BitAssets 3.0 - For Community Review

[starspirit]

#3 Any time someone with USD is unhappy with the current internal market price, they can request settlement at the 99% of feed (a 1% fee) in X days, where X is more than 24 hours.

Why does X need to be more than 24 hours? Why can't it be "instant" for example?

To prevent an attacker from exploiting time delays in the feeds, and other implementation artifacts to bot-harvest that 1% for reasons other than the intended liquidity.  Neither side can know exactly which way the feed will move 24 hours from now, so we get a more fair result.

I can't imagine time delays in the feeds being more than a few minutes, so I assume the second part is the bigger driver? Would you mind clarifying what you mean by "other implementation artifacts to bot-harvest that 1%"?

[Stan]

#3 Any time someone with USD is unhappy with the current internal market price, they can request settlement at the 99% of feed (a 1% fee) in X days, where X is more than 24 hours.

Why does X need to be more than 24 hours? Why can't it be "instant" for example?

To prevent an attacker from exploiting time delays in the feeds, and other implementation artifacts to bot-harvest that 1% for reasons other than the intended liquidity.  Neither side can know exactly which way the feed will move 24 hours from now, so we get a more fair result.

[starspirit]

#3 Any time someone with USD is unhappy with the current internal market price, they can request settlement at the 99% of feed (a 1% fee) in X days, where X is more than 24 hours.

Why does X need to be more than 24 hours? Why can't it be "instant" for example?

[starspirit]

The main feature of BitAsset 3.0 that I like is that redemption is possible at the feed price, which underpins valuation throughout this and external markets. My main issue has been that it eradicates interest, which is particularly important for currencies. I believe that if interest rates are high on a currency in external markets, it basically eliminates usage of the bitAsset as a transactional currency, because it will only pay to have it hoarded in the bond market. However, this weakness could be overcome if one of the bond market tokens represented an at-call deposit instantly interchangeable for currency (like an ATM machine) or with check payment facilities.

I've just posted a white-paper that describes the architecture of an at-call market integrated with a bill market. That is here...https://bitsharestalk.org/index.php/topic,15880.msg203776.html#msg203776
This envisages currency being instantly created and destroyed with floating interest as the clearing mechanism.

However, that system can be adapted to accommodate BitAsset 3.0 and potentially create a more powerful system.

i) a Cash Creation Market, along the lines of BitAsset 3.0 (although I would suggest some modifications), which does not bear interest, and has a floating level of collateral as the clearing mechanism, plus
ii) an at-call Deposit Market, whose tokens pay a floating interest rate from longs to shorts (like the Currency Creation Market in the whitepaper), and
iii) a Bill Market at various terms (akin to zero coupon bond tokens, as described in the whitepaper).

The Deposit Market would use exactly the same structure as I outlined for the Cash Creation Market in that white-paper, except that now it would be settled in the currency token instead of BTS, and the bids and offers would be for DEPOSIT tokens. This guarantees instant interchangeability between deposits and currency, with a floating rate determined by the market.

A challenge with this particular market is the zero bound on interest rates. The whitepaper outlines a couple of possible approaches.
 
What I like about this total approach is that it would now be much closer to the complete functionality of the current money market system, while obviously also having the usual block-chain based advantages.

I want to think about all this some more, but if it pans out, as soon as I get a chance I will update the whitepaper to v2 to incorporate this thinking.

As a follow-up thought to this, I was thinking more about the purpose of non interest bearing cash, when its possible to create interest-bearing currency. I can think of two possible purposes:

i) anonymity - there could be mechanisms in place to ensure anonymity of holding and spending (like some other crypto currencies).
ii) security - cash could be heavily collateralised in compensation for lack of interest

The question I have is do we ideally want a system with:

a) anonymous or extra secure cash + interest bearing deposits + bills/bonds, OR
b) interest-bearing currency + bills/bonds.

The option of (c) non-interest cash + bills/bonds, is lacking a critical ingredient as I've discussed, if we want these currencies to have transactional utility.

