Author Topic: I think BITASSETs 3.0 will not work (original post are too long)  (Read 5604 times)

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Offline starspirit

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Buying BitUSD == Selling BTS

I'm not too good with all the mechanics of the proposed bitasset 3.0 system, but does this mean that BitUSD demand will no longer positively correlate with a higher BTS valuation?

Buy BitUSD with BTS = Selling BTS = internal demand for BitUSD , so it's not positive on BTS .

Buy BitUSD with fiat or BTC = external demand for BitUSD , good for BTS .

Im pretty sure that's how it works today.  So the value proposition for Bts from bitassets hasn't changed?


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You have to be very careful with this line of thinking, as I've discussed many times in this forum.

Growth in the supply of bitUSD does represent an additional bid made on BTS at the time it occurs. And that does tend to instantaneously lift the price of BTS. Arhag convinced me on that one.

But once that bid has been filled, it is removed from the market. After that point, the BTS market will equilibrate at whatever level is required to balance the subsequent supply and demand, according to the market's continuously adjusting perceptions of the value of BTS.

The value of BTS cannot simply reside in the fact that new bidders will keep bidding up BTS. This is a circular argument that provides no anchor at all for how BTS should be valued. I could just as easily argue that if the market perceives BTS as overvalued, bitUSD demand will decline, placing a continuous sell offer on BTS that does not end until zero.

The bottom line is that value for BTS must derive from what utility the token can offer to BTS holders, not a false concept of endless price gains. I have always stood by this view. Where I have moderated my view is that the form of that utility does not  need to be direct income on BTS, or even transactional utility as a global currency. It can derive utility from providing free-market opportunities (either in profit, or other forms of value) that are uniquely accessed in the system through the token. Think of this as the way fiat derives value today. If you want to live, work, and invest in the traditional economy, fiat is the token you need to do so. Well, the same can apply within any system, no matter how small or large, as long as it provides real opportunities for its tokenholders. An example in BitShares could be UIAs.

Derivation of income is like a "company model". And system utility is like a "network economy" model. For the foreseeable future, BitShares is likely to sit somewhere between the two, but needs to clarify and build both the income and utility opportunities to convince BTS holders.

Offline carpet ride

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Buying BitUSD == Selling BTS

I'm not too good with all the mechanics of the proposed bitasset 3.0 system, but does this mean that BitUSD demand will no longer positively correlate with a higher BTS valuation?

Buy BitUSD with BTS = Selling BTS = internal demand for BitUSD , so it's not positive on BTS .

Buy BitUSD with fiat or BTC = external demand for BitUSD , good for BTS .

Im pretty sure that's how it works today.  So the value proposition for Bts from bitassets hasn't changed?


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Offline luckybit

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This is not fair for shorter, and the system will not work!!!!
Because people hold BITUSD can get BTS back at any time, with not market impact no matter how big the volume the settlement is.

If I'm a whale and holding a lot of BTS. And I want get more.
Here is what I need to do:
1. Keeping dump BTS in external market, at the same time buy BitUSD in internal market. This will cause the BTS price fall. (I'm a whale, and have enough BTS)
2. After the price is down  more than 5%(just a example) after 24 hours. I require a settlement in internal market, this will not make BTS price up (no market impact in settlement but only 1% price gap). I will get more BTS than before Step 1.
3. Buy BTS in external market, (maybe loss a little bit BTS compared to before Step 1).

The chance is very big that the BTS I earned in step 2 is more than what I lost in step 3. Because In step 2 I will make no market impact with only 1% price gap. In step3 as the BTS price is already drag down by myself, I can buy cheap BTS, even if the price raise when I buy BTS back.  It is likely the price will not raise to the price before Step 1.

The point here is the people who hold BITUSD do not need to drive the BTS price up when they convert BITUSD to BTS. (only 1% price gap to cover)
While shorter's have no chose, ever if they do not want this settlement.

Without the settlement rule, if people want convert BITUSD to BTS, they need to buy BTS with BITUSD, and it will move the BTS price up. That is what a free market behave. Settlement will not have market impact, this is the key, why BitAsset 3.0 will fail.

Settlement thing is not free market, which can be manipulated.

How do u think about this?

