Author Topic: BitAssets 3.0 - For Community Review  (Read 44369 times)

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Offline fav

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just for my understanding:

No more Yield, instead we get something like Liquidity Providing (https://www.bitfinex.com/pages/howitworks )?

sounds like a good idea.

Offline starspirit

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I have some questions.

1) The price feed should be irrelevant unless the current market price is below 99% the expected price feed in X days
I wouldn't mind further explanation of this comment. When bitUSD is a large liquid market, there will be redemption requests and redemption settlements spread through time on an a near continuous basis. This means that the veracity of the price feed is critical at all times, doesn't it?

Additionally, why is there no yield now? I thought yield came from transaction fees as well as from the interest offered by shorts.
I suppose there could still be yield from transaction fees and overlap fees, but due to yield harvesting and also due to the fact that most of the yield would have likely come from short interest, I think it makes sense to just send the transaction and overlap fees to BTS shareholders instead and get rid of the idea of yield for BitAssets. The nonfungible bond market will likely be the best way of allowing longer term holders to get interest on their savings.

In some recent brainstorming threads I made a similar suggestion about relegating yield purely to the bond market, but I'm now recanting that idea after thinking through an issue raised elsewhere about how Russian roubles as a  bitAsset might possibly fetch the 14% odd yield they receive in the external market. The problem I now see is that if the currency receives no yield, the only demand for it will be in the bond market. It will only be used very reluctantly and with high velocity as transactional currency because of the high opportunity cost.

Offline arhag

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Controlling feed price now enables a major attack.

1) Obtain large BitAsset position
2) Request liquidation in 24 hours
3) Just before liquidation, spike the feed price via the delegates under your control
4) Profit, at the expense of the called shorts

Was this already a weakness? Is it made worse under these new rules?

Kinda. If a short position expires in the current system and just sits in the order book at the feed price, it is also vulnerable to such an attack.  Another reason why I would like there to be a grace period.

And of course if you truly have control over the price feed you could also trigger black swan liquidation and profit from the shorts in both systems.

I think the assumption is that it is very difficult to just completely take over the median feed price.

Offline betax

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Nice!! I like it  +5%

As it was mentioned before an infographic will be great, simple way to short and a simple example on different types of investment and risks associated.

To inspire more confidence it will be great to have a thread as we had before of possible "market manipulations", which happen on all other markets, this way any newbie trader can anticipate them, and realise that this market is here to help.
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Offline Chronos

Controlling feed price now enables a major attack.

1) Obtain large BitAsset position
2) Request liquidation in 24 hours
3) Just before liquidation, spike the feed price via the delegates under your control
4) Profit, at the expense of the called shorts

Was this already a weakness? Is it made worse under these new rules?

Offline Chronos

Whoa, do new shorts choose collateral level now? Extra choice means extra complexity.

I like this proposal in general, but thought should be put toward how to make this as easy to understand as possible for users of the market. I think most people don't intuitively "get" shorting unless they are already traders.

What if shorting were a single button "short x of BTS" that automatically shorted at feed price to yourself? Could this be combined with the proposal? Would it be beneficial?

Offline daidai

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great,good idea,just do it.

Offline bitmeat

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Just when I started giving up on BitShares... Your proposed changes are excellent.

Specifically - promise of liquidity, I've proposed the blockchain to be a market maker many times before, but stakeholders didn't want to take the risk of losses turning into dilution.

Whatever you do - can you please KISS? There is so much confusion as to how this works, and it keeps changing. Make sure you put together a nice infographic showing how things work.

Would love to see synthetic depth of market as well - e.g. BitUSD:BTS <-> BTS:BitGold should automatically populate BitUSD:BitGold. And UI should have a "base asset" mode, so traders can think in terms of BitUSD, or BitCNY, or whatever.

Offline arhag

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I especially like that short positions set their own initial collateral level. Doesn't that also mean that providing a grace period is unnecessary, since a short can decided how to collateralize their position and thereby determine the probability that their position gets called within a given period.

I wouldn't say it is unnecessary. Certainly being able to adjust the collateral ratio (via choosing initial collateral and adjusting the collateral of an existing short position through add margin and partial cover operations) helps the short owner adjust the likelihood of having their short position called. But the grace period gives certainty that the short position won't be called. For example, even in the situation where all BitUSD holders want to simultaneously exit, the owner of a short position within the grace period still doesn't need to worry about their short being called. That of course also assumes that the short position maintains sufficient margin to not be margin called and also assumes that settlement is not triggered either due to an undercollateralization event or through the vote of the feed producers and majority of shorts. Although since the last trigger can only be done after 30 days, the short owner that could be affected by the settlement event would have had plenty of prior warning of that potential risk (with a 14 day grace period, they would have already been at least 16 days into the 30 day period at the time the short position was created).

I don't think shorts should have to hold onto extra funds to cover their position. Would it be possible for shorts to remove collateral from their position up to the margin call limit in order to place themselves at the head of regular call queue?

