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Topics - starspirit

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Muse/SoundDAC / Problem claiming MUSE from BTS 0.9.3c wallet export
« on: July 16, 2016, 06:21:35 am »

Muse/SoundDAC / I'm having a problem opening the client
« on: October 31, 2015, 12:32:19 am »
Are there any installation instructions or Q&A? e.g. I downloaded the MAC client (.dmg file) from here...

When I try to open the application, it says "Application initialisation issues", and for the API connection shown it says "Connection Status: Not Connected", with a RETRY button that keeps giving me the same error. Wondering what to do.

Maybe now that there is a client and all, its worth having a folder to handle technical support issues.

Technical Support / Loading stalls for OpenLedger web wallet
« on: October 22, 2015, 10:26:46 pm »
A few days ago I successfully set up an account in the OpenLedger web wallet and imported my keys.
Now when I go to the same link here... ... I only get a dark screen with the "Loading..." message, but it just sits there forever not doing anything.
What might have changed and how might I fix this?

Some facts that may or may not be relevant:
When I was last successfully in the wallet, I tried making a backup of the keys, which only appeared to open a new blank tab in the browser. I did not find any downloaded backup file.
It's possible that I did not properly log out on my last use.
I'm running OSX. I've tried loading several times, and rebooted my machine.
Not sure what else...


Technical Support / Suggestions on market charts in GUI
« on: July 16, 2015, 02:47:36 am »
Do you think its a good idea to add an extra line for the history of the feed (or Call Price)? That would allow traders to have a price history showing even if the bitAsset market has traded thinly and lacks a smooth line (or in cases like Shenzhen, any line at all), which means another application is required to be used in conjunction to get this data. Traders like to see the price history and movement, because it affects their speculations.

What are the windows for the MACD lines? Could these be specified or labelled?

General Discussion / Alternatives for dealing with Black Swans?
« on: July 15, 2015, 06:36:51 am »
The current proposal for 2.0 is that when the least collateralised short has insufficient collateral remaining to cover 100% of their debt, then a liquidation event is triggered. The liquidation event settles all shorts, and leaves the pool of remaining collateral for longs to settle against at a time of their choosing. In effect, the shortfall loss from any under-collateralised shorts is shared by all the longs, and thereafter the token no longer reflects price movements of the original bitAsset, but only the collateral.

I've been thinking about a couple of issues with this. First, even an immaterial under-collateralisation loss would result in complete liquidation of the market.  That could be detrimental for popular Smartcoins (e.g. bitUSD or bitCNY) and affect BitShares' brand even if it occurred once or twice (especially if there is a rush to sell the collateral, leaving big losses). Second, the full collateral backing of the token is not available to longs in such an event - they bear a loss as soon as the least collateralised short becomes under-collateralised, equal to the shortfall. This is even though total collateral in the pool may still be much greater than 100% of total debts. (As an aside, the collateralisation levels we generally quote probably give a false sense of security, because adequately collateralised shorts also have a claim on that collateral).

I would like issuers of privatised Smartcoins to have more flexibility in the rules governing black swan events, so that they can manage these issues in different ways they think is appropriate - without making judgements in this post on what ought to be done, because people will have different preferences here.

Here are some key options I would like to see:

i) Ability to let the pool of longs absorb the loss, while leaving the market open, and only allowing business-as-usual settlements at the reduced value (equivalent to what the liquidation value would be at any time under the 2.0 approach). This maintains equity amongst tokens that settle and those that remain trading. However, it also means that the shortfall amount (under-collateralisation loss) that has not been diluted through settlements, continues to live on as a deduction against fair settlement value for remaining longs, unless there is some way to plug this gap (either through (iii) below, or if the market cap grows significantly and the percentage discount gets low enough, through (ii)).

ii) Ability to have the pool of shorts take the first loss, and leave the market open. That is, spread losses from under-collateralised positions across remaining shorts, via a pro-rata increase in the obligation of each short. This protects longs and allows the market to keep trading at parity as long as the total collateral in the pool is sufficient to cover all debts. In this case shorts share a collective interest in the insurance of the Smartcoin.

iii) Initiate a transparent reputation system for shorts, that incentivizes shorts to make good on margin called positions that were under-collateralised, or the broader community to voluntarily rectify under-collateralisation events. So for example, a short that is margin called and under-collateralised, has a debit against their name for the shortfall amount. This might prevent them from taking short positions on other assets, assuming issuers have the ability to grant or reject authority to individual shorts. If these shorts make good on this amount, within an acceptable time, that debit is removed, and their reputation maintained. Anybody else in the community could also voluntarily contribute to plugging an under-collateralised position, and receive recognition via a credit. This process would require a mechanism for users to contribute to the general collateral pool.

I don't have all the answers here, just trying to see what options are available other than a forced liquidation event. Feel free to express your views or other ideas.

