordance.

Hey everyone,

I've modified the original post after noticing that the solution I proposed is no solution at all.

Let's suppose that:

1 Bts = 1 USD and that Joe has 1000 Bts.

That means Joe has 1000 USD worth of BTS.

Joe uses his 1000 Bts to borrow 500 BitUSD at a CR = 2 from the Blockchain.

Then Joe uses his 500 BitUSD to buy 500 Bts from Ana. Ana who, being risk averse, stores those 500 BitUSD in a cold wallet.

Now Joe has 1000 Bts frozen as collateral on the blockchain and 500 Bts available in his wallet.

Joe uses his 500 Bts to trade and get some profits from Ken, who holds several cryptocurrencies but no BitUSD.

Suppose also that there are no more players in this little world.

As time passes, bts price decreases to 1 Bts = 0.5 USD, and Joe is margin called.

He wants to pay his debt immediately, he looks desperately for anybody who can sell him some BitUSD but there is none. Because all the created BitUSD is in Ana's cold wallet.

Even if Joe has made profits he will be unable to pay no matter what because no BitUSD is available in the market.

Under the current protocol, Joe portraits the situation of many debtors and Ana that of many BitAsset holders. I only see two possible solutions for this problem.
  • Joe voluntarily closes his position. In that case, the collateral in excess of debt is returned back to Joe. Because there are still 500 BitUSD in the hands of Ana and those 500 BitUSD need to be backed by something, the collateral retained from Joe enters a pool of debt management that needs to be replenished by some fees.
  • If Joe doesn't close his position before his CR falls below a certain threshold, his position (both debt and collateral) is taken over by the pool.  Much like in the traditional markets, long and short positions have closing dates and/or prices.

If, as is happening today, Joe increases his voting power by going into debt and uses that inflated voting power to prevent his position to be taken over, then the whole system is unsustainable. This is because Ana will eventually understand that her 500 BitUSD won't be backed justly and, being risk averse by hypothesis, she will leave the system. Ken, on his part, having only Joe to trade on a system which is controlled by Joe, will also leave, leaving Joe alone.

Stakeholder Proposals / Re: [Poll] BSIP76:Set bitUSD feed threshold
« on: October 19, 2019, 01:28:11 am »
After forced vacation from this forum, I am finally back!

General Discussion / Re: I come from the cn-vote
« on: October 19, 2019, 01:24:04 am »
What do you mean by "pull the plates"?

Stakeholder Proposals / Re: [Poll] BSIP76:Set bitUSD feed threshold
« on: October 15, 2019, 02:47:21 am »

Well, The only one left crying will be you and your perverted logic once FBI, Interpol or your harsh communist authorities find out what you and your gang have been coercing other witnesses to do.

I don't see how this is not financial  criminal activity. Recently G7 pronounced against stable coins. They called them a threat to global financial system. What will authorities do once they find out that an asset, long time marketed as stable, had its price feed faked by voting power created out of thin air and extortion to key role players in a decentralized community?

Enjoy the news you idiot.

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