Author Topic: Project: BitUSD Liquidity  (Read 4860 times)

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Offline Rune

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Re: Project: BitUSD Liquidity
« Reply #15 on: January 16, 2015, 03:12:46 pm »
I'll be interest to know if you manage to break even with this strategy - market making is very hard to get right.

With 5% spread it should be easy enough. In the future we could actually run nubot style "BitBots" that can enforce a much tighter peg and be guaranteed to be profitable, using the method the nubitters described here after they realized that they've become insolvent and their peg is doomed: https://discuss.nubits.com/t/possible-solution-to-custodian-loss-of-value-due-to-btc-exposure/1099/3

Offline Rune

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Re: Project: BitUSD Liquidity
« Reply #16 on: January 16, 2015, 03:14:50 pm »
https://bitcointalk.org/index.php?topic=926934.0 :)

lololol, they want to use 10x leverage..... hahaha this is game over ... that disqualifies Nubits as a competition to BitUSD.

Actually hedging their BTC is a viable strategy and if they had used that one from the start things would have looked much better for them. But at this point they are already insolvent and are operating as a fractional reserve that should soon go down in flames.

A bitshares market maker could copy the hedging strategy and make a bot that could be guaranteed to be profitable as long as it operated on a 1-2% spread.

Offline vlight

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Re: Project: BitUSD Liquidity
« Reply #17 on: January 16, 2015, 03:22:20 pm »
Actually hedging their BTC is a viable strategy and if they had used that one from the start things would have looked much better for them. But at this point they are already insolvent and are operating as a fractional reserve that should soon go down in flames.

A bitshares market maker could copy the hedging strategy and make a bot that could be guaranteed to be profitable as long as it operated on a 1-2% spread.

They have to use external services which means increased risk. They have to use high leverage, which adds to the overall risk even more. High leverage is bad. Just look what swiss central bank did to largest forex brokers and their clients. imho

Offline Rune

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Re: Project: BitUSD Liquidity
« Reply #18 on: January 16, 2015, 03:23:23 pm »
Wondering what you can do to help bitshares up to the 1.0 launch?

Toast has written a market maker bot for BTC/BitUSD on bter.com that Riverhead is now running (possibly others)

https://bter.com/trade/btc_bitusd

Volume is only 10 BTC so far, but notice the spread is around 5%. If you check out NuBits you can see that their spread is more or less the same: https://bter.com/trade/nbt_btc

This is most likely because the "trusted" custodians have lost shitloads of money by getting BTC dumped on them in the last crash, so they have widened their spread in an attempt to make money so they'll  stop being a fractional reserve. This is our moment to steal their market and surpass them as _the_ 1 USD token. All we have to do is to keep our spread lower, and then pump the volume! BTC isn't crashing any more so market making at a small spread will be profitable!

If you want to help BitUSD get adoption then get on bter now and start trading!!! Lets push the volume to at least 100 BTC as soon as possible!
Do you have a link to the market maker bot post?

No, I don't think there is any post about it. I gave 5k bitUSD to riverhead to fund his bot with. If you want to help with liquidity but don't want to run the bot yourself you can do the same, he's a trusted community member and won't mess up.

If you want to run the bot yourself then get in touch with toast.

Offline monsterer

Re: Project: BitUSD Liquidity
« Reply #19 on: January 16, 2015, 03:28:05 pm »
With 5% spread it should be easy enough. In the future we could actually run nubot style "BitBots" that can enforce a much tighter peg and be guaranteed to be profitable, using the method the nubitters described here after they realized that they've become insolvent and their peg is doomed: https://discuss.nubits.com/t/possible-solution-to-custodian-loss-of-value-due-to-btc-exposure/1099/3

Increasing spread size helps compensate for losses due to adverse selection, but you can price yourself out of the market like that.
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Offline Rune

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Re: Project: BitUSD Liquidity
« Reply #20 on: January 16, 2015, 03:32:34 pm »
With 5% spread it should be easy enough. In the future we could actually run nubot style "BitBots" that can enforce a much tighter peg and be guaranteed to be profitable, using the method the nubitters described here after they realized that they've become insolvent and their peg is doomed: https://discuss.nubits.com/t/possible-solution-to-custodian-loss-of-value-due-to-btc-exposure/1099/3

Increasing spread size helps compensate for losses due to adverse selection, but you can price yourself out of the market like that.

Agree, but right now nubits are offering a 5% spread too so as long as we offer the same it should be competetive.

Offline liondani

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Re: Project: BitUSD Liquidity
« Reply #21 on: January 16, 2015, 03:39:24 pm »
needs no comment!   :)

JordanLee

This is a great idea that should be evaluated more closely. The most important question is what is the cost of this insurance? Perhaps historical charts of BTC and contract pricing can give us a good idea of that. Once that is understood, we would be in a position to discuss doing this on a pilot basis, which if successful, could expand to being used for all BTC held by Jamie And KTm. Whether LPCs providing their own funds use this type of insurance is really up to them individually. They just need to decide if they wish to speculate on the price of BTC. We should avoid speculation with shareholder funds where practical, however.

Whether such an action requires shareholder approval as an amendment to existing contracts is a grey area. I would say if it doesn't seem to create controversy here in the forum, formal shareholder approval is not needed. Whether it creates controversy will largely depend on the cost of this insurance.

@pennybreaker, if you are interested in taking on the task of assessing the cost of this insurance, I would encourage you to do so and bill for it.

