Author Topic: I think BITASSETs 3.0 will not work (original post are too long)  (Read 5608 times)

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Offline Ander

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The new system seems far more fair to shorts than the old one. 
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Offline bytemaster

This is not fair for shorter, and the system will not work!!!! Because people hold BITUSD can get BTS back at any time, will 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.
What I need to do is keep buy the BITUSD, and drive the BITUSD price up. The more BITUSD I buy, the more expensive BITUSD is, and the less BITUSD can be created with same mount of BTS.   This will keep moving the BITUSD price raise. And at some moment when succeed drive the BITUSD price up for more than x hours, I can request an settlement with only 1% lost, and I will not move the market at all, no mater how big volume I settled.
This is crazy.

The market will be completely controlled by whales.

The problem here is settlement will have a market impact. This is not a free market!

How do u think about this?

Not at any time, but at the price feed (not easily manipulated) and after 24+ hours (allowing the market time to correct from your attempted manipulation).

If you keep buying BitUSD further from the peg without real demand for BTS in the outside market then you will pay a high price without moving the feed.  If you force settlement you will lose money.  If you can control the outside price of all BTS then that *IS* the market price and you should speculate accordingly.   Fortunately the only way to harm shorts is to buy BitUSD... dump BTS on external markets... for them to settle at a loss.   But this is real market action and fair.  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.   Any way you slice it there are no guaranteed profits and every move you make is a PRICE SIGNAL and a valid price signal.   Buying BitUSD == Selling BTS
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Offline lastagile

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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?
« Last Edit: April 24, 2015, 05:36:20 pm by lastagile »