I think the order matching rules are pretty good right now.  It seems to be standard (same as other exchanges).

Yes I think this is true.

The margin trading using the current orderbook to determine whether or not to execute sounds like the right way to go.  My question is how does it bootstrap?

If I lend funds to someone when there is no order book, then it is impossible to "call".

When you start out with an empty orderbook, no margin trading is allowed.  In order to place a margin order in the first place, the system checks to see that the orderbook could handle the new state (where you have a margin position), and checks that you have at least 40% collateral in that new state.  (Thats the amount for polo, 40% to start a position or add to it).  Then, if things go against you, you are allowed to go down to 20% margin before a margin call happens.  While in the 20-40% range, the interface gives you a warning that you are near a margin call and it does not allow you to add to your position, only to reduce it.


I am not sure exactly how the polo system works, but there might be an additional requirement:

If an order on the books would be cancelled, and this cancellation would leave the orderbook with not enough supply remaining, then instead of allowing the order to be cancelled, it instead executes the margin call FIRST, to ensure that the person can pay back what they owe, and then it cancels the rest of the order if needed. 

This is needed because otherwise I could set up the following scenario:


I have an order in to buy a large amount of asset at price 100.  My order is most of the orderbook.
People then took margin positions which were within collateral requirements, based on my order being in the order book.  That is, as long as they can sell into my order, they have sufficient collateral and will be able to pay back the loan.

But then I remove my big order!  There is very little remaining orders on the books, and everyone gets margin called and the system tries to sell into what is left, but they cannot get enough funds from it to pay back the people they owe.  This would be a failure of the system to protect lenders, it would leave the person who got margin called owing a bunch more BTS that they cannot pay, to other people.


Instead, at the point where I try to remove my big order, the system checks that this removal will cause a margin cascade, and instead of pulling the order, it executes the margin cascade into the order.  Then, if some of the order is left unfilled, it is allowed to be pulled.



If you use polo you will know that at times when trading gets crazy and a margin call happens, the system freezes up for a couple seconds.  This occurs because the system is forces to do a bunch of calculations and then execute automatic margin call trades, and then recompute again, and do more margin call trades, etc.    Only once this process is completed are people allowed to trade normally again.


This might be an issue with the blockchain times, witnesses computers needing to process all these calculations in time, etc.  I would imagine that this is a hard technical problem to do on a blockchain.  (It was probably hard enough already for polo to implement flawlessly...and it must be flawless).  So maybe because of this difficulty we are forced to use a simpler system?

This post gives me hope about bitshares again!

We will be migrating BitShares GUI to copy as closely as possible the best interface out there.   We will also be copying the best fee system and best market rules.

Copy Poloniex GUI imo.  It is great for trading lots of alts against a main coin.  (Note: We are trading lots of assets against core BTS in Bitshares, so its similar).

For fee rules, the best would probably be  0.2% fee (this is how crypto exchanges work).  But If we cannot do percentage fees, then a flat fee per trade also works, the way that stock brokerages work, for example scottrade $7 trades.  So if it is too technically difficult to do a .2% fee on the blockchain for some reason, a flat fee can work.


It is really, really important that customers dont pay fees for orders that do not execute (aside from a very very small fee purely to prevent spam, that needs to be as low as possible, like .1 BTS).  This needs to be the case for both lifetime members and normal users.  Not everyone is going to be a lifetime member, and we need the liquidity those people provide from creating orders.

Everyone seems to like poloniex margin trading, so we will adapt their rules unless Bitfinex is better.    Any help on identifying the best choices let us know.

Polo is good, and it appears that it is working really well and has not had a single instance of someone who gets margin called not being able to pay back all of what they owe to lenders.  (Of course, it has had many instances of margin calls taking most of peoples BTC or alts, but that is what "should" happen). 

This algorithm is quite complicated however.  Essentially, every time someone places or removes an order or makes a buy or sell, it then checks whether the resulting state will cause somoene to get margin called, not based on the nominal price that the item just traded at, but at the remaining orderbook!  This is very important because just because some alt is trading at '100' does not mean that someone who got margin called would be able to sell it all at 100 to fulfill their margin.  They need to account for the fact that the margin call is going to dump it down a huge amount through the orders on the book and crash the price.   This leads to the behavior we have seen on polo, which is that at some point a whale will pull a large buy order from below the price, and the lack of that order existing on the books anymore will cause someone to no longer fulfill their margin requirements, so they dump into the now thin order book, and then this causes others to get margin called, etc. 

While this might seem bad, it is the way it has to be in order to work correctly.  After all, we cannot have instances where the blockchain generates tons of extra BTS or an asset type, to cover someone who is gets margin called and cannot pay people back.  If this loophole exists it could be exploitable in some small illiquid asset and be used to generate large amounts of the asset or BTS, and would ruin everything.

Some of the bitcoin exchanges like huobi and okcoin use a system of socialized losses where if a person is margin called and cannot pay, everyone trading futures covers the loss.  This is total BS and we should not do it, every time it happens tons of people flee those exchanges.

Note also:  The margin lending CAN BE THE BOND MARKET.  Go look at the poloniex lending page and see how it works.  IT IS A BOND MARKET right there.  So implementing this feature and the bond market are really one item. 

It is very important that the margin call system works correctly so that lenders ALWAYS get their BTS (or whatever) back in full.  Otherwise the bond market becomes a big risk and no one will trust it.

We are going to stop trying to invent new market mechanics if at all possible and use what is proven to work.   So please help us identify places where our system deviates from the market-accepted solutions.

1.  Fee Systems
2.  Trading Interfaces
3.  Order Matching Rules

In other words, we want people to be able to use BitShares without having to learn anything new!

Fee system:  The place we deviate is fees for cancelled orders.  These need to be made really really really low, only existing to prevent spam from filling up our TPS.

Trading Interface: Copy poloniex imo.

Order matching rules: You should be able to put in an order for more than the current price, and it will match it to the orders on the books at those prices, and not take the difference as a fee.  (No 'get what you asked for' or whatever).  This is not a good way for the blockchain to try and make money, the blockchain makes money by having happy customers making lots of transactions and paying a fee for each.

Well I made 1.7 btc in the past two days trading stuff, mostly maid at huge spreads.  But it doesnt make up for bts dropping.

Lol, upper 800s minutes after i get some at 720.

Lets do the opposite of what Ander says then, we gonna be rich kkkkk

I am literally doing the opposite of what I say right now and making money from it.

Quote from: Ander on November 04, 2015, 10:45:34 pm

lol, btc's turn to be rekt.

Sounds more like butthurt talking than reason. 

My BTC has doubled up, why not yours?

I'm loving this volatility and would not be surprised if onlookers are too.

I smell more new blood coming into the BTC waters after the 5th.

Some BTC I bought on coinbase that they havent even finished sending me yet was up over 50% from where I bought it at one point.  

BTS 30 min chart looking good and close to generating buy signal.

HINT HINT to whale who wants to kill it, this is your chance to dump again!