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Messages - xeroc

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1
Technical Support / Re: Error settling BitBTC
« on: October 16, 2018, 01:06:27 pm »
Thanks for the reply, but I do not understand. The liquidation price set at that time was much better, why was the operation resolved at a lower price?
Price feeds are beeing kept up to date so that in case the collateral covers the debt sufficiently (175%), the bitasset is automatically revived (BSIP18)
However, settlements are against the black swan price (the price at which the asset black swanned! Not the current price feed!

2
Cool development, for sure.

Personally, I am not even convinced yet that "smart contracts" (the way Ethereum uses them and allows users
to freely 'install' new ones on-chain) are a viable business long-term.

This has nothing to do with EVM, or OpenLedger per-se, but with how I personally interpret the term "trust-less":
Before bitcoin/blockchain, people had to trust the middle*MAN*, who was a human being and not only may not be trustworthy,
but (what's worse), he might change behavior sometime later.
With the blockchain, people can now (partially) trust a piece of software that replaces the human being. Software does **not**
change mind but always executes "as implemented" - and that's where the problem starts already. We've all seen what
has happend to "the DAO" and how "intention" may not be reflected fully by "implementation". What I want to say is this:
In BitShares, people trust the operation implementations which go through rigorous review by the core development team
and the review of witnesses as well as anyone curious before a network upgrade that introduces new code. Those operations
(fixed smart contracts) are also tested in plenty of unit tests! Ultimately, that means, you end up with a functionality on-chain that
performs the exact way it was specified for (and confirmed by unit tests!).
Those contracts are *reliable* and people can *trust* the development team, procedures, and ecosystem!

With EVM contracts, you allow anyone to install new code. What happens is that noone knows how *reliable* that contract is! Was
it reviewed? By whom was it reviewed? Was it tested? How was it tested? Ultimately, the users need to *trust* the code? How well
will that work? We've seen with the DAO!

Introducing EVM to BitShares now makes things more complicated because you introduce a software where
   people need to trust the code
and mix it with software where
   people trust the development team and procedures in place.

My fears are that BitShares as a trust-less platform may be harmed by individual "smart contracts" that go rough.
We've seen that with "the DAO", we today see it again with EOSbet.
I don't want that for BitShares.


Instead, how about you go the route BEOS goes and span a sidechain? I believe that with this (https://github.com/bitshares/bitshares-core/wiki/SPV)
we might be able to connect graphene chains with each other. That would allow people to move their funds over
to a separate chain and by this also separate concerns...

</imho>

3
Technical Support / Re: Error settling BitBTC
« on: October 16, 2018, 08:46:37 am »
bitBTC is in global settlement (black swan), hence you can settle against swan price(!!!!) instantly.

4
General Discussion / Re: Announcement on BSIP42 relevant actions
« on: October 12, 2018, 02:57:59 pm »
I think "Forced margin calls" is not very necessary for the MPA, because we have another feather "Forced settlement".

Could we use a "Quick Forced settlement with BSIP38 for the collateral<175%" to instead of  “Forced margin calls“ or together?
Force settlement is for longs (users having bitCNY)
Margin Calls are for shorts (those providing collateral to borrow and sell bitCNY)

You cannot force settle a long position because a short position screwed up.

An option would be to remove margin calls but also remove the collateral from users that run into ratio of less than 130%, but that ultimately requires someone else to provide collateral for the call who would need to buy it up from market and we are back to square one similar to keeping margin calls.

5
General Discussion / Re: Announcement on BSIP42 relevant actions
« on: October 12, 2018, 07:23:57 am »
1) Do you support an experimental MSSR of 0 as an incentive to keep shorts in the game and not penalize future bts collateral holders?

Yes. The current price feed modification is interfering with the MSSR in a bad way that renders the intended penalty moot and leads to a price feed that is further away from the real price than necessary.

