Author Topic: ripple-style IOU gateway functionality!  (Read 6587 times)

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Offline bytemaster

The gateway could offer the service of converting to btsx at 75% the feed price.   

Trx fees for IOU are paid in bts. 
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Offline speedy

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Regarding the fees, that is an interesting question. My intuition tells me that it isn't possible because that would make a DDOS attack by a gateway issuing infinite IOUS to pay for spam transactions possible. But if you can't pay for transactions with IOUs then it becomes inconvenient to use them as an on ramp... Maybe there is some inbuilt anti-spam system that detects if IOUs are issued for DDOS purposes. Also it should be up to the IOU issuer whether the IOU fees go to yield or are simply burned. If they are burned it can be a source of revenue for the issuer since they don't have to cover the burned IOUs and can take the collateral for themselves.

The gateway itself holds BTS, and they require that to pay for transaction fees whenever they issue/cancel an IOU.

But yes the transaction fee payed by the holder could simply be burned and kept as revenue by the gateway. As long as this is transparent.

Offline Rune

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Ok apart from fiat goxing, issuing IOUs on the blockchain makes development of onramps a lot easier, because the onramp doesn't have to store any BTS. All the onramp does is issue and cancel IOUs on the blockchain, which users trade from their own personal wallet. Compare this with a currency like Bitcoin that doesnt support blockchain IOUs, which requires that an exchange store both the fiat and the crypto.

At least that much is true correct?

If I issue IOUs, can the holder make an order to swap for BTS/whatever by paying fees from the IOU? The user wouldnt have any BTS at that point to pay the fee with. And does that mean that holding the IOU would accumulate yield from other user's transaction fees ?

Regarding the fees, that is an interesting question. My intuition tells me that it isn't possible because that would make a DDOS attack by a gateway issuing infinite IOUS to pay for spam transactions possible. But if you can't pay for transactions with IOUs then it becomes inconvenient to use them as an on ramp... Maybe there is some inbuilt anti-spam system that detects if IOUs are issued for DDOS purposes. Also it should be up to the IOU issuer whether the IOU fees go to yield or are simply burned. If they are burned it can be a source of revenue for the issuer since they don't have to cover the burned IOUs and can take the collateral for themselves.

Offline speedy

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Ok apart from fiat goxing, issuing IOUs on the blockchain makes development of onramps a lot easier, because the onramp doesn't have to store any BTS. All the onramp does is issue and cancel IOUs on the blockchain, which users trade from their own personal wallet. Compare this with a currency like Bitcoin that doesnt support blockchain IOUs, which requires that an exchange store both the fiat and the crypto.

At least that much is true correct?

If I issue IOUs, can the holder make an order to swap for BTS/BitUSD/whatever by paying fees from the IOU? The user wouldnt have any BTS at that point to pay the fee with. And does that mean that holding the IOU would accumulate yield from other user's transaction fees ?
« Last Edit: November 27, 2014, 01:28:55 pm by speedy »

Offline ag

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cool. also I'm waiting for bitUSD to come to the ripple ledger. but maybe a bitAsset that tracks oil price would have more demand on the ripple ledger. since.. they don't have oil IOU's yet.

Offline Helikopterben

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There is another important advantage of IOU gateways being built into the blockchain: You can build a gateway without having the risk of storing any of your user's crypto funds. Whenever the gateway's fiat bank account receives a deposit, it issues an IOU to the user's BitShares wallet. The user is then responsible for keeping his own IOU, and he can trade it on the blockchain however he wants.

This can make MtGox collapses a thing of the past.

Am I right in this assessment?

No.  IOU are always subject to Goxing unless there is on chain collateral.   Which I guess any gateway could do... the problem is this would limit the gateways ability to take deposits because they would have to buy some BTS for every IOU they issued.

Thanks, but I dont quite understand. I thought the collateral behind a gateway's IOUs is the fiat that the gateway receives. Why would a BitShares gateway need to hold collateral on the blockchain? I dont think there has ever been a single crypto exchange that went bust because their bank account got hacked - just their crypto funds.

Think Cyprus.  A user deposits 100,000 euros with the gateway and receives on-chain IOUs for those euros.  Overnight the government steals all euros in the gateway.  The on-chain IOUs are now worthless.  Fiat is subject to Goxing just as crypto is.  The best solution is on-chain collateral.  The user has to have full control over the IOUs AND collateral to prevent goxing.

Offline bytemaster

There is another important advantage of IOU gateways being built into the blockchain: You can build a gateway without having the risk of storing any of your user's crypto funds. Whenever the gateway's fiat bank account receives a deposit, it issues an IOU to the user's BitShares wallet. The user is then responsible for keeping his own IOU, and he can trade it on the blockchain however he wants.

This can make MtGox collapses a thing of the past.

Am I right in this assessment?

The gateway could run away with collateral.

