Quote from: bytemaster on September 04, 2014, 05:00:24 pm

First I will summarize the rules for BitAsset markets assuming the BTSX : USD market where BTSX is priced in terms of USD.  For the purpose of providing concrete examples, we will assume a median price of $0.03 per BTSX.

1) 51 delegates or more must publish a price feed at least once per day
     - if they do not publish the feed, then the market reverts to a 1hr moving average.
     - if a feed is published, the 1hr moving average is set to the feed.
2) No short orders can be published to the network at a price 11% above the 1 hour moving average. (ie: they must be less than 0.0333)
     - the minimal short quantity is 100 BTSX
3) Short orders will only be matched against asks that are below the moving average. (ie: people must be selling BTSX for less than $0.03)
     - the highest short order is matched first, so a short selling USD at $0.03333 will be matched against someone buying USD at $.02999 and the difference (0.003333) * volume is captured as a fee.
4) A margin call will be executed any time the highest bid is greater than 90% of the moving average and the highest bid is less than the call price.
    - the initial call price is 66% of the short price (ie: $0.022 for a short entered at $.033).  This is the price at which 75% of the collateral would be required to buy back the USD necessary to cover the position.
    - If a margin call is executed and there is any collateral left over, then 5% is kept as network fees and 95% is returned to the owner. 
5) There are no restrictions on what prices people can set for normal BitUSD/BTSX trading.  All parties will receive what they ask for.
6) Rounding errors are inevitable when using fixed point math, any such rounding error is deemed to be a network fee.
    - for example you may place an order to buy $1.00 USD but end up with $0.99999 USD. 
7) The network saves all fees earned in USD and in the event that a short position lacks the necessary collateral to cover during rapid market movements, then the network will provide the stored USD.
You cannot use the collateral of your short position to buy the USD necessary to cover the position.  This USD must be purchased separately. 
    - This requirement creates a kind of "virtual collateral" that all shorts must maintain so they can cover for either profit taking or loss prevention.
9) When you partially cover a position it will reduce your exposure, but your collateral is not returned until the position is fully covered. 

I fully agree with the new rules but I find it confusing when we talk about short orders while looking at the market of BTSX being priced in terms of USD. So I've made an attempt to translate the rules into USD/BTSX terms. Maybe some of you will find it useful. The changes are marked in bold. Please correct me if I made any mistakes.


The rules for BitAsset markets assuming the USD/BTSX market where USD is priced in terms of BTSX.  For the purpose of providing concrete examples, we will assume a median price of BTSX 30 per USD.

1.) 51 delegates or more must publish a price feed at least once per day
     - if they do not publish the feed, then the market reverts to a 1hr moving average.
     - if a feed is published, the 1hr moving average is set to the feed.

2.) No short orders can be published to the network at a price below 90% of the 1 hour moving average. (ie: they must be more than BTSX 27.00)
     - the minimal short quantity is 100 BTSX

3.) Short orders will only be matched against bids that are above the moving average. (ie: people must be buying USD for more than BTSX 30.00)
     - the lowest short order is matched first, so a short selling USD at BTSX 27.01 will be matched against someone buying USD at BTSX 30.01 and the difference (BTSX 3.00) * volume is captured as a fee.

4.) A margin call will be executed any time the lowest ask is less than 110% of the moving average and the lowest ask is more than the call price.
    - the initial call price is 150% of the short price (ie: BTSX 45.00 for a short entered at BTSX 30.00).  This is the price at which 75% of the collateral would be required to buy back the USD necessary to cover the position.
    - If a margin call is executed and there is any collateral left over, then 5% is kept as network fees and 95% is returned to the owner. 

5.) There are no restrictions on what prices people can set for normal BitUSD/BTSX trading.  All parties will receive what they ask for.

6.) Rounding errors are inevitable when using fixed point math, any such rounding error is deemed to be a network fee.
    - for example you may place an order to buy $1.00 USD but end up with $0.99999 USD. 

7.) The network saves all fees earned in BTSX and in the event that a short position lacks the necessary collateral to cover during rapid market movements, then the network will provide the stored BTSX.

8.) You cannot use the collateral of your short position to buy the USD necessary to cover the position.  This USD must be purchased separately. 
    - This requirement creates a kind of "virtual collateral" that all shorts must maintain so they can cover for either profit taking or loss prevention.

9.) When you partially cover a position it will reduce your exposure, but your collateral is not returned until the position is fully covered.