Understanding BitAsset Limitations

[Helikopterben]

A peg is meaningless if you do not consider volume:

You can have $1.00 pegged to 1 BitUSD  *or*  You can have $100,000 pegged to 100,000 BitUSD but you cannot do both at the same time.

According to starspirit, you can only enforce the peg on an external exchange anyway, so this is largely out of your control. You have to rely on their orderbooks being thick enough to support the traded volume you want at the prices you want.

You can enforce it with a user issued asset on the internal exchange.

Isn't this what the price feed is for?  Arbitration should keep prices relatively uniform across external exchanges and the price feed is grabbed by the internal exchange to enforce the peg.

[ebit]

I think this need more  help derivatives.

[profitofthegods]

Expired orders.     Right now BitAssets work with "forced settlement at the price feed" after 30 days.    So the totality of the change is to change it from 30 days to 0 days and then prioritize by collateral.

Not sure if I understand this or not - does 0 mean that shorts will always be forced to settle at the feed price, even on the day they shorted, or that they will never be forced to settle?

I was just thinking while looking at the orderbook: Right now 70,000 is >0.5% of all BTS held in collateral within this forced settlement queue. Given that a lot of BTS is probably held long term, or at least not being actively traded today, this probably represents several percent of all actively traded BTS at the very least.

Surely if the present situation continues, with shorts refusing to settle at feed price and this figure therefore building  up, then pretty soon the amount of actively traded BTS on the exchanges is going to really plummet and the price will have to rise due to the laws of supply and demand?

[monsterer]

You can enforce it with a user issued asset on the internal exchange.

If the UIA represented an external exchange's IOU for a fiat currency I can see how this would work... But getting an external exchange to develop the infrastructure to support externalisation of their internal IOUs would be rather hard I think, since they are just database values.

[bytemaster]

Bottom line, when you look at the BitUSD price, the quantity available over $1.00 is VERY SMALL and thus meaningless.   That means that right now BitUSD is "perfectly pegged" and the premium for creating new BitUSD is VERY HIGH.   This is a good and healthy position and indicates what it will look like with force settlement enabled.    Everything else just depends upon trading volume and market making.   

Right now there is over 70,000 bitusd in bids at the feed price, which represents almost half of all bitusd in existence.  If this were force settled right now at the feed price and all else remaining constant, then nearly half of all short sellers would be forced into a transaction that they did not agree to, or at least a transaction that they did not initiate.  IMO, this would further shake the confidence of short sellers and the market in general.

Exuse my ignorance, but is this 70,000 composed of margin calls?

Expired orders.     Right now BitAssets work with "forced settlement at the price feed" after 30 days.    So the totality of the change is to change it from 30 days to 0 days and then prioritize by collateral. 

[profitofthegods]

Bottom line, when you look at the BitUSD price, the quantity available over $1.00 is VERY SMALL and thus meaningless.   That means that right now BitUSD is "perfectly pegged" and the premium for creating new BitUSD is VERY HIGH.   This is a good and healthy position and indicates what it will look like with force settlement enabled.    Everything else just depends upon trading volume and market making.   

Right now there is over 70,000 bitusd in bids at the feed price, which represents almost half of all bitusd in existence.  If this were force settled right now at the feed price and all else remaining constant, then nearly half of all short sellers would be forced into a transaction that they did not agree to, or at least a transaction that they did not initiate.  IMO, this would further shake the confidence of short sellers and the market in general.

Exuse my ignorance, but is this 70,000 composed of margin calls?

[bytemaster]

A peg is meaningless if you do not consider volume:

You can have $1.00 pegged to 1 BitUSD  *or*  You can have $100,000 pegged to 100,000 BitUSD but you cannot do both at the same time.

According to starspirit, you can only enforce the peg on an external exchange anyway, so this is largely out of your control. You have to rely on their orderbooks being thick enough to support the traded volume you want at the prices you want.

You can enforce it with a user issued asset on the internal exchange.

[Helikopterben]

Helikopterben, you may have missed a previous response I made to this idea when you raised it in another thread - there is nothing to stop people exchanging these assets somewhere else at very different prices in a free market. [edit: I think it could be achievable though if you allowed something else to float to change the relative attractiveness for longs and shorts]

Arbitrage?

[monsterer]

A peg is meaningless if you do not consider volume:

You can have $1.00 pegged to 1 BitUSD  *or*  You can have $100,000 pegged to 100,000 BitUSD but you cannot do both at the same time.

According to starspirit, you can only enforce the peg on an external exchange anyway, so this is largely out of your control. You have to rely on their orderbooks being thick enough to support the traded volume you want at the prices you want.

[starspirit]

Bottom line, when you look at the BitUSD price, the quantity available over $1.00 is VERY SMALL and thus meaningless.   That means that right now BitUSD is "perfectly pegged" and the premium for creating new BitUSD is VERY HIGH.   This is a good and healthy position and indicates what it will look like with force settlement enabled.    Everything else just depends upon trading volume and market making.   

Right now there is over 70,000 bitusd in bids at the feed price, which represents almost half of all bitusd in existence.  If this were force settled right now at the feed price and all else remaining constant, then nearly half of all short sellers would be forced into a transaction that they did not agree to, or at least a transaction that they did not initiate.  IMO, this would further shake the confidence of short sellers and the market in general.

How should we solve this?