The basic problem with IOUs backed by single issuers is counter-party risk. So for example, an IOU for USD from an exchange is always subject to the viability of that exchange, and whether you will eventually be able to withdraw.

The solution proffered by BitShares to date has been to eliminate counter-party risk altogether, by backing tokens with BTS. But that also has a weakness - investment risk. BTS can be volatile, and its fundamentals can change dramatically, especially for what amounts today to a micro-cap stock (the future might be very different of course!). The wider market is not currently familiar or confident in the stability of BTS. The way to mitigate this is by stringent collateral requirements. But here there is a trade-off - increasing security for longs means making the product less attractive for shorts.

Another avenue that could be explored is one that seeks to reduce both the counter-party risk and the investment risk. This is done by matching the nature of the collateral as closely as possible to the nature of the asset. (One way to think of this is matching assets to liabilities, reducing the relative risk).

If there were enough IOUs for an asset issued in the UIA market, then any of these IOUs could be used as collateral to back a token in the corresponding asset. A haircut on the value of that collateral would be required to allow for the prospect of issuer default, much in the same way as we allow a haircut on BTS for the volatility risk (a haircut is just another way of saying you need more than 100% of the value held as collateral). But we can go further than this. Shorts could choose which IOUs they want to include as collateral, and in what mix, and because they always bear the first loss on any devaluation of that collateral, it is in their interests to ensure they get the proper mix of quality and diversification.

In the future, suppose there were many exchange or gateway based IOUs for USD, issued as UIAs. Lets label these EXA.USD, EXB.USD, EXC.USD, ... , EXZ.USD. Most will trade close to par. Those that fall below par will have increasing collateral requirements, and shorts will act to move away from these to higher quality IOUs. Thus its the shorts that manage the counter-party risk on behalf of the longs.

In this way a USD token is potentially backed by all the exchange members, with the risk profile managed by users heavily incentivised to maintain quality and diversification.

For high quality IOUs, haircuts might be as little as 10% (this can be adjusted higher if the collateral pool is not very diversified, and lowered as diversification increases). Shorts should be able to earn a reward in the form of a fee from longs (even 1% pa would represent a 10% pa return for shorts) and from market-making. Thus their main reward is an income stream, rather than speculation.

Risk cannot be removed, only changed in form. This is just another way of packaging risk for users of pegged assets.

This is a question I've been struggling with for a while. Suppose it is possible to have the following:

(i) tokens that behave like at-call deposit accounts, where the token represents a holding of a varying number of units in the currency of denomination (e.g. USD). The number of currency units per token might vary with interest payments for example, just like a typical bank deposit, and

(ii) the protocol allows users with such deposits to make transfer payments specified as units of currency, with the system automatically calculating the equivalent deposit tokens that are transferred, and reporting of transactions and statements for both senders and receivers available in units of currency (as well as deposit tokens if preferred)

When merchants or others receive payments, they actually receive deposit tokens equivalent in value to the specified payment amount. If this functionality on a deposit account were possible, what would be the added benefit of having a cash token (e.g. bitUSD etc) that is also allowed to circulate freely? I appreciate any views on this. Thanks.

***Short version***

The community has a schizophrenic view on BTS as a result of its history. A currency demands very little or no dilution. That's why we had many leave the community when dilution to fund development was introduced. On the other hand, developing a financial platform is a business endeavour that requires a lot of funding in return for profit. That's why CNX has had to establish externally to bitShares, to give the development team other avenues of funding the business. That separation has also upset some of the community. The basic problem is that BTS cannot be both a currency and a development business. In answer to my question on whether bitShares might consider market loans to help fund development (a business need), bytemaster in the Hangout suggested the big problem is aversion to dilution (the currency need). I understand that answer completely.

What I'm suggesting here is a way to potentially meet both needs within the bitShares system. What if we split BTS into separate decentralised currency and business vehicles? It's not fully thought out, and I'm not certain this would be a good idea yet or not - this is just conceptual and posted for feedback.

***Long version***

The currency vehicle(s)

The primary purpose of a currency is as a reliable unit of account and store of value. We could feasibly have one or more stand-alone currencies within the system, that could compete directly against Bitcoin or other cryptos. Unlike market pegged currencies, these would stand alone as independent units of account, rather than being pegged to fiat. The core properties would be:

- Negligible dilution to cover only network cost, which is very low under DPoS, a competitive advantage against PoW.
- No participation in platform profits.
- Competitive advantage of using all the speed and capacity benefits of the bitShares platform.

Apart from these core properties, competitive variations could offer a range of different features around interest, stability, and the like, just like the alts market today, but on our platform.