We cannot aim for a tight peg *and* force margin calls to buy above the market price, at least not without a hard fork.

This!

6
Stakeholder Proposals / Re: Proxy: xeroc
« on: October 11, 2018, 09:59:53 am »
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"

7
voted

8
Stakeholder Proposals / Re: Proxy: xeroc
« on: October 10, 2018, 02:36:39 pm »
I have voted for the "bitshares-org" worker proposal:
https://www.bitshares.foundation/workers/2018-10-bitshares-org

9
Stakeholder Proposals / Re: Proxy: xeroc
« on: October 10, 2018, 10:08:02 am »
Dear Xeroc, could you please clarify you point here? What is the reason for you to not unvote those witnesses who feed updated prices to bitUSD?
1. You believe applying BSIP42 is safe for bitUSD.
2. You have concerns regarding BSIP42 applied to bitUSD, but you don't want or afraid to make a decision and take actions.
3. Any other?

Thank you very much in advance!

We currently are in a very interesting (and also competitive) time when it comes to "stable" crypto assets.
With that said, we do *need* to improve, or we will not be able to compete for much longer.

The market sees a need for a tighter peg, and the current "solution" provides that quite well.
It is my believe that the way BSIP42 is currently implemented is suboptimal in many ways, but it
achieves its goals. In addition, there is a backend limitation that prevents the witnesses from using
other means for utilizing BSIP42 fully.

In short, the way most witnesses currently deal with BSIP42 should be a short-term solution that is
ideally replaced with a method that is currently highly discussed but only possible *AFTER* fixing
the backend.

With those things in mind, I believe there is more value in keeping BSIP42 for now than to ditch it away
without replacement.

10
General Discussion / Re: Announcement on BSIP42 relevant actions
« on: October 09, 2018, 08:49:45 am »
So, let me summarize my understanding. We basically have three parameters available that we can use
towards fulfilling our optimization criteria:

* settlement price (price feed) - This is the price that is used for margin calls as well as force settlements.
* MSSR - the max premium a shorter needs to pay (from market) in case of margin call
* MCR - The minimum collateral necessary for call positions, if lower -> margin call

Essentially, we can apply a "feedback loop" on all of them, either by "derailing the price feed", tuning MSSR or MCR.
The main motivation for "detailing the price feed" is because the MSSR as well as the MCR are lower bounded by 100.1%
and thus cannot go lower. A "tuning" of the price feed could lead to reduction of the premium beyond what could be
possible by tuning MSSR or MCR.

Now, the question (at least to me) is, where is the "premium" and how can we lower it, best?

I would like to see how well this approach would work:

* Feed: price feed with a fixed 1% offset from the "fair price" (fixed tuning) - this way, we allow bitasset buyers to outcompete margin calls and have margin calls provide liquidity at 1% 'discount'
* MSSR: at 100% if premium >=0%, else (100-premium*penalty)% if premium <0 (feedback) - this way, we cause margin calls to raise the price in case there is a discount - "penalty" would cause the margin call to pay a premium
* MCR: dynamic MCR at     max(130, 170 - 40 * (premium/5%))% (feedback) - this way, we have a MCR of 170% in case of 0% premium which groes if the premium is <0% and shrinks towards 130% (linearily) in case of premium >0%

The only thing that I am not sure about is if this approach may not lead to more and more margin calls piling up at the settlement
price with not incentive provided to sell into them - unless the external "premium" is negative ...

Thoughts?

11
Update:

As most already know, I have resigned from the board of directors of the PBSA.
As a consequence, I am now only involved due to Blockchain Project being
contractor to the PBSA for technical consultency.

12
General Discussion / Re: Announcement on BSIP42 relevant actions
« on: October 05, 2018, 02:06:11 pm »
bitCNY has a 5% force settlement offset for long time and this does not impact the value of bitCNY, the value of smart coin do not rely that much on force settlement. if we can not guarantee tight peg+liquidity+fair price force settlement, I believe we should give up the last one.
Just because people do not use force settlement does not mean that the
ability to do so provides value.
IMHO, force settlement (I settle bitCNY for its collateral) is a core
feature that provides a floor to the valuation of bitCNY.