I think a KISS method similar to the original design would work because the original design wasn't given enough time to work IMHO.  Force all trades to occur within 1% of the price feed.  Allow users to place orders outside of that 1% range but the order wont be activated until their price comes within 1% of the feed.  Don't force short sellers to cover at any time.  Give sell orders priority over short sell orders when being filled.    Allow users to place market orders that float at the price feed.  No one is forced into a trade unless margin called.  I don't see any reason why it wouldn't work. 

Adoption and liquidity are a function of time.  Everyone wants to try all these complex approaches when the simplest approach may be best.  Now that the bts market has settled down, it may be worth a try.

Helikopterben, you may have missed a previous response I made to this idea when you raised it in another thread - there is nothing to stop people exchanging these assets somewhere else at very different prices in a free market. [edit: I think it could be achievable though if you allowed something else to float to change the relative attractiveness for longs and shorts]

[wuyanren]

Should strive to enhance the user experience, so that more users to participate in the transaction。No one is willing to open the wallet to participate in the transaction, saying nothing is empty talk

[merivercap]

 

Bottom line, when you look at the BitUSD price, the quantity available over $1.00 is VERY SMALL and thus meaningless.   That means that right now BitUSD is "perfectly pegged" and the premium for creating new BitUSD is VERY HIGH.   This is a good and healthy position and indicates what it will look like with force settlement enabled.    Everything else just depends upon trading volume and market making.   

Right now there is over 70,000 bitusd in bids at the feed price, which represents almost half of all bitusd in existence.  If this were force settled right now at the feed price and all else remaining constant, then nearly half of all short sellers would be forced into a transaction that they did not agree to, or at least a transaction that they did not initiate.  IMO, this would further shake the confidence of short sellers and the market in general.

How should we solve this?

I think a KISS method similar to the original design would work because the original design wasn't given enough time to work IMHO.  Force all trades to occur within 1% of the price feed.  Allow users to place orders outside of that 1% range but the order wont be activated until their price comes within 1% of the feed.  Don't force short sellers to cover at any time.  Give sell orders priority over short sell orders when being filled.    Allow users to place market orders that float at the price feed.  No one is forced into a trade unless margin called.  I don't see any reason why it wouldn't work. 

Adoption and liquidity are a function of time.  Everyone wants to try all these complex approaches when the simplest approach may be best.  Now that the bts market has settled down, it may be worth a try.

 

[Helikopterben]

Bottom line, when you look at the BitUSD price, the quantity available over $1.00 is VERY SMALL and thus meaningless.   That means that right now BitUSD is "perfectly pegged" and the premium for creating new BitUSD is VERY HIGH.   This is a good and healthy position and indicates what it will look like with force settlement enabled.    Everything else just depends upon trading volume and market making.   

Right now there is over 70,000 bitusd in bids at the feed price, which represents almost half of all bitusd in existence.  If this were force settled right now at the feed price and all else remaining constant, then nearly half of all short sellers would be forced into a transaction that they did not agree to, or at least a transaction that they did not initiate.  IMO, this would further shake the confidence of short sellers and the market in general.

How should we solve this?

I think a KISS method similar to the original design would work because the original design wasn't given enough time to work IMHO.  Force all trades to occur within 1% of the price feed.  Allow users to place orders outside of that 1% range but the order wont be activated until their price comes within 1% of the feed.  Don't force short sellers to cover at any time.  Give sell orders priority over short sell orders when being filled.    Allow users to place market orders that float at the price feed.  No one is forced into a trade unless margin called.  I don't see any reason why it wouldn't work. 

Adoption and liquidity are a function of time.  Everyone wants to try all these complex approaches when the simplest approach may be best.  Now that the bts market has settled down, it may be worth a try.

[merivercap]

Bottom line, when you look at the BitUSD price, the quantity available over $1.00 is VERY SMALL and thus meaningless.   That means that right now BitUSD is "perfectly pegged" and the premium for creating new BitUSD is VERY HIGH.   This is a good and healthy position and indicates what it will look like with force settlement enabled.    Everything else just depends upon trading volume and market making.   

Right now there is over 70,000 bitusd in bids at the feed price, which represents almost half of all bitusd in existence.  If this were force settled right now at the feed price and all else remaining constant, then nearly half of all short sellers would be forced into a transaction that they did not agree to, or at least a transaction that they did not initiate.  IMO, this would further shake the confidence of short sellers and the market in general.

    I'm deeply concerned with this forced settlement design.  The current orderbook is already so unbalanced I'm not sure what to think.  Who really is going to want to short & create BitUSD?  Will these speculators know what situation they are getting into by creating BitUSD?  Aside from a speculative surge of BitUSD creation up until June 8th and a short time after, I think shorts are going to be in for a rude awakening. 

I have such a different perspective on the idea of a peg... any effort to enforce the 'peg' without moving the market is price fixing, whether it's $1 or $100,000.  It's just way worse at $100,000.   The only good thing about a higher amount is the design may just break down faster and we can move on to BitAsset 3.0... 

[eagleeye]

Bottom line, when you look at the BitUSD price, the quantity available over $1.00 is VERY SMALL and thus meaningless.   That means that right now BitUSD is "perfectly pegged" and the premium for creating new BitUSD is VERY HIGH.   This is a good and healthy position and indicates what it will look like with force settlement enabled.    Everything else just depends upon trading volume and market making.   

Right now there is over 70,000 bitusd in bids at the feed price, which represents almost half of all bitusd in existence.  If this were force settled right now at the feed price and all else remaining constant, then nearly half of all short sellers would be forced into a transaction that they did not agree to, or at least a transaction that they did not initiate.  IMO, this would further shake the confidence of short sellers and the market in general.

How should we solve this?