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General Discussion / Re: Announcement on BSIP42 relevant actions
« Last post by Thom on October 18, 2018, 12:31:10 am »
Allowing witnesses to individually set minimum collateral level changes it from a global, uniform setting to one more akin to "pick your witness, pick your desired margin collateral level". I think it would create an unhealthy competition between witnesses.
IMHO this is actually healthy. It means "vote for witnesses who are working well" when the consensus is to dynamically adjust MCR according to market conditions. Again, witnesses aren't predicting market price, they're acting according to perceived market conditions/data.

Voters should already be voting "for witnesses who are working well", and they do so on the basis of their own subjective perspective of what that is with very few guidelines and understanding of what is important for an economic system that won't self-destruct like mainstream currencies eventually do. Although we all would like to see more people who are dedicated and attentive to the ongoing well being of BitShares, it's probably unrealistic to expect shareholders to care about issues unrelated to them, like trading if they aren't traders, or savers if they're traders as examples.

Unless all witnesses use the exact same sources how could shareholders know if they're working well? What is "working well"? For who is it working well, just the voter or the entire ecosystem? Some think it's only a matter of keeping tight pegs for MPAs, others think more broadly about the ecosystem and vote to balance out competing interests, which is a very difficult thing to do under our decentralized governance structure.

We'll just disagree on this point. I can live with that.
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General Discussion / Re: New mechanism to handle bad debt (black swan)
« Last post by Thom on October 17, 2018, 10:32:41 pm »
BSIP-18 doesn't guarantee recovery either. If BTS continues to go down, neither solution will help.

@abit 's suggestion is better than BSIP-18 because it limits the damage to only the undercollateralized positions, while leaving the rest of the market intact.

Exactly, that's why I like it.

Quote from: abit
IMHO, in % sense, collateral requirements should be increased while market is bullish; then when market turns to bearish, there will be more spaces to release risks.
Interesting, I understand that logic, but am surprised to see you say it, since doing so would dis-incentivize trading and shorting in particular. Wasn't it you that said 175% collateral was too much in bullish conditions?

I know I've seen bitcrab and others talk favorably about allowing CR to go < 100% and "not to penalize debt holders", but I believe we should use the carrot and the stick to keep them trading by the rules, which help to keep the ecosystem safe and fair for all.
73
General Discussion / Re: Economic Abstraction and Network Fees
« Last post by pc on October 17, 2018, 09:05:23 pm »
You can pay the network fee for any operation using any (unrelated) asset if it has BTS in its fee pool and a "core exchange rate" defined.

For example, Alice can transfer bitBTC to Bob and pay the fee in bitUSD. What happens then is that the blockchain takes the bitUSD from Alice's account, exchanges them for BTS (using the bitUSD fee pool), and pays the network fee in these BTS. That's what xeroc meant with "implicit exchange".
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General Discussion / Re: Economic Abstraction and Network Fees
« Last post by spark on October 17, 2018, 07:42:49 pm »
that unfortunately only works in "liquid" markets - as such, a reason for having the issuer provide the BTS in the fee pool for an implicite exchange

Please help me understand why there are BTS in the fee pool? I thought it was to pay network fees, but it sounds like the BTS can be taken by any coin holder whatsoever by 'implicit exchange' so I am unsure about my understanding.
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General Discussion / Re: New mechanism to handle bad debt (black swan)
« Last post by pc on October 17, 2018, 06:33:07 pm »
BSIP-18 doesn't guarantee recovery either. If BTS continues to go down, neither solution will help.

@abit 's suggestion is better than BSIP-18 because it limits the damage to only the undercollateralized positions, while leaving the rest of the market intact.
76
General Discussion / Re: New mechanism to handle bad debt (black swan)
« Last post by armin on October 17, 2018, 05:33:50 pm »
Actually, thinking about it more, this solution will cause a number of major problems:

1. As the price moves down sharply, there will be more and more "stuck" orders on the order book (accumulation)
2. The next time a bull market is in swing, the stuck orders will prevent the price from going to new highs

This solution is actually "shorting a bull market", meaning it creates a debt in a bear market (accumulated orders) that needs to be repaid when a bull market is in swing.