No.  IOU are always subject to Goxing unless there is on chain collateral.   Which I guess any gateway could do... the problem is this would limit the gateways ability to take deposits because they would have to buy some BTS for every IOU they issued.

Thanks, but I dont quite understand. I thought the collateral behind a gateway's IOUs is the fiat that the gateway receives. Why would a BitShares gateway need to hold collateral on the blockchain? I dont think there has ever been a single crypto exchange that went bust because their bank account got hacked - just their crypto funds.
For the latest updates checkout my blog: http://bytemaster.bitshares.org
Anything said on these forums does not constitute an intent to create a legal obligation or contract between myself and anyone else.   These are merely my opinions and I reserve the right to change them at any time.

Offline speedy

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There is another important advantage of IOU gateways being built into the blockchain: You can build a gateway without having the risk of storing any of your user's crypto funds. Whenever the gateway's fiat bank account receives a deposit, it issues an IOU to the user's BitShares wallet. The user is then responsible for keeping his own IOU, and he can trade it on the blockchain however he wants.

This can make MtGox collapses a thing of the past.

Am I right in this assessment?

No.  IOU are always subject to Goxing unless there is on chain collateral.   Which I guess any gateway could do... the problem is this would limit the gateways ability to take deposits because they would have to buy some BTS for every IOU they issued.

Thanks, but I dont quite understand. I thought the collateral behind a gateway's IOUs is the fiat that the gateway receives. Why would a BitShares gateway need to hold collateral on the blockchain? I dont think there has ever been a single crypto exchange that went bust because their bank account got hacked - just their crypto funds.

Offline bytemaster

There is another important advantage of IOU gateways being built into the blockchain: You can build a gateway without having the risk of storing any of your user's crypto funds. Whenever the gateway's fiat bank account receives a deposit, it issues an IOU to the user's BitShares wallet. The user is then responsible for keeping his own IOU, and he can trade it on the blockchain however he wants.

This can make MtGox collapses a thing of the past.

Am I right in this assessment?

No.  IOU are always subject to Goxing unless there is on chain collateral.   Which I guess any gateway could do... the problem is this would limit the gateways ability to take deposits because they would have to buy some BTS for every IOU they issued.
For the latest updates checkout my blog: http://bytemaster.bitshares.org
Anything said on these forums does not constitute an intent to create a legal obligation or contract between myself and anyone else.   These are merely my opinions and I reserve the right to change them at any time.

Offline speedy

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There is another important advantage of IOU gateways being built into the blockchain: You can build a gateway without having the risk of storing any of your user's crypto funds. Whenever the gateway's fiat bank account receives a deposit, it issues an IOU to the user's BitShares wallet. The user is then responsible for keeping his own IOU, and he can trade it on the blockchain however he wants.

This can make MtGox collapses a thing of the past.

Am I right in this assessment?

Offline cn-members

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Now bter has 100+ BTC volume on BTS .

Imagine 1000+ people offers even 0.1 BTC quota to operate a small gate way in order to let BTC value in and out of the system, it would be more than bter's volume , and less risk (decentralized gateway group) .

It would easily multiple BTS volume with a lot small gateways .
Who's going to trust this 1000+ people with their value?

As far as I understand with Ripple you need to trust the gateways, so I see no value in having a lot of small gateways with no reputation.

Mtgox had reputation .  Now ...
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Offline betax

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So this cuts out the step of having to buy BTS/bitCNY from inside bter - the volume on bter might be relatively thin compared to the decentralized exchange.
This leads to the question: Why would exchanges want to do this if they profit from transaction fees?!

Exchanges will make more money as arbitrages possibilities are increased. How long does it take you to transfer USD, CNY, EUR from on exchange to another. This can be instant now.

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Offline Rune

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So this cuts out the step of having to buy BTS/bitCNY from inside bter - the volume on bter might be relatively thin compared to the decentralized exchange.
This leads to the question: Why would exchanges want to do this if they profit from transaction fees?!

The exchange fees will disappear but they can make up for that by having higher withdrawal fees. I guess that's how ripple currently does it. Using gateway IOUs will not actually increase liquidity, because you will still have segregated markets for bterCNY, btc38CNY and so on. It removes the need for depositing the BTS tokens they are traded against onto the exchange though, which is a huge deal that dramatically decreases exchange centralization.

Offline xeroc

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So this cuts out the step of having to buy BTS/bitCNY from inside bter - the volume on bter might be relatively thin compared to the decentralized exchange.
This leads to the question: Why would exchanges want to do this if they profit from transaction fees?!

Offline bubble789

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Why not just send bitUSD/bitBTC  back to the sending address instead of gateway's user issued asset (which adds unnecessary confusion)?
I see this new feature in 4.25 a great preparation for onramp services! --> simply send fiat/btc to a "gateway" then u can get ur bts/bitUSD/bitGLD !!