Unless of course, you are talking about the 5% offset. Of course, if it
doesn't effect the value, nor it's liquidity, we could as well get rid
of the offset.

I agree it's OK to not allow MCR<1 in the MCR based solution.
I agree that the overall collateral ratio need to be >1, the problem is, how to handle some single margin call orders with CR<1? I think it's bad to let these single orders trigger global settlement process. can we just leave these orders there and wait they be eaten or disappear?
I believe we all agree here now.

There have been some options to deal with individual call positions that
go <100%:

* Take call positions that reach <(100+x)% away from users and give it to
  the issuer - effetively a x% penalty for the shorter.
* Allow traders to bid for the call position to provide additional
  collateral in exchange for pro-rata shares of the debt.

And possibly others.

I believe there are incentive - actually the “negative feedback” make this logic appears: if there are demands on smart coins (premium>0), there will be incentive to borrow smart coins and buy BTS, this is true incentive that we had ignored, it means if we can make more demands on smartcoins, we can help the BTS price to go up.
I think we all agree here as well. The disagreement lies in the means
that we use to achieve that goal. So far, BSIP42 meant that the price
feed formula is modified.

However, there has been plenty of discussion also instead of faking
the price feed, to use the margin call ratio as well as the short
squeeze protection ratio to provide a similar solution.

For instance, according to Peter Conrad, the current situation may well
be achieved by using the actualy/fair price feed and a short squeeze
protection ratio of 0%. That would lead to margin calls to execute at
the price feed instead of additional penalty of additional 10%. The only
drawback (that might not be one) is that the short protection ratio
cannot be negative. That means that in case there is a margin call
pending in the books, people that want bitUSD will provide a "premium"
to the market to snatch bitUSD from the margin calls.
If this becomes a problem, the price feed could still be "modified", but
at all other times, the price feed would reflect the fair price.


13
Stakeholder Proposals / Re: Proxy: xeroc
« on: October 02, 2018, 08:49:35 am »
I hereby remove my "threat" of unvoting witnesses if they apply BSIP42 to bitUSD.
Ultimately, threatening them was a mistake to begin with. Also, BSIP42 has been approved explicitly to grant freedom of choice to the witnesses. IMHO proxies shouldn't push a their decision about BSIP42 onto the witnesses.

With that said, sorry for my previous statement and sorry for the mess and uncertainty it may have caused.
Please also note the discussion in this thread: https://bitsharestalk.org/index.php?topic=27203.msg322845#msg322845

14
General Discussion / Re: Announcement on BSIP42 relevant actions
« on: October 02, 2018, 08:45:14 am »
First of all,
thank you, Jerry, for taking the time to put down in written.

This clears up a few things for me, in particular, the uncertainty
about why you see things the way you see them.

Secondly, I think we can fix this, let me address your points below.

Sad to see these, however, I think I can understand why these actions comes out, I was also an opponent to BSIP42 at the very beginning of discussion, but step by step I was persuaded by others, especially by abit, so here I’ll also try to  summary some key points of the solution and hope that can help to persuade.
Provided that the Eastern community is in discussion about this
for much much longer than the Western community, please give me
the benefit of the doubt. In a sense, I am now in the very same
situation that you have been in, namely as an opponent, while you
are trying to convince the community (and me) about why the approach
make sense. The concept behind BSIP42 is just so different that
most of the Western community need some time to understand and
I feel it is the obligation of the BTS voters and proxies to work
out a way forward together, as a community.

That said, I would like to request that we keep communications up
and try to find common ground where we agree and work forward from there.

