Proposal Idea for Bitshares - Use SmartCoins instead of User Assets for Altcoins

[renkcub]

Can someone advise how to petition the Bitshares Network to create Smartcoins for BitETH, BitZEC, and BitLTC OFFICIALLY? Would this be something that would require an approved proposal?

If so, is there anyone here who has done so before, and would know how to create such a submission (with my help)? Preferably someone with a lot of clout (votes)?

In that proposal - could you detail BitBTC as an example, and include the feeds the witnesses are using for that (is any of that information public - like which exchange(s) they are drawing from for the BitBTC price? Might be easy to simply apply those same feeds for these alts.

I believe this is the first crucial step in this mission of wider Alt/SmartCoin awareness.

(meanwhile - please add liquidity to BitBTC people. Issue some of your own!)

[severo]

Have you made a detailed proposal? Or is this still in the idea stage?

No. It's just an idea, I do not understand how something so obvious is not working from the beginning. I would like someone with better knowledge of bitshares to fully develop it.

There is at least one possibility to exchange BitBTC and BTC in the DEX, without any need of Gateway or third parties.

For example: Alice, Bob and the witness create a 2-of-3 multisign BTS address. Two signatures are required, the witness and Alice or Bob to withdraw the deposit.

A has 0.1 BTC and B has 0.1 BitBTC and both want to exchange them. For this, A and B deposit an escrow of 0.12 BitBTC each in the BTS multisign address. A and B report their bitcoin addresses to the DEX and both close the operation. The DEX checks periodically if the bitcoin has been transferred between the specified addresses and if so and there is a confirmation, he signs and returns the escrow to A. It also checks if BitBTC has been transferred. In that case he signs and returns the escrow to B and the operation ends completely.

It is necessary to have BitBTC to buy BitBTC, but as it is possible to iterate the procedure, a very small amount is enough. The Dex could handle this iteration, performing the interchange in stages.

[renkcub]

I differ with you in that I believe the only reason BitBTC has not been very successful (volume) thus far has been due to lack of first mover advantage against Open.BTC, marketing, and thus, any incentive to make a market or add liquidity to that market.

Agree. So why do not we make the DEX directly exchange BTC for BitBTC? can be done with Atomic Swaps or very easily with my proposal.

Have you made a detailed proposal? Or is this still in the idea stage?

By the way, BitBTC/BTS is #4 dex market today, on minimal volume. Let's support this pair, people. Run your bots on it so we can get more momentum!

[mostar]

federated network of many gateways connected to each other, all issuing the same multi-signature proxy-assets. A super majority of agreeing gateways is needed to publish a transaction on the blockchain. In this trust-reduced setup, you don't have to trust a single entity to hold your funds. Each gateway node is independently verifying the transactions of the other nodes to make sure gateways stay honest.

So is BridgeCoin miner also king of bithsares  gateway?

[TheSchrammHIT]

What about CryptoBridge who claims to be a Fully-Decentralized Gateway...

Here's what they say... Very Interesting...

1--- Q: How are gateways decentralized in CryptoBridge?
A: CryptoBridge is using a federated network of many gateways connected to each other, all issuing the same multi-signature proxy-assets. A super majority of agreeing gateways is needed to publish a transaction on the blockchain. In this trust-reduced setup, you don't have to trust a single entity to hold your funds. Each gateway node is independently verifying the transactions of the other nodes to make sure gateways stay honest.

2 ---CryptoBridge provides more decentralisation when it comes to the gateways, normally a BTS Gateway is a central point of failure because the Gateway is just operated by the company owning the exchange. The user is dependant on the gateway to deposit/withdraw his funds. In CryptoBridge, a federated distributed network of gateways, operating world-wide, makes sure that there is no single point of failure whatsoever. In fact, this network will continue to operate if CryptoBridge (the development company) goes out of business.

---

So... Should we only use the Bridge Gateway then ?

[severo]

I differ with you in that I believe the only reason BitBTC has not been very successful (volume) thus far has been due to lack of first mover advantage against Open.BTC, marketing, and thus, any incentive to make a market or add liquidity to that market.

Agree. So why do not we make the DEX directly exchange BTC for BitBTC? can be done with Atomic Swaps or very easily with my proposal.

[yvv]

Very interesting. I wonder if there are any examples of successful SmartCoins that are "user created" but eventually transitioned to being "official"?

RUBLE

We need more efforts like this.

[renkcub]

Interesting point by you on creating SmartCoins. Are they identical to "real" Committee-issued Smartcoins, in this case?

Not necessarily, but they can be made identical, i. e. with identical flags + permissions etc.. You can also create them and assign ownership to the committee.

Very interesting. I wonder if there are any examples of successful SmartCoins that are "user created" but eventually transitioned to being "official"? In any case, I'd rather see any SmartCoins be launched officially as they probably have a better chance of success that way..

[pc]

Interesting point by you on creating SmartCoins. Are they identical to "real" Committee-issued Smartcoins, in this case?

Not necessarily, but they can be made identical, i. e. with identical flags + permissions etc.. You can also create them and assign ownership to the committee.

[renkcub]

But that's a completely different business model, with a whole bunch of additional risks (on the side of the gateway owner). I perfectly understand that they do not offer such a service.

This business model may be actually not that risky as it seems. Gateway don't need to keep 100% BTC reserve in this case, just enough to satisfy daily withdrawal volume. When users deposit BTC, gateway would buy bitBTC on DEX, if the offer exists, or issue in other case. Risk of margin call would not be a problem for them, because they would keep BTC and bitBTC reserves, and if BTS price falls, they would sell a fraction of their reserves and add to collateral. When users withdraw their bitBTC, gateway would settle its debt. They don't offer such a service because they think that everybody should be happy with their IOU, and they don't need to bother to improve their service, but evidently many people are not happy with the current business model.

