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Messages - biophil

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General Discussion / Re: Investigating the reasons for BitUSD GS
« on: December 07, 2018, 05:41:10 pm »
1. Was BitUSD mismanaged? If so, by whom and why?
2. Was it the fault of BSIP42?
3. How will BitCNY be saved from the same fate?
4. Was the GS inevitable?
To break it down:
BSIP42 allowed witnesses to experiment more with price feeding to improve the peg.
Different algorithms have been tried which came with more risks and better peg for certain market conditions.
Market conditions changed drastically. Unfortunately, at that time, the algorithm for price feeding was such
that the peg was holding strong, at a (significantly) increased risk of global settlements.

What the algorithm basically did was move the (margin call) price feed away from market so that margin calls
(which buy at 10% above market) would only trade at current market rates. Hence the price feed was off by
10% in general (more of less). Additionally to that, a stateful feedback loop was integrated to track the *premium*
of bitUSD and move the call price even further.

The consequence was that a huge margin call aggregated during the bear market and those margin calls were
unable to buy back their bitUSD in the internal markets (not even with a 10% penalty) because the call price (feed)
was off too much.

Could a GS have been prevented without BSIP42, I am not sure. It could be because the margin calls could have
been filled more easily. Would there have been traders doing so? No one knows.

My personal conclusion (as a proxy) is to not accept call price (feed) manipulation and instead use other means
to give (and take) incentive to borrow (and short sell) new bitassets (depending on supply and demand).
Those means have been discussed back then too, but an issue in the backend that is currently been worked
on effectively prevents us from using it. Additionally to that, the bear market has continued and moving away from
BSIP42 (in particular for bitCNY) would cause an immediate global settlement, which at least is undesirable for the
vast majority of the bitCNY traders and BTS holders from China.

The ideal "solution" for me would be to sit out the bear market and as soon as collateral ratios in bitCNY pick up again
gradually reduce the impact of BSIP42 and instead replace it with (potentially a mix of) dynamic MCR and dynamic

bitUSD can be revived and when that happens I do not intend to support any witness that feeds a price feed that
goes more than ~2% away from fair market pricing for bitUSD.

Thanks for the writeup. A big problem stablecoins face is that risk is very hard to eliminate, and a change that reduces one risk may very easily increase some other risk. It sounds like what you're saying is that BSIP42 reduced BitAsset short-term volatility, and inadvertently (or maybe deliberately?) increased the risk of a GS. Whether the total amount of risk in the system increased or decreased isn't clear, but since GS is such a drastic operation (essentially everybody loses in a GS), anything which increases the risk of a GS is probably a bad idea.

General Discussion / Re: Investigating the reasons for BitUSD GS
« on: December 07, 2018, 05:27:36 pm »

anyway, I think this is much better than just let global settlement happen.

Would you say this is an accurate way to rephrase your statement: "better to lose the peg via a nonconsensus hack than to lose the peg via a GS."

I'm pretty sure that I agree with that sentiment.

That makes it sound like it's worth looking in to a major protocol update which would soften the GS nuclear option in some way.

General Discussion / Investigating the reasons for BitUSD GS
« on: December 06, 2018, 03:12:04 pm »
Greetings, Bitshares community!

A very few of you may remember me from the early days of Bitshares; back then, I was a lowly graduate student interested in game theory and cryptocurrencies.

Now, I've worked my way up to professor of Computer Science at the University of Colorado: I've been doing a bit of research on stablecoins recently, and I want to gather some perspectives on what went wrong with BitUSD. I think there are some very interesting underlying problems with stablecoins in general (see NuBits for some early examples), and collaboratively-managed stablecoins in particular (see BitUSD), and I'd like to understand these problems very clearly.

So I'd love to get some community input on the reasons that BitUSD's peg mechanism broke and it went into GS. Here are some starter questions, but of course give me your own perspectives even if they don't fit my questions at all:

1. Was BitUSD mismanaged? If so, by whom and why?
2. Was it the fault of BSIP42?
3. How will BitCNY be saved from the same fate?
4. Was the GS inevitable?

And just to be clear about my intentions here, depending on my findings, I plan to write a (possibly series of) academic research papers on the topic of how to properly incentivize stablecoins. I think the incentive issues are very deep and likely very difficult to surmount. Here's an older summary of my concerns:

General Discussion / Re: When to expect the bitUSD revival?
« on: December 06, 2018, 02:57:21 pm »
Hi Neo, I've been absent from bitshares for quite some time now, and just came back to see what was going on with bitUSD. For some time now, I've been concerned that there are systemic problems that would eventually lead to GS for some bitasset, and I'm very sad to see that the community was not able to correct these problems before a GS happened. I'm going to be looking in to exactly why this happened, and hopefully this kind of thing can be prevented in the future. For now, you'll have to decide how confident you are that bitUSD will recover. I summarize the "global settle" operation here: In essence, when GS happens, the majority of the asset's collateral pool is thrown away. What little collateral is left after GS is not enough to effectively back the asset, so it goes into sort of a shutdown mode.

I think (people more involved in day-to-day can confirm) that BitUSD needs several million dollars to be revived. From what I recall, it will be revived when the value of the collateral pool rises to a certain threshold, either because some gracious whale comes and commits that collateral to the pool, or because the price of BTS rises enough so that the existing collateral is worth enough to back the asset again.

Does the project have a website or anything useful like that? I want to learn about the project without having to sift through a morass of telegram spam.

