Author Topic: BitShares X Status Update  (Read 260897 times)

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Offline bytemaster

Well, so long as someone else is willing to take over the short positions.... 

I think the way I will solve all of these fee issues is to accumulate BitUSD and simply sell it into the market at the highest bid and take the BTS received and destroy that.  Keep things simple and restore balance to the force.



you mean from the fees? Or you will be the central bank? O.o

From the fees... I am just a poor software developer who wouldn't dream of starting a central bank...
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Offline toast

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Well, so long as someone else is willing to take over the short positions.... 

I think the way I will solve all of these fee issues is to accumulate BitUSD and simply sell it into the market at the highest bid and take the BTS received and destroy that.  Keep things simple and restore balance to the force.



you mean from the fees? Or you will be the central bank? O.o
Do not use this post as information for making any important decisions. The only agreements I ever make are informal and non-binding. Take the same precautions as when dealing with a compromised account, scammer, sockpuppet, etc.

Offline bytemaster

Well, so long as someone else is willing to take over the short positions.... 

I think the way I will solve all of these fee issues is to accumulate BitUSD and simply sell it into the market at the highest bid and take the BTS received and destroy that.  Keep things simple and restore balance to the force.

For the latest updates checkout my blog: http://bytemaster.bitshares.org
Anything said on these forums does not constitute an intent to create a legal obligation or contract between myself and anyone else.   These are merely my opinions and I reserve the right to change them at any time.

Offline gulu

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As depicted in the whitepaper, BitUSD will be destroyed over time due to fees. That means there exists excess XTS backing BitUSD. The theory states that if the backing XTS is more than the original amount, BitUSD will trade with a premium over USD, effectively paying dividend to the BitUSD holder. This also serves as the motivation to hold BitUSD.

Here is the concern. We need a channel to connect the excess XTS to the existing BitUSD, in order for the market to perceive that a BitUSD indeed is more valuable than a USD. In other words, the excess XTS will somehow need to be cashed out. Otherwise, if it stays within the system for ever, then it only provide more security for holding BitUSD against short squeeze. Other than that, it is no more than a notion, and as a results BitUSD price stays with USD, which voids the motivation for holding BitUSD.

Something could be done here, but I am not sure what.

Is that still true that transaction fees can be payed in BitAssets which then will be destroyed?

I thought, that if an account wants to perform a transaction and does not have enough BTSX to pay for the fee, then an amount of BitAsset will be automatically sold on the market to obtain those BTSX for the fee?

If really BitAssets are destroyed, won't this cause an undesirable overhang of short positions long term?

I think we need to clear up some terminology here and make a distinction between 'transaction fees' and 'market fees'.   

A Transaction Fee is assessed based upon the size of your transaction and is always paid in BTS. 
A Market Fee is assessed to anyone who bids higher than the highest bid or lower than the lowest ask.  These fees are assessed in their native unit.

BitUSD that is destroyed is no different than someone choosing to hold BitUSD forever at any price.  It means that not all short positions can fully unwind and serves to give real backing to BitUSD as shorts must compete for the BitUSD that is actually on the market.   In the event that the market wants to completely unwind all short positions, then the holders of BitUSD will profit nicely. 

How the market responds to this characteristic would be no different than someone who loses their private key to their BitUSD.   It will not matter.  It is also a kind of insurance against blowout of margin of short positions by preemtively taking some BitUSD out of circulation, having extreme events do the opposite may balance out.

Either way this is all an experiment and we shall see what happens.
Ok, I now get why BitUSD price would be higher even without a channel. Then I am concerned that the liabilities on the short side can never be paid off completely, no matter what price, as there does not exist enough long position.


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Offline bytemaster

Quote
A Transaction Fee is assessed based upon the size of your transaction and is always paid in BTS. 

Someone has bitUSD only can't make a transaction?

At the moment, yes.   Having a way to charge fees in BitUSD may be an option by having the fees go toward buying BTS to destroy.
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Offline gulu

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Quote
A Transaction Fee is assessed based upon the size of your transaction and is always paid in BTS. 

Someone has bitUSD only can't make a transaction?
I guess they must have some XTS to perform transactions.


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Offline coolspeed

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Quote
A Transaction Fee is assessed based upon the size of your transaction and is always paid in BTS. 

Someone has bitUSD only can't make a transaction?
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Offline Markus

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Ah, now I get the difference.

So there are overlapping bids and asks (market fees) and lost keys destroying long positions and margin blowouts destroying short positions. And the hope is they will cancel each other out.

Quote
In the event that the market wants to completely unwind all short positions, then the holders of BitUSD will profit nicely.
BTW, I don't think this should be called nice. This is the perfect breeding ground for a huge short squeeze. And short squeezes undermine trust, no matter if some people might profit or not.