This man gets it. 

[renkcub]

bitBTC is not a successful example.
BTC is not as stable as CNY/USD, so borrowing or holding bitBTC means much more risk  than doing the same to bitCNY/bitUSD, and BTC itself is a blockchain token, no enough necessity to create other token to peg it.
OpenLedger is good, but what they do is far from enough, as a gateway, they should do much more market making work to their UIA but they do not, that's why I am preparing another gateway, the name is GDEX.
one key point for BTS to grow is the demand for smart coins grow, which means there should be many assets in DEX for traders to trade. in other words, we need to make DEX an exchange with liquidity and depth similar to central exchange.
surely if we can realize side chain or some other cross-chain way to move tokens from otherchains to BTS, we may not need most of the UIA, but now in my view we still need to rely on UIA to make DEX to grow.
the other key point for BTS is to be listed in more central exchanges, we need more volume for BTS, we need BTS price to grow, only then it's possible for smartcoin supply to grow and attract more people to accept it.
for example, as China banned cryptocurrency exchange, now it's not  easy for people to buy tokens with CNY, some exchanges outside China are considering to open bitCNY markets, their main concern is that bitCNY supply is too low.
that's also what I am trying to do: make BTS be listed in more exchanges and create a gateway to make DEX have much more trading volume.

Thanks for your great post.

First, I completely disagree with your bolded comment. I keep hearing that crypto is "too volatile" for SmartCoins, but what everyone seems to be missing is that this is completely the opposite, since BTS itself moves with these "volatile assets" - the end result being that USD is actually more volatile against BTS, our collateral, making you more likely to suffer margin calls being a BitUSD issuer than BitBTC (same goes for BitETH, etc...)

Proof that BTS is more volatile against USD/Fiat than BTC/Alts based on 6 month low and high, for a crypto vs fiat pair:

BTS/BTC

3/12/2017 - .00000289 low
6/12/2017 - .00016511 high

57.13x move

BTS/USD

3/12/2017 - .00337205
6/12/2017 - .48908884

145.04x move --- you would have been a lot better off issuing BitBTC than BitUSD!

Next, I agree with pretty much everything else you said, and especially agree with the italicized section - that is one of the topreasons why I am encouraging moving from UIA --> SmartCoins (besides security, user experience, and BTS reputation). If the liquidity is better on SmartCoins - and someone wants to trade and get assets cheaper (by issuing more) - they will be FORCED to buy MORE BTS and support the network by further drive up the price to both issue and collateralize SmartCoins. Essentially, more FOCUS on SmartCoin use = Higher BTS Market Cap = More SmartCoins can be made = More BTS Market Cap --- it's a self-fulfilling hypothesis that has already helped BTS this year with the success of BitCNY. Essentially this model forces you to have a sizable BTS position (although you can simply buy your SmartCoins at market if you don't want to collateralize).

I differ with you in that I believe the only reason BitBTC has not been very successful (volume) thus far has been due to lack of first mover advantage against Open.BTC, marketing, and thus, any incentive to make a market or add liquidity to that market.

[renkcub]

I think you are contradicting yourself here. HOW would you exchange BTC for bitBTC or trade BTC for bitUSD without a centralized gateway? I thought that's exactly what you're proposing to get rid of.

True, my suggestion doesn't eliminate all centralization.

But it does eliminate 99% of it.

Isn't it still better to only have to "trust" a gateway long enough for an instant deposit/withdraw (or, just trade/settle to BTS and skip the Gateway) instead of leaving "alts" on a centralized Gateway indefinitely? Plus, there are more decentralized solutions for converting things coming out - atomic swap, sidechain(?), or something like the 0x OTC ERC20 tool.

Gateway still makes money, as they can charge for this conversion.

For me, it would be well worth paying OL a small fee to convert my BitBTC to real BTC rather than holding and withdrawing Open.BTC as real BTC "for free". That's the point here.

Along these lines, see Ronny's project "https://www.cryptofresh.com/a/OCASH", which somewhat matches my vision of a way to "cash out" SmartCoins.

Also, you didn't give any reasons why SmartCoins are not effective for Altcoins.

Oh, they would be as effective as they are for BTC/USD/CNY. I just don't see a use for altcoins at all.
Providing feeds for additional coin means additional work for the witnesses, so we should only add SmartCoins if there's a benefit to be expected. I don't expect significant volume from altcoins, and therefore no benefit either.

Not sure if you're aware of it, but *anyone* can create SmartCoins. No need to lobby for this - if you want them, just go ahead and create them.

I don't understand your argument here at all.

OL/Ronny has proved there is a significant market for alts on the Dex. Worldwide, besides Dex, over 50%+ of ALL crypto trading volume was Alts. If you don't think there is a market for alts on the dex, but people are going to line up for BitSilver and BitGold, then I frankly find that nonsensical But, you did give yourself away as a maximalist 

Interesting point by you on creating SmartCoins. Are they identical to "real" Committee-issued Smartcoins, in this case? In any case, my specialty is liquidity, making markets, not creating SmartCoins.

Thanks for the discussion.

[fav]

so you want atomic swaps ... yeah, why not. nothing new though, and no need for witnesses

Sí, pero parece ser que la implementación de atomic swaps es muy compleja, mientras tanto mi propuesta funcionaría

I'm not too sure if it's complicated. bitshares keys deviate from bitcoin, may be easier than expected

[severo]

so you want atomic swaps ... yeah, why not. nothing new though, and no need for witnesses

Sí, pero parece ser que la implementación de atomic swaps es muy compleja, mientras tanto mi propuesta funcionaría

[fav]

so you want atomic swaps ... yeah, why not. nothing new though, and no need for witnesses