Edit: It would also make sense to consider hedging the BTC that comes from NuShare sales, which currently is about 350 BTC. We need to keep some of the NuShare sale proceeds as BTC so that they can function as tier 4 buy side liquidity, which has been used on several occasions to make raising interest rates unnecessary.

Offline xeroc

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Re: Project: BitUSD Liquidity
« Reply #22 on: January 16, 2015, 03:43:53 pm »
Wondering what you can do to help bitshares up to the 1.0 launch?

Toast has written a market maker bot for BTC/BitUSD on bter.com that Riverhead is now running (possibly others)

https://bter.com/trade/btc_bitusd

Volume is only 10 BTC so far, but notice the spread is around 5%. If you check out NuBits you can see that their spread is more or less the same: https://bter.com/trade/nbt_btc

This is most likely because the "trusted" custodians have lost shitloads of money by getting BTC dumped on them in the last crash, so they have widened their spread in an attempt to make money so they'll  stop being a fractional reserve. This is our moment to steal their market and surpass them as _the_ 1 USD token. All we have to do is to keep our spread lower, and then pump the volume! BTC isn't crashing any more so market making at a small spread will be profitable!

If you want to help BitUSD get adoption then get on bter now and start trading!!! Lets push the volume to at least 100 BTC as soon as possible!
Do you have a link to the market maker bot post?

No, I don't think there is any post about it. I gave 5k bitUSD to riverhead to fund his bot with. If you want to help with liquidity but don't want to run the bot yourself you can do the same, he's a trusted community member and won't mess up.

If you want to run the bot yourself then get in touch with toast.
Sounds interesting ..

Do you know the reason @toast is not opensourcing the bot?
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Offline Rune

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Re: Project: BitUSD Liquidity
« Reply #23 on: January 16, 2015, 03:52:18 pm »
Wondering what you can do to help bitshares up to the 1.0 launch?

Toast has written a market maker bot for BTC/BitUSD on bter.com that Riverhead is now running (possibly others)

https://bter.com/trade/btc_bitusd

Volume is only 10 BTC so far, but notice the spread is around 5%. If you check out NuBits you can see that their spread is more or less the same: https://bter.com/trade/nbt_btc

This is most likely because the "trusted" custodians have lost shitloads of money by getting BTC dumped on them in the last crash, so they have widened their spread in an attempt to make money so they'll  stop being a fractional reserve. This is our moment to steal their market and surpass them as _the_ 1 USD token. All we have to do is to keep our spread lower, and then pump the volume! BTC isn't crashing any more so market making at a small spread will be profitable!

If you want to help BitUSD get adoption then get on bter now and start trading!!! Lets push the volume to at least 100 BTC as soon as possible!
Do you have a link to the market maker bot post?

No, I don't think there is any post about it. I gave 5k bitUSD to riverhead to fund his bot with. If you want to help with liquidity but don't want to run the bot yourself you can do the same, he's a trusted community member and won't mess up.

If you want to run the bot yourself then get in touch with toast.
Sounds interesting ..

Do you know the reason @toast is not opensourcing the bot?

I'm pretty sure he plans to do it as soon as it is ready.

Buy BitUSD and get it on bter.com guys!!! Buy low sell high and make some money as we make nubits unravel over the next couple of days.

Offline xeroc

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Re: Project: BitUSD Liquidity
« Reply #24 on: January 16, 2015, 03:55:20 pm »
Damnit I am off for skiing the weekend without access to my wallet .. shit .. missed that opportunity :/
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Offline toast

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Re: Project: BitUSD Liquidity
« Reply #25 on: January 16, 2015, 04:19:23 pm »
It's a little early to call their downfall IMO. I'm sure they still have enough to buy back all outstanding nubits.

I didn't want to open source the bot because 1) I didn't want competition (but it's there now) and 2) I'm embarrassed by my code quality (but that's a bad reason)

Perhaps I will open it up today or over this weekend
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Offline Rune

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Re: Project: BitUSD Liquidity
« Reply #26 on: January 16, 2015, 04:53:33 pm »
It's a little early to call their downfall IMO. I'm sure they still have enough to buy back all outstanding nubits.

I didn't want to open source the bot because 1) I didn't want competition (but it's there now) and 2) I'm embarrassed by my code quality (but that's a bad reason)

Perhaps I will open it up today or over this weekend

NuBits will continue for sure. But soon they'll be subjected to the same kind of standard that rational people subject other exchanges/counterparties too, such as cryptographic proof of reserves. They'll have to eventually come up with a system to basically copy BitUSD and its backing entirely if they want to maintain credibility. If we just have acceptable liquidity and spreads in the meantime, some of the non-retarded traders might switch to BitUSD.

Offline Rune

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Re: Project: BitUSD Liquidity
« Reply #27 on: January 16, 2015, 07:54:24 pm »
Number 4 on bter!!

https://bter.com/

Offline toast

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Re: Project: BitUSD Liquidity
« Reply #28 on: January 16, 2015, 08:01:55 pm »
Do not use this post as information for making any important decisions. The only agreements I ever make are informal and non-binding. Take the same precautions as when dealing with a compromised account, scammer, sockpuppet, etc.

Offline mint chocolate chip

Re: Project: BitUSD Liquidity
« Reply #29 on: January 16, 2015, 08:07:35 pm »
Number 4 on bter!!

https://bter.com/

Isn't that "X" the old logo, isn't there a bitUSD logo that should be there?