Offline bytemaster

As depicted in the whitepaper, BitUSD will be destroyed over time due to fees. That means there exists excess XTS backing BitUSD. The theory states that if the backing XTS is more than the original amount, BitUSD will trade with a premium over USD, effectively paying dividend to the BitUSD holder. This also serves as the motivation to hold BitUSD.

Here is the concern. We need a channel to connect the excess XTS to the existing BitUSD, in order for the market to perceive that a BitUSD indeed is more valuable than a USD. In other words, the excess XTS will somehow need to be cashed out. Otherwise, if it stays within the system for ever, then it only provide more security for holding BitUSD against short squeeze. Other than that, it is no more than a notion, and as a results BitUSD price stays with USD, which voids the motivation for holding BitUSD.

Something could be done here, but I am not sure what.

Is that still true that transaction fees can be payed in BitAssets which then will be destroyed?

I thought, that if an account wants to perform a transaction and does not have enough BTSX to pay for the fee, then an amount of BitAsset will be automatically sold on the market to obtain those BTSX for the fee?

If really BitAssets are destroyed, won't this cause an undesirable overhang of short positions long term?

I think we need to clear up some terminology here and make a distinction between 'transaction fees' and 'market fees'.   

A Transaction Fee is assessed based upon the size of your transaction and is always paid in BTS. 
A Market Fee is assessed to anyone who bids higher than the highest bid or lower than the lowest ask.  These fees are assessed in their native unit.

BitUSD that is destroyed is no different than someone choosing to hold BitUSD forever at any price.  It means that not all short positions can fully unwind and serves to give real backing to BitUSD as shorts must compete for the BitUSD that is actually on the market.   In the event that the market wants to completely unwind all short positions, then the holders of BitUSD will profit nicely. 

How the market responds to this characteristic would be no different than someone who loses their private key to their BitUSD.   It will not matter.  It is also a kind of insurance against blowout of margin of short positions by preemtively taking some BitUSD out of circulation, having extreme events do the opposite may balance out.

Either way this is all an experiment and we shall see what happens.
For the latest updates checkout my blog: http://bytemaster.bitshares.org
Anything said on these forums does not constitute an intent to create a legal obligation or contract between myself and anyone else.   These are merely my opinions and I reserve the right to change them at any time.

Offline Markus

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As depicted in the whitepaper, BitUSD will be destroyed over time due to fees. That means there exists excess XTS backing BitUSD. The theory states that if the backing XTS is more than the original amount, BitUSD will trade with a premium over USD, effectively paying dividend to the BitUSD holder. This also serves as the motivation to hold BitUSD.

Here is the concern. We need a channel to connect the excess XTS to the existing BitUSD, in order for the market to perceive that a BitUSD indeed is more valuable than a USD. In other words, the excess XTS will somehow need to be cashed out. Otherwise, if it stays within the system for ever, then it only provide more security for holding BitUSD against short squeeze. Other than that, it is no more than a notion, and as a results BitUSD price stays with USD, which voids the motivation for holding BitUSD.

Something could be done here, but I am not sure what.

Is that still true that transaction fees can be payed in BitAssets which then will be destroyed?

I thought, that if an account wants to perform a transaction and does not have enough BTSX to pay for the fee, then an amount of BitAsset will be automatically sold on the market to obtain those BTSX for the fee?

If really BitAssets are destroyed, won't this cause an undesirable overhang of short positions long term?

Offline bytemaster

As depicted in the whitepaper, BitUSD will be destroyed over time due to fees. That means there exists excess XTS backing BitUSD. The theory states that if the backing XTS is more than the original amount, BitUSD will trade with a premium over USD, effectively paying dividend to the BitUSD holder. This also serves as the motivation to hold BitUSD.

Here is the concern. We need a channel to connect the excess XTS to the existing BitUSD, in order for the market to perceive that a BitUSD indeed is more valuable than a USD. In other words, the excess XTS will somehow need to be cashed out. Otherwise, if it stays within the system for ever, then it only provide more security for holding BitUSD against short squeeze. Other than that, it is no more than a notion, and as a results BitUSD price stays with USD, which voids the motivation for holding BitUSD.

Something could be done here, but I am not sure what. 
For the latest updates checkout my blog: http://bytemaster.bitshares.org
Anything said on these forums does not constitute an intent to create a legal obligation or contract between myself and anyone else.   These are merely my opinions and I reserve the right to change them at any time.

Offline gulu

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As depicted in the whitepaper, BitUSD will be destroyed over time due to fees. That means there exists excess XTS backing BitUSD. The theory states that if the backing XTS is more than the original amount, BitUSD will trade with a premium over USD, effectively paying dividend to the BitUSD holder. This also serves as the motivation to hold BitUSD.

Here is the concern. We need a channel to connect the excess XTS to the existing BitUSD, in order for the market to perceive that a BitUSD indeed is more valuable than a USD. In other words, the excess XTS will somehow need to be cashed out. Otherwise, if it stays within the system for ever, then it only provide more security for holding BitUSD against short squeeze. Other than that, it is no