The business vehicle

The primary purpose of the business is to earn profit through the development of the financial platform. Such a vehicle would be able to take advantage of various funding methods, and have full flexibility over its capital structure subject to the determination of its stakeholders. Some of these methods will result in dilution, much as company capital raising does in traditional markets, but on the prospect that future growth will more than compensate for these new investments.

So as an example, the business could raise equity or debt funds in currency, and use those for development. The business keeps all the common platform fees (except for privatised structures). There is a wide range of possible fund raising structures (via tokens offering different forms of participation) ranging between full equity and pure debt, such as preferred tokens (first cut of profits), convertibles (only dilute if the equity token price rises above certain levels) etc. Its only limited by imagination.


We'd have to decide whether the currency or business vehicle would be best to retain the BTS label. Then the token for the other vehicle would be 100% sharedropped on existing BTS holders.

Other considerations

This is not comprehensive, but some other considerations would be:
- How clear is the business model? To successfully raise funds requires a robust model and profit expectations.
- How clear is the currency model? Does a currency require a profit stream to underpin it or can it exist purely as a unit of account?
- How do we incorporate the possibility of multiple development teams in the future that could each be contributing to the platform in different ways? How are profits divided from common sources?

There could be unlimited ideas for different parameter variations on privatised Smartcoins.

Is there a hosting cost to the network irrespective of the number of transactions?
What key factors determine how much total "network capacity" each market will draw?
How would this be economically rationed, and would there be a limit on the number of Smartcoins?
Where particular markets fail to find material use, or outright fail to perform as expected, could there be a pruning process, and how could this operate cleanly without raising legal issues around control etc?


Delegates are elected in a manner similar to witnesses. A delegate becomes a co-signer on a special account that has the privilege of proposing changes to the network parameters. This account is known as the genesis account. These parameters include everything from transaction fees, to block sizes, witness pay, and block intervals. After the majority of delegates have approved a proposed change, the stakeholders are granted a 2 week review period during which they may vote out delegates and nullify the proposed changes.

This design was chosen to ensure that delegates technically have no direct power and that all changes to the network parameters are ultimately approved by the stakeholders. This is done to protect the delegates against regulations that may apply to managers or administrators of cryptocurrencies. Under DPOS, we can truly say that the administrative authority rests in the hands of the users, rather than either the delegates or witnesses.

I was wondering how similar principles might apply to Smartcoins, or if that's even possible. Ideally we would want failing Smartcoin markets to be able to be closed or modified by the users, rather than keep indefinitely expanding the number of copies and variations that exist, with a string of zombie markets in our wake. It may be for example, that a poor parameter set was chosen, an inadvertent effect is created that eventually compromises the market, or the market just never gets much momentum or interest.

But this raises some of the following questions, just as a starting point:

- If nobody has ultimate power over a particular Smartcoin market, would anybody apart from shorts (via global settlement) ever be able to shut it down if it is failing?
- What if the shorts are not incentivised to shut a failing market if they are a beneficiary of it?
- Could the provider make proposals for changes to the parameters or operation of a market? If so, how could a consensus be found between longs and shorts, who may have conflicting interests, or even be missing?

Just a starting point.

General Discussion / Two questions relating to global settlement
« on: June 19, 2015, 01:44:28 am »
1. How does global settlement on a Smartcoin get enforced? For example, how to you forcibly remove the long holding from a users' account? Or would each Smartcoin (or series of Smartcoin) have a unique identifier that would remove its ability to settle at any future date, thereby devaluing its market value?

2. Keys can get lost, accounts abandoned, or users forget or die. The problem is when we have counter-parties on the other side of their positions. Say for example, somebody owns a big % of bitUSD and disappears. The shorts could never fully exit their positions. The best they could do is try to offload their short position to others by bidding a high enough price on bitUSD in the market so another short self-creates a position to meet their bid. Is global settlement intended to deal with this situation, or are there less drastic solutions?

[Edit, actually make that 3 questions...]

3. What is the procedure for shorts agreeing to force a global settlement? Does this present any legal problem of control on the market?

So basically what we are saying is that the level of dilution that is considered acceptable for a currency (in competition with Bitcoin etc) is not sufficient to fund the level of development we are aspiring to. And as a result the cost of that development needs to be defrayed across multiple networks through CNX licensing out that technology.

But have we exhausted all the ways in which the development could be internally funded?

Below I've just brainstormed a bit on internal funding approaches to open what might be an interesting and curly discussion about these and other ideas people might have. They are not mutually exclusive, and they do not necessarily preclude the CNX/license approach either - possibly some of these could be complementary.

