BitUSD has a lot of promise as a behind-the-scenes system for hedging against bitcoin volatility. I think the focus on using bridges for dark markets is the right way to go, especially if they could get a system so transactions are sent through a bridge and into escrow as bitUSD. The average user still only understands bitcoin, but with bridges that's all they ever have to understand or deal with while others can get the benefit of bitUSD.

Cryptohedge held 27 BTC at the time of the hack. Any guesses to how big the haircut will be?

I really hope they didn't steal BTS or bitassets. Even if they didn't this is still a huge blow. Bter likely won't continue operations and if they did there'd be no liquidity. So now we have to find new markets for our bitassets - a real shame since bitgold had just got listed and bitUSD had just started picking up in volume.

Quote from: monsterer on February 14, 2015, 01:25:20 pm

Quote from: graffenwalder on February 14, 2015, 01:19:49 pm

Sounds like a plan, i kinda like these simple marketing solutions.
Before a delegate would be selected we could give it a test run, to see the results.
I'd be willing to put a bit of BTC in the faucet, for this experiment.

Don't we already have a few marketing delegates elected?

Even better.

Question though:
The point of this would be to attract new users to BTS.
Is there a way to calculate the value of a new user, and thus a way to calculate if this is profitable for BTS?

This isn't really possible because each user brings wildly different value. Getting one guy to deposit 1 million is as good as getting a million guys to deposit one.

Hey guys.

Riverhead is working hard at finishing up the hedgebot system that will allow us to offer the super tight spreads for bitUSD and bitGOLD on bter that traders crave. We're also going to have talks with elmato of Bitwallet and Monsterer and Shentist of Metaexchange about how to create a large amount of liquidity for the bitwallet once it releases (we want to have really high limits so you can send or receive up to 25 BTC as bitUSD or bitGOLD at a 0.5-1% fee)

Up until now we have been hedging all our bitcoin exposure using bitfinex leveraged trades. However if we want to really be able to offer the lowest spreads we will need to borrow our BTC directly from the community. We will do this in the form of a new CFS asset, CFSBTC. The idea is that CFSBTC will eventually function as an interest paying gateway asset, however at first it will just reside on the bitshares blockchain as a normal CFS asset like CFSGOLD, and will have a limited sale directly to early funders, manually by private message.

Here's the benefits of holding CFSBTC:

Steady returns from the market making of our HedgeBots: Since we fully hedge all exposure to other assets every time someone buys or sells into our market making walls on bter we are a guaranteed a small return on the difference in the spreads from where we sell (bter) and where we hedge (huobi). This results in a slow but steady income stream that is almost risk free (except in the event of an exchange default). 70% of the gross income from this goes directly to CFSBTC and results in an increased NAV. At issuance, each CFSBTC will be sold for 1 BTC each, but over time they will be bought back at higher and higher amounts as the BTC increase from our market making operations. At first while we are still at low volume this will income and NAV increase will be close to zero, but over time as we get more volume and more markets the return will increase.

continuos buy back/withdraw at any time: For every CFS asset there will always be systems in place to do instant withdrawal of all the funds they have deposited with us at the NAV. If there is large demand within a short period of time there can sometimes be up to 24 hours of waiting as we transfer money from the bots in order to pay back funders.

Early funder perk 150000 CFSCOIN sharedrop to CFSBTC holders: The biggest reason to buy into CFSBTC at this point (in addition to helping bitshares with bitasset liquidity) is the CFSCOIN sharedrop that all early funders get. This sharedrop is compensation for the fact that CFS assets are temporarily more risky than they will be in their final state (when they are insured by the value of CFSCOIN against exchange default risk). We will be releasing a lot more news regarding CFSCOIN and why it will soon become a really desirable investment as it takes on a life on its own as a DAC-coin that lives on the bitshares blockchain and gains 30% of all income earned by all CFS assets.

If you would like to become a funder of CFSBTC in our limited release sale then please send me a PM and you will get a bitcoin address where you can send you investment to, and will receive your CFSBTC at a price of 1:1. There is a minimum limit of 1 BTC to buy in. You will be able to withdraw your BTC again by exchanging your CFSBTC at any time at at least a price of 1:1, and possibly higher if NAV has increased (at first this this will also have to be done manually). At first there will be no fee on deposit and withdrawal, however once CFSBTC becomes a gateway asset that gets issued by a gateway there will be a deposit fee of 0.1%, and the income of this deposit fee will also go towards the NAV of the asset.