I agree with this. I believe that the short owner should be allowed to add and remove margin as they please as long as the collateral leftover after the operations are complete has a collateral ratio (at the current price feed) that is above the margin call ratio limit. This operation also makes partial cover more sane. There would no longer need to be silly tricks like breaking up your shorts into pieces to minimize the amount of spare BTS to keep outside of the locked collateral.

Additionally, why is there no yield now? I thought yield came from transaction fees as well as from the interest offered by shorts.

I suppose there could still be yield from transaction fees and overlap fees, but due to yield harvesting and also due to the fact that most of the yield would have likely come from short interest, I think it makes sense to just send the transaction and overlap fees to BTS shareholders instead and get rid of the idea of yield for BitAssets. The nonfungible bond market will likely be the best way of allowing longer term holders to get interest on their savings.

In this new BitAsset system, the people who can profit from eager shorts are those who are willing to buy the shorts offered below 99% of the price feed (if any exist), wait for X period of time (e.g. a few days) and then use the BitAsset they bought to redeem BTS at profit (assuming the price of BTS relative to the asset has not gone up too much in that period of time). They still need to take some speculation risk, so I don't think it makes sense to have the blockchain attempt to do it.

Offline BunkerChainLabs-DataSecurityNode

This all sounds really awesome. I am looking forward to the improvements to make bitassets more resilient.  +5%
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@arhag: Your implementation of bytemasters scheme makes the most sense. I especially like that short positions set their own initial collateral level. Doesn't that also mean that providing a grace period is unnecessary, since a short can decided how to collateralize their position and thereby determine the probability that their position gets called within a given period.

@bm: This is definitely a step in the right direction. The 30 day cover rule was too arbitrary. In the bear market that we've seen it forced shorts to buy bitusd when no one other than new shorts were willing to sell. This is the first implementation of bitassets that really doesn't seem to have any flaws. The only one I can think of is that shorts can't exit their position at their whim, like the longs.

I don't think shorts should have to hold onto extra funds to cover their position. Would it be possible for shorts to remove collateral from their position up to the margin call limit in order to place themselves at the head of regular call queue?

Additionally, why is there no yield now? I thought yield came from transaction fees as well as from the interest offered by shorts.

Offline Helikopterben

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I like the proposal in its current form.  It's worth a try and I'm sure changes can be made later if need be.  Legacy futures and paper markets largely influence (and in some cases determine) asset prices.  I think bitshares has the potential to take that role and if so, then bitasset prices may naturally adhere to true prices without the need for a price feed.  The price feed can become just a backstop in case prices deviate.  This proposal seems to be headed in that direction vs bitAssets 2.0. 

Offline joele

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I really like these changes!  Well done all those who contributed to this idea!!


Improvements:
* No forced cover at any particular amount of time.  (30 day rule is gone).  The least collateralized short may be "margin called" with 24 hour notice by the bitAsset longs, but they have to pay him 1% to do so at least.

* bitAsset holders can be guaranteed a return with only 1% loss in 24 hours, which is much better than up to 30 days! 

* Probably a better peg!

* Collateral is much more fair, even colalteral between shorts and longs, instead of favoring bitAsset longs.




We are going through a process of testing and improving the bitshares product.  This iteration will be superior to the previous one.

I believe BM said more than 24 hours

zerosum

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Wait how do you prevent shorts to cover with owned (already) bitAsset. By completely removing such operation?

Well they can still cover with already owned BitAssets, but then they wouldn't really be short. I am assuming they don't own enough of the BitAsset to cover their existing short (so that they profit from BTS price increases). Then to rollover they would need to use their spare BTS to buy BitUSD to cover the existing short and to buy into their new short order. However these BitUSD buy orders would first match with the activated redeem orders (if any exist) before matching with any other sell (or short) orders.

Without yield there's less, if any, incentive to short to yourself?

Believe me there are more reasons to be short and long at the same time than yield harvesting:
- buying cheap bitAssets without the exposer to price movement of the bitAsset; (generally first have to be short and later buy discounted bitAsset and put it for sale just below the feed)
- staying at all times in the no redemption period (in the arhag's proposal);
- never closing grandfathered (1 year expiration ) shorts, when ever you decide the price of BTS will go down.
to name a few.
.....

Offline Riverhead

Wait how do you prevent shorts to cover with owned (already) bitAsset. By completely removing such operation?

Well they can still cover with already owned BitAssets, but then they wouldn't really be short. I am assuming they don't own enough of the BitAsset to cover their existing short (so that they profit from BTS price increases). Then to rollover they would need to use their spare BTS to buy BitUSD to cover the existing short and to buy into their new short order. However these BitUSD buy orders would first match with the activated redeem orders (if any exist) before matching with any other sell (or short) orders.

Without yield there's less, if any, incentive to short to yourself?