I'm not recommending any of these approaches right now, as they come loaded with enormous philosophical arguments about what bitShares really is or might be (e.g. startup business, currency, something else...). I can guarantee the community would be up in arms on just about any of these approaches! So nobody get their knickers in a knot  ;D

1. "Equity dilution" - What if we gave up on the notion that BTS is like a currency? We could treat it more like a startup business. First we would need a clear profit model for our core products - that is, how will these be monetised and what could they be worth. Then, there would be no reason why we could not dilute $2m worth of shares in a year, if we thought that was the investment required for the project to deliver a revenue stream well in excess of this down the track. If the market embraces the direction of the business, capital gains should more than exceed the dilution.

2. Investment Loans - What if we borrowed from the market for investment purposes, effectively leveraging the business? For example, we issue $2m USD loan tokens to the market, paying say 25% pa (or a market-determined rate), repayable in 2 or 3 years. Payment is made at expiry by the block-chain diluting the necessary value of BTS shares. If the business has invested well, the market cap should have risen by much more than $2m. If there is not sufficient equity for payment, loans may need to be rolled if the market is willing, or else default terms would kick in.

[A side point on approaches 1. and 2. which treat bitShares as a start-up business. Eventually when the business revenue exceeds the need for investment, the business would no longer need dilution (from equity or loans), and would be self-funding through profit. And ultimately when the business builds a decreasingly risky utility-like income stream, it could be bid up to the point where the yield is quite low and the main utility of BTS is as a currency. This could be an alternative path to eventual currency status.]

3. Project equity - Development projects could be privatised as far as possible, where there is a clear revenue stream possible. Developers can either take the risk themselves, share it with a group of backers, or take a salary and pass it all to the backers. At a granular level, it may even be possible that any modules accepted into the core protocol could receive a revenue stream from its direct use, or use by other modules.

4. Donors - there may simply be people that would like to donate to the cause and evolution of bitShares. This could be for their own philosophical reasons, or perhaps they may hope to get network advertising or other benefits from it.

5. Other??

General Discussion / RealityKeys useful for prediction markets?
« on: June 11, 2015, 03:18:45 am »
Now that BM has said that the tools will be available in 2.0 for prediction markets, I thought this data feed provider might be interesting, which I came across elsewhere...

I just want to be confident I understand where the ("grey") lines are so that I can avoid crossing them in the designs I'm building.

For example, if the buyer of a token is not able to do anything with it apart from buy or sell it, is that necessarily a security? What makes an MPA a product rather than a security? Does it require non-financial utility?

"What's that you say? Aren't we supposed to be destroying the old financial markets and introducing a new era?"

Well, yes and no. What I'm sure everyone is in agreement on is that its the costs, inefficiencies and traditional power complexes in the outside financial industry that are becoming obsolete. However, it's important to not throw out babies with the bathwater, so to speak. Modern financial markets have created solutions to many economic problems. Rather than reinvent every wheel and spoke, we should at least take note of what works in financial markets, and seek to replicate that in some modified or improved form. Especially as that's how many people will transition over.

So I'm looking at all these intellectual battles in the forum around how bitAssets should be structured, including my own head-banging, and thinking "the modern financial industry doesn't just have one way for people to invest in an asset, but many ways, each designed to meet different needs". So why are we all arguing? Maybe we should all be working together to design everything we want, but not all in one "holy grail" bitAsset package. Maybe we just need different instruments.

Let's look at a sample of offerings in the modern financial industry, using gold as an example:

- Physical gold is like a substitute money. You hold it, and pay holding costs directly. Its difficult to do, inconvenient, and possibly only used for large financial transactions, but secure.
- Gold-backed currencies can be used as money. They are highly convenient, liquid, and transferable. (if they currently existed)
- Futures on gold allow you to trade it with leverage, subject to margin calls, and regular expiries. Its easy, and requires little capital, but you bear the risk of contango/backwardation.
- CFD accounts with long gold allow you to trade with leverage, subject to margin calls, but no expiries. It requires little capital, but costs you in spreads and funding rates.
- Exchange-Traded Funds (ETFs) on gold allow you to hold it as a long-term investment, as part of a shared pool, with holding expenses paid from the pool and adjusting your exposure over time. Its convenient and easy, but its not leveraged, and cannot be used in transactions.

These are not the only ways of investing in gold. Now if you look closely you can see that many of the bitAsset debates are really about features a bitAsset should provide. But the perfect set of features we are arguing over are never seen in the external world in a single package.

So I'm proposing we move the strategic debate in a different direction...
What are the building blocks to offer a suite of markets aimed at different needs? And where do we start, recognising that not everyone's needs can be met from that starting point.
(Of course, we can start "everywhere all at once" if we like, if we decentralise/privatise the development process as I have just suggested in another thread.)

I'd also be inclined to begin this process before we have a final solution to the issue of a stable currency. Stable currency is a hard problem. I'm convinced we will find the right answer eventually, but I do now think it's holding us up from exploring all these other profit opportunities. Who knows - maybe the optimal solution to stable currency will present itself by surprise as we let design freedom and the free market do its work.

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