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Offline lastagile

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I think I have to add some.


In effect a short position is a "loan" that is callable based upon price or X day notice.


BTA short position is different from loan.

If you loan from someone, he loan the right to use his resource. You benefit from the loan, and need to pay interest.
But BTA long side sell bts is a market behavior. They get money from this, and can withdraw to their bank account, can buy something. So the long do not have the right to call back.

The market have the right to call back from short. Only when the collateral is not enough.
Xiahui u got my mind. This project is failing.
I posted another topic about it


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« Last Edit: April 25, 2015, 08:00:49 am by lastagile »

Offline xiahui135

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I think I have to add some.


In effect a short position is a "loan" that is callable based upon price or X day notice.


BTA short position is different from loan.

If you loan from someone, he gives you the right to use his resource. You benefit from the loan, and need to pay interest.
But BTA long side sell bts is a market behavior. They get money from this, and can withdraw to their bank account, can buy something. So the long do not have the right to call back.

The market have the right to call back from short. Only when the collateral is not enough.
« Last Edit: April 25, 2015, 09:23:05 am by xiahui135 »

Offline xiahui135

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the longs and shorts are two sides of the market.
we should keep them in balance, so the market can run very long time.

Now in BitAsset, the BTA shorters have an expiring date, but the BTA holders have not. This means holding BTA have advantage than holding BTS(or the bts collateral). So the BTA holders are winner, and BTS price is falling all the way.

In BitAsset 3.0, there is no solid time limit for BTA shorter too. But BTA holders have another advantage: can settle back BTS whenever they want. This leads to the same result as now.
And the settlement makes BTA not currencies any more. If we want to create BTA as currencies, then we just need to let BTA can buy BTS whenever they want.
What you called settlement seems not basic function of currencies, but some kind of bond. Correc me if I make mistakes.

EDIT PLUS:
For a healthy market:
if market mainly want to sell, sellers need place lower price orders to match buyers'.This leads the price to go down.
if market mainly want to buy, buyers need place higher price orders to match sellers'. This leads the price to go up.
In BitAsset 3.0, the settlement function make the market do not work normally. Hold BitAsset to get BTS, will not leads BTS price go up, but Hold BTS to get BitAsset leads BTS price to go down.

I suggest we need more consideration.  Maybe just cancel the short orders time limit and make shorts can cover whenever they want and at what amount they want, and market will do the rest.  (except bad collateralized shorts)
« Last Edit: April 25, 2015, 07:53:12 am by xiahui135 »

Offline pc

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If I'm a whale and holding a lot of BTS. And I want get more.
Here is what I need to do:
1. Keeping dump BTS in external market, at the same time buy BitUSD in internal market. This will cause the BTS price fall. (I'm a whale, and have enough BTS)
2. After the price is down  more than 5%(just a example) after 24 hours. I require a settlement in internal market, this will not make BTS price up (no market impact in settlement but only 1% price gap). I will get more BTS than before Step 1.
3. Buy BTS in external market, (maybe loss a little bit BTS compared to before Step 1).

That's basically what I thought of too: https://bitsharestalk.org/index.php/topic,15775.msg202667.html#msg202667

A whale can manipulate the external price (and in consequence with some practice and good timing the price feed) at the time of settlement. The settlement happens instantly and at a fixed price for the full sum. The settlement is actually a large sell of BitUSD that would affect the market price if done in the normal way, but due to it being instant and fixed-price it does not influence the market as it should.
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Offline joele

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Buy BitUSD with BTS = Selling BTS = internal demand for BitUSD , so it's not positive on BTS .

The demand for bitUSD required BTS collateral that makes value of BTS appreciated.

Offline Pheonike

In theory the BTS price should be 3 times the price of all bitassets combined. Anything more is pure speculation on BTS increasing. So until there is enough external/internal demand for bitassets then there is not real reason for BTS to rise outside of speculation.
« Last Edit: April 24, 2015, 06:20:02 pm by Pheonike »

Offline Ander

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Buying BitUSD == Selling BTS

I'm not too good with all the mechanics of the proposed bitasset 3.0 system, but does this mean that BitUSD demand will no longer positively correlate with a higher BTS valuation?
This depends on what they are spending to get bitUSD.
If people are putting fiat into bitUSD, it indirectly supports BTS.  They have to buy BTS first in order to convert.