Anything specific you want to know?

The usual stuff for new projects: if 70% to BTS, who gets the other 30? Is there a drop to whaleshares UIA? ICO? What is the intended feature set (fuzzy seems to indicate that it will merge the capabilities of BTS and STEEM)?

Etc etc etc.

Does the project have a website or anything useful like that? I want to learn about the project without having to sift through a morass of telegram spam.

General Discussion / Re: Bitshares price discussion
« on: February 06, 2018, 06:34:38 pm »
Please do keep in mind that this whole general pump is largely fueled by the Tether scam   :-\...

You were right more than you may have realized!  USDT from tether is a massive sell off for Bitcoin, Bitshares, many different currencies everywhere.

All you have to do is look for any Market on that has a USDT trading pair... everyone is liquidating USDT and trading it for other coins and then most probably doing withdrawals back to fiat.
Well if I understand it correctly: Those selling their crypto for tether will end up with "money" worth nothing as always in history.

Likely enough. I quit using USDT a long time ago, a while before I quit using BitUSD (because we have some whales who are dancing awfully close to undercollateralization and black swans).

I'm absolutely shocked that the Tether people have been able to maintain USDT-USD parity for so long without even the illusion that USDT can be redeemed for USD. Seems like by now we'd start to see BTC/USD and BTC/USDT prices diverge, but they've been pretty well locked together for months. Blows my mind.

General Discussion / Re: Delegates Please Publish Feeds More Often
« on: January 30, 2018, 06:36:27 pm »
There is no need for short squeeze protection imo. When a margin call happens, the system should take all orders up to a limit defined by collateral.
As the name implies, the short squeeze protection is to protect shorters for overpaying in low-liquidity markets.

Why to do this? Shorters deposit collateral to protect bitAssets. If a shorter can't maintain his collateral, use it all to buy back his debt. What's a problem with this?
Where you sit determines what you say.Where you stand depends on where you sit.

To state it explicitly, people with large short positions want to offload as much of their risk as possible to people on the long side. Hence things like short-squeeze protection and bitcrab's bizarre arguments for nonzero force-settle offsets.

It's things like this that have really weakened my trust in the BitAsset system. It seems that there is a deep incentive problem here:

If BitShares does well, people who took out short positions on BitAssets make a ton of money and gain a large share of the total stake. Since those people have short positions, they have two things:
1. Strong individual incentives to offload risk to longs, and
2. The voting power to make that a reality.

Of course, the whole point of holding BitAssets is that they're supposed to be a place to harbor oneself from price volatility and risk, and in my view, BitAssets are one of the major selling points for Bitshares overall. So if the large shorts vote their own interests myopically (which they have both the incentive and the ability to do), they weaken one of the very pillars that holds up Bitshares itself.

Maybe I'm overstating the importance of BitAssets to the overall Bitshares ecosystem? In any case, I've been aggressively reducing my exposure to BitAssets ever since I realized the magnitude of the incentive problem. The black swan risk is just too great and too difficult to quantify for me to keep significant amounts of my wealth here anymore.

Ok guys, sorry the delay. I had moved elasticsearch to a new node and now it is fully in sync and working. I changed the exporter to point to the new place, please try again:

I also increased the timeout to 60 seconds so big accounts can be downloaded without the need to go over it in chunks.

I confused at first with your account, thought it was biophil but i see now it is with 3782 operations.

I was able to download your account history now, sending the csv by email too but you can go ahead and try to download from the online tool.

thanks for the patience.

Fantastic, looks like the tool works fine now, and I also got the CSV by email. Thanks very much!

Hello. I'm also trying to download all of my transactions in order to reconcile my account. I followed the above steps and it appeared to work. The issue is the CSV file has plenty of data, but not the simple data I'm looking for - such as fill price and amount of bts purchased.

Appreciate any help!

I'll be writing some Python tools to parse the CSV file into human-readable data, if that's any help. I'll come back here with a github link when/if I get the tools working in a publicly accessible way.

Here's some official stuff:

That's not "official" .. it's just a page that factually documents what's actually going on.

Fair enough, I edited it.

It has 30 sec timeout hard coded. So you better retrieve your history in chunks, which can be processed in less than 30 sec.

I'll try that more deliberately, but I tried something like that already and didn't get anything. But I'll give it another go.

Thanks for the pointer. I tried the CSV exporter, and it looks like something is wrong -- it hangs for a while (30 seconds?) and then gives me a CSV that only has column headers but no actual data. Nice explorer, by the way. I only just learned about it today; has it been operating a while?

I'll PM you my email address to send me what you exported!

I'm trying to compile a good record of my Bitshares activity, and the web wallet doesn't give you much history. Does anybody have a nice CSV history service or anything? Or a better web interface that lets you download history?

If you had asset which tracked the dollar had as its underlying a share in a bank, then a borrower of this asset would get dividends from (collateral - feed_price * debt) units of the share and the smartcoin owner would get feed_price * number_owned units of the share.

One problem if you wanted to have bank deposits which pay interest would be to when you make the payments since if you make the payments every year, then the price of the smartcoin will rise closer to the dividend date, and drop instantly after the dividend is paid, which defeats the point of the smartcoin tracking the dollar.

One very simple way to hack this is already in operation with HERO, a smartcoin which tracks BitUSD +5% APR. Here's some information:

I wrote about some issues with it on Steem:

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