Also a short update on CFSGOLD. We're using all the bitgold we collected so far to either make sell and (hedged) buy walls on bter https://bter.com/trade/BITGLD_BTC or do continous buybacks at the CFSGOLD:bitGOLD market on the bitshares exchange (you can go there and withdraw your bitGOLD at any time). Volume has been quite low so far, but we have still made some income since we're still trading at a large spread, and might be able to do our first NAV increase soon. We're considering declaring a NAV increase and moving the buy and sell orders every time NAV increases by 0.1% rather than at specified points in time.

on CFSCOIN sharedrop. There will be a lot more news about CFSCOIN soon, along with a bitcointalk announcement thread and the new cryptohedge.io website. We are still considering when the best time to do the CFSCOIN sharedrop will be. The most important thing is that once the sharedrop is done we need to be sure that the CFS assets are "insured", (i.e. they can ensure all CFS assets stay at their current NAV if one of the centralized exchanges we operate on defaults). This means we will likely do the sharedrop some time after we've seen bitasset volume pick up, and have launched our buy&burn bot, which is the mechanism we will use to increase the price of CFSCOIN from 30% of the income of the HedgeBots so that CFSCOIN has a healthy, liquid market.

Have any questions about Cryptohedge, CFSBTC, CFSGOLD, CFSCOIN? please let me know and I'll answer.

If no one else is going to do then I will make one. It's ridiculous not having one.

I will be making one for CFSCOIN when we launch the buy&burn bot anyway, so i can help keep them both up, but I think it would be the perfect job for Stan to keep it running with latest info and insights, since he's already doing the puppies and communist posts.

Ultimately anyone who wants to do bitasset/bts trading in any serious capacity will be running bots to do these tricks (self-shorting everything in the bitasset that currently has the highest yield with 0% interest rates and rolling over their own shorts whenever there are 0% interest rates and more than 24 hours have elapsed). The more people do these self-shorting tricks, the less traders will be shorting with interest. It seems to me like this should always equilibrate towards 0% interest rates and 0% yield.

I think ultimately the problem is that single actors decide the interest rate they pay for their shorts, and pay the cost individually, but the reward is divided among everyone who hold bitassets. This discrepancy makes the economic incentives misaligned, and what happens instead is that traders who wish to go long will self-short and then sell their bitassets with regular sell orders, so they can outbid each other on price instead of on interest rate (because this way they can offer the reward in form of a better price directly to the counterparty to the trade, rather than having to spread the reward as yield among everyone, giving them a better deal).

Edit: I do realize that if short sellers start to outbid each other on price instead of interest rate, then there will be sell orders below the feed and self-shorting becomes impossible. This shouldn't incentivize them to offer shorts with interest, though, instead it should incentivize them to wait until the sell orders are cleared and then do the self-shorting of all their holdings at that time.

Maybe we should look at this another way: yield harvesting should be encouraged by everyone. If everyone tries to spot an opportunity to harvest when there are no short orders, then pretty soon there will always be short orders.

Its kind of like arbitrage, if everyone tries to do it then we have a more perfect market.

Yield harvesting doesn't create more short orders. At any moment there are no active short orders it's possible for everyone who holds BTS to short 100% of their BTS holdings to themselves in an instant. If everyone were rational actors almost all BTS would be held this way since there are always moments where shorting to yourself becomes possible, and as long as there is any yield it's profitable to do. This is also the best way to go long BTS, since you can just sell the bitasset you shorted to yourself at times where there are other shorts competing on interest, so you order will get matched first and you won't have to pay interest. Ultimately once people learn how to do this there shouldn't be any reason to short bitassets at an interest.

The best I can come up with for getting yield to work is that delegates decide an interest rate that is then enforced by the blockchain somehow. It would be badly centralized but it could have limits that ensured it wouldnt change too fast if there was an attack.

Getting yield to work autonomously in the market is a really difficult task...