First, let’s define the vision of smartcoin,  in my view, it is 1. enough accurate pegging and 2. enough liquidity. based on these smartcoin will seek wildly adoption comparing to USDT.
I think this is already where people may have a different vision.
For me (and others) the core value proposition of bitassets was:
* always fully collateralized
* settlement available to obtain collateral at a "fair" price.

With respect to settlement, the community has already moved from a
settlement at parity 1:1 with the introduction of the settlement
offset to incentivize shorters to increase liquidity.

My feeling is that those optimization criteria (tight pegging & liquidity
vs. backing and settlement) may not work out together, at least not in
the short term.

to improve pegging and also liquidity, now there are 2 solutions:

1. BSIP42
2. To dynamically adjust MCR

The core ideas of these 2 solutions is negative feedback - while one smartcoin is in positive premium, loose the smartcoin creation condition, while one smartcoin is in negative premium, tighten the smartcoin creation condition.
Here, I think we can all agree. The "premium" needs to be fed back into the
bitasset somehow. My understanding is that the first approach is chosen
solely because the second approach is currently not available due to
backend limitations (that abit is fortunately already working on - afaik).

With that said, I do think applying BSIP42 in the short term is quite o.k.,
but long term, I would like to see MCR adjusted instead so that we can
move back to the price feed describing the "fair" price - or at least something
that is very close to it. Who knows, maybe we find out that we need to do both
in the future.

this naturally lead to one question: in bear market both solutions lead to higher black swan risks, a higher feed price lead to higher called price and also higher global settlement price, while solution2 also may lead to a close to 1 collateral ratio.
Ultimately, I believe both proposals are effectively the same when it comes to
overall collateral ratio. BSIP42 just changes the price for settlement and margin
calls.

Also, I do not understand the fear people have with respect to "black swan" (global
settlement). From the perspective of bitCNY/bitUSD, a black swan (caused by a short dip
in BTS price) does not actually affect bitUSD pricing. However, what does change is the
excess collateral that is taken from the shorters. With that said, instead of
removing global settlement, why not try to find another solution for treating global
settlements so that short positions are not punished for a single position not being
collateralized, sufficiently? With that in mind, please think about what it could mean
to remove the short protection ratio if the collateral ratio goes below 150% (or so).

Of course, if we want to keep bitassets "fully" collateralized, then we cannot allow
OVERALL collateral ratio to go below 100%. We may find a way to still allow this for
individual call positions, as long as the OVERALL collateralization is provided. Also,
there needs to be a penalty for those not keeping collateral at over 100%, otherwise,
those that provide excess collateral need to pay the bill, which is unfair.

Let’s do a idea test: if we disable black swan setting, what will happen:
My conclusion is: the actual CR has very low chance to fall below 1, even it fall below 1, it is easy for it to jump above 1.

Easy to understand: if one can borrow with actual CR < 1, he have a infinite leverage and can borrow smart coin and buy BTS endlessly, this is not sustainable as the rapidly increased smartcoin quantity will rapidly lower the smart coin premium, with the negative feedback mechanism  the actual CR will rapidly return above 1, either by lowering price feed in soluton1 or increasing MCR in solution2.
If you have a call position with CR <1, and the MCR (solution 2) is raised, then
that call position will be margin called and needs to buy from the market. Are
you sure that will help liquidity, because I believe that will eat liquidity in
the markets.


In practice, we can expect that when actual CR fall close to 1, the “borrow and buy” activity will happen in big quantity that can resist the actual CR to fall continually, there is a very very little chance for black swan to happen even we keep the black swan setting with solution1 or solution2.
I agree with you that when there is a premium and it is "cheap" to borrow new bitassets,
that this will lead to a reduced premium.