But if people are trading BTS they already ahd for bitUSD, its kindof like selling BTS. 
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Offline btswildpig

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Buying BitUSD == Selling BTS

I'm not too good with all the mechanics of the proposed bitasset 3.0 system, but does this mean that BitUSD demand will no longer positively correlate with a higher BTS valuation?

Buy BitUSD with BTS = Selling BTS = internal demand for BitUSD , so it's not positive on BTS .

Buy BitUSD with fiat or BTC = external demand for BitUSD , good for BTS .
这个是私人账号,表达的一切言论均不代表任何团队和任何人。This is my personal account , anything I said with this account will be my opinion alone and has nothing to do with any group.

Offline lastagile

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For every whale who buys bitUSD and then wants to dump BTS so they can convert the bitUSD back into more BTS, there is an equal and opposite whale who just shorted bitUSD, and wants to buy up BTS to drive the price up so they can profit.

Its a long vs short margin battle, just like any leveraged market, and whichever side breaks the other and forces them to cover at a loss wins.  Sometimes the shorts will win and sometimes the longs.

The point here is the people who hold BITUSD do not need to drive the BTS price up when they convert BITUSD to BTS. They only need to do the settlement  with only 1% price gap.
Shorter's have no chose, ever if they do not want this settlement.

Without the freak settlement rule, if people want convert BITUSD to BTS, they need to buy BTS use BITUSD, and it will move the BTS price up. That is what a free market behave. Settlement will not have market impact, this is the key, why it will fail.

Settlement thing is not free market, which can be manipulated.

Offline nomoreheroes7

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Buying BitUSD == Selling BTS

I'm not too good with all the mechanics of the proposed bitasset 3.0 system, but does this mean that BitUSD demand will no longer positively correlate with a higher BTS valuation?
« Last Edit: April 24, 2015, 05:21:33 pm by nomoreheroes7 »

Offline Ander

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1. Keeping dump BTS in external market, at the same time buy BitUSD in internal market. This will cause the BTS price fall. (I'm a whale, and have enough BTS)
2. After the price is down  more than 5%(just a example) after 24 hours. I require a settlement in internal market, this will not make BTS price up (no market impact in settlement but only 1% price gap). I will get more BTS than before I buy BitUSD.
3. Buy BTS in external market, (maybe loss a bit BTS compared to before I sell BTS).

For every whale who buys bitUSD and then wants to dump BTS so they can convert the bitUSD back into more BTS, there is an equal and opposite whale who just shorted bitUSD, and wants to buy up BTS to drive the price up so they can profit.

Its a long vs short margin battle, just like any leveraged market, and whichever side breaks the other and forces them to cover at a loss wins.  Sometimes the shorts will win and sometimes the longs.
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Offline lastagile

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Fortunately the only way to harm shorts is to buy BitUSD... dump BTS on external markets... for them to settle at a loss.   
Agree

But this is real market action and fair.
Not agree.
What I need to do is:
1. Keeping dump BTS in external market, at the same time buy BitUSD in internal market. This will cause the BTS price fall. (I'm a whale, and have enough BTS)
2. After the price is down  more than 5%(just a example) after 24 hours. I require a settlement in internal market, this will not make BTS price up (no market impact in settlement but only 1% price gap). I will get more BTS than before I buy BitUSD.
3. Buy BTS in external market, (maybe loss a bit BTS compared to before I sell BTS).

The chance is very big that the BTS I earned in step 2 is more than what I lost in step 3. Because In step 2 I will make no market impact with only 1% price gap. In step3 as the BTS price is already drag down by myself, I can buy cheap BTS, even if the price raise when I buy BTS back.  It is likely the price will not raise to the price before Step 1.

   If you have enough BTS to push the price down by 1% in 24 hours then you signaled your move when you purchased BitUSD above market and again when you requested settlement which would likely cause the market to fall before you can sell your BTS.  Your gains on the BitUSD side would be offset by your losses on the BTS side.
Did not get you. why the settlement will cause the market to fall  Why I want to sell my BTS?
« Last Edit: April 24, 2015, 05:02:23 pm by lastagile »