Thoughts?
77
General Discussion / Re: New mechanism to handle bad debt (black swan)
« Last post by armin on October 17, 2018, 05:30:09 pm »
Wait this doesn't make sense. If a debt position is < 100% CR, lets say 80% CR, then this new account will take the 80% CR BTS and buy the bitasset and burn it? But the problem is that an extra 20% of the bitassets was issued by the blockchain. Effectively, the blockchain is "printing bitassets" out of thin air?

No, the new account will try to buy the 100% debt for the available 80% CR. This is probably to far away from the market price, so the order will stay on the book. As soon as the price recovers, the order will be filled and the full debt will be repaid.

(In reality, with MSSR > 0, the account will try to buy 100% debt for 110% CR. For large positions this will result in the same premium that we have had with the old margin call rule, at least temporarily until the feed price adjusts.)

The problem here is that the price is not guaranteed to recover. With BSIP18 at least the bitasset is "guaranteed" to be de-pegged. And it doesn't seem like you can de-peg a small percentage of the outlying bitasset...
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General Discussion / Re: New mechanism to handle bad debt (black swan)
« Last post by pc on October 17, 2018, 04:57:17 pm »
Wait this doesn't make sense. If a debt position is < 100% CR, lets say 80% CR, then this new account will take the 80% CR BTS and buy the bitasset and burn it? But the problem is that an extra 20% of the bitassets was issued by the blockchain. Effectively, the blockchain is "printing bitassets" out of thin air?

No, the new account will try to buy the 100% debt for the available 80% CR. This is probably to far away from the market price, so the order will stay on the book. As soon as the price recovers, the order will be filled and the full debt will be repaid.

(In reality, with MSSR > 0, the account will try to buy 100% debt for 110% CR. For large positions this will result in the same premium that we have had with the old margin call rule, at least temporarily until the feed price adjusts.)
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General Discussion / Re: New mechanism to handle bad debt (black swan)
« Last post by armin on October 17, 2018, 04:33:34 pm »
Wait this doesn't make sense. If a debt position is < 100% CR, lets say 80% CR, then this new account will take the 80% CR BTS and buy the bitasset and burn it? But the problem is that an extra 20% of the bitassets was issued by the blockchain. Effectively, the blockchain is "printing bitassets" out of thin air?

80
General Discussion / Re: Announcement on BSIP42 relevant actions
« Last post by armin on October 17, 2018, 04:22:59 pm »
No matter if bitUSD holders convert their bitUSD to BTS via margin calls or via forced settlements, the BTS are (forced) paid by debt positions with least collateral ratio, aka by bitUSD borrowers/creators, so what's the difference? IMHO there is no difference.

bitasset value = max(market price, settlement price)
If you take out settlement, this means bitasset value = market price.
The former formula gives a relative minimum price to the feed, but the latter formula looks exactly like UIAs.

So effectively, taking out settlement will make bitassets the same as UIAs in terms of value.

Thoughts?

Essentially you're saying that if you sell some amount of PMA and nobody will buy, its trading price will be pushed lower than its value.

Actually, you ignored how MPA supply is created and who are on the market. Not like UIAs, PMAs are created with debt positions, this means you won't have unlimited amount to sell. In addition, debt positions are always on the market, with BSIP42 or a dynamic MCR-based mechanism, if you place an order to sell some PMA below its value, there will be margin calls appear to fill your order, thus the trading price would be guaranteed. Force-settlements aren't in this process at all.

True, good point! Actually maybe I need to adjust the formula a little bit. Basically what you're saying is that the supply of bitassets is self-regulating with BSIP42 so that it maintains the peg. This means the supply will increase/decrease to fit a tight peg. Change in supply will lead to some change in market price. Interesting

EDIT: OOH that makes sense, so in an empty market there is almost always some form of BTS sell pressure, therefore it will only be "half empty"
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