Any thoughts?

[edit: One more thing, by bond market, do we mean a counterparty-risk-free bond market, collateralised by BTS (akin to a government bond market), or do we mean a risky credit market for loans to counter parties? I am assuming the former.]

[starspirit]

The main feature of BitAsset 3.0 that I like is that redemption is possible at the feed price, which underpins valuation throughout this and external markets. My main issue has been that it eradicates interest, which is particularly important for currencies. I believe that if interest rates are high on a currency in external markets, it basically eliminates usage of the bitAsset as a transactional currency, because it will only pay to have it hoarded in the bond market. However, this weakness could be overcome if one of the bond market tokens represented an at-call deposit instantly interchangeable for currency (like an ATM machine) or with check payment facilities.

I've just posted a white-paper that describes the architecture of an at-call market integrated with a bill market. That is here...https://bitsharestalk.org/index.php/topic,15880.msg203776.html#msg203776
This envisages currency being instantly created and destroyed with floating interest as the clearing mechanism.

However, that system can be adapted to accommodate BitAsset 3.0 and potentially create a more powerful system.

i) a Cash Creation Market, along the lines of BitAsset 3.0 (although I would suggest some modifications), which does not bear interest, and has a floating level of collateral as the clearing mechanism, plus
ii) an at-call Deposit Market, whose tokens pay a floating interest rate from longs to shorts (like the Currency Creation Market in the whitepaper), and
iii) a Bill Market at various terms (akin to zero coupon bond tokens, as described in the whitepaper).

The Deposit Market would use exactly the same structure as I outlined for the Cash Creation Market in that white-paper, except that now it would be settled in the currency token instead of BTS, and the bids and offers would be for DEPOSIT tokens. This guarantees instant interchangeability between deposits and currency, with a floating rate determined by the market.

A challenge with this particular market is the zero bound on interest rates. The whitepaper outlines a couple of possible approaches.
 
What I like about this total approach is that it would now be much closer to the complete functionality of the current money market system, while obviously also having the usual block-chain based advantages.

I want to think about all this some more, but if it pans out, as soon as I get a chance I will update the whitepaper to v2 to incorporate this thinking.

[clayop]

What happens if some bad actors sell BitUSD under the 50% of feed price, and the short order backed by less than 100%?

[xeroc]

This certainly doesnt fit here but the people discussing here might be interested in an overview of competitors implementation of margin trading

https://blog.bitmex.com/margin-call-how-it-works/

[starspirit]

arhag, I have developed a potential solution to yield and other issues, which I hope you will see in the next few days. So I hope you don't mind if I hang off from responding to your suggestions on yield harvest right now, as I still need time to complete this work.

Looking forward to it. 

Here...sorry it's long, I hope it doesn't waste your time...https://bitsharestalk.org/index.php/topic,15880.msg203776.html#msg203776

[xeroc]

I beg to differ. The "vote" I described exist for every single cryptocurrency today. But, this is off topic, so I'll let it go at that.

I was talking about the system to active a hardfork autmatically if a critical amount of approval was stated by the shareholders ..
this is different from bitcoins version updates which are performed over time with an overlap to a prevision version (soft forks) and hard forks being dictated by the pool admins.

[BunkerChainLabs-DataSecurityNode]

Now if we straighten out the delegate/employee pay system then we are solid.

One step at a time.

[Pheonike]

Now if we straighten out the delegate/employee pay system then we are solid.

[Tuck Fheman]

This does not exist ...

I beg to differ. The "vote" I described exist for every single cryptocurrency today. But, this is off topic, so I'll let it go at that.

[bytemaster]

The current BitAsset system will be run in parallel with the new system users can migrate at will.

Interesting. Would the old system ever be completely phased out?

Probably once the shorts unwind and people stop using it.

[Chronos]

The current BitAsset system will be run in parallel with the new system users can migrate at will.

Interesting. Would the old system ever be completely phased out?

[bytemaster]

The current BitAsset system will be run in parallel with the new system users can migrate at will.