“harsh collateral rule lead to high risk” is one essential experience we lernt in the past several years, increasing force settlement offset, target CR both follow an essential logic: try to be more friendly to debt position owners, request least to borrowers. In BSIP42 the new idea is to let the market decide what an actual collateral ratio is appropriate, this not only improve peg, but also help to convert the demand of smart coin to purchasing power to BTS. The latter make big sense for ecosystem grow up.
We both agree on bitassets having a supply side problem and that
we should allow shorters to easier borrow bitassets. According to
my optimization criteria, I still believe we must not allow bitassets
to become undercollateralized (overall - we may find a way to allow
individual positions to go CR < 1)

After BSIP applied to bitUSD the premium fell drastically, we hope we can keep this trend continue until to a close to 0 premium.
Well, arguable, that is expected behavior because we are "forcing" the marketing
to trade according to parity, we do not provide incentive for the market to
move to parity on its own. This difference is what does sit well with the Western
community.

bitUSD belong to the people all around the world, in China there are also many big bitUSD players. it will benefit the whole ecosystem to keep better peg and better liquidity, I hope the whole community can take action to protect the good pegging status of bitUSD, if we remove BSIP42 at this moment, bitUSD will return to high premium and disappoint potential users again, don’t make the previous efforts wasted.

If anyone would like to try some other solutions like solution2, please leave BSIP42 there and develop the new BSIP, go through the voting->testing->implementation process, if there’s strong enough consensus, it can cover BSIP42.
I agree with this approach - in particular I do want to see how well solution 2
may (or may not) work.

it’s not easy for the whole community to make bitUSD to go on a right way, I now have no choice but try my best to protect BSIP42 from being removed from bitUSD, spring-team now only support the witnesses that apply BSIP42 to bitUSD, if later this week xeroc unvote the witnesses that support BSIP42 on bitUSD, proxy bitcrab will unvote the witnesses that do not support BSIP42 on bitUSD.

I also hope voters that prefer bitUSD to have a better peg/liquidity to take similar actions. save bitUSD, please!
I agree that life as a proxy is not as easy as people may believe.

@Jerry, how about the both of us come to a compromise in that we allow the witnesses
to decide how to go forward and whether or not they want to run BSIP42 on bitUSD, or
not. I think, as a proxy, we shouldn't threaten them with the removal of our votes
just because they support(or not support) a BSIP that actually gives the freedom of
choice to them (the witnesses). With that said, I will retract my statement of removing
votes from BSIP2-bitUSD witnesses and would like to keep rational and
constructive discussion like this one going.

15
Stakeholder Proposals / Re: Proxy: xeroc
« on: October 02, 2018, 08:01:44 am »
At this point, I decided to withdraw my support from witnesses to that feed BSIP42 to bitUSD. This will happen later this week so there is sufficient time for witnesses to
evaluate their individual situation.


My thinking is quite easy, I (as a proxy) gave an approval to BSIP42 in the premise that it would be limited to bitCNY for now (in fact I wanted it to named explicitly in the BSIP - which unfortunately didn't happen).
The reason is that I can only acknowledge the fact that the Chinese community apparently wants to experiment with bitCNY which is "their native token" - they know their own markets much better than I do
and I have mostly seen support for BSIP42 from the chinese community so far.

bitUSD is a different beast though. There are many opponents (me included) about running BSIP42 on bitUSD. Not only because there is no real on-off-ramp for bitUSD into fiat USD but also because
it is a less liquid market. I am not convinced it would work well there.

Also, BSIP42, to me is a short term "patch" at best. It forces a price onto the markets instead of providing incentives to the market. Knowing how nuBits failed with such an approach
I would argue that we should do better.

That said, i still support the BSIP42 worker because it want the Chinese community to continue their experiment on bitCNY and chose to instead withdraw my vote
from witnesses that push BSIP42 onto bitUSD.

To avoid playing double standards, will you stop voting for witnesses who refuse to appropriately apply BSIP42 on bitCNY? (note: do it "appropriately" may be a bit hard for some people)
I don't mind witnesses running BSIP42 on bitCNY, its up to them. But for bitUSD, more convincing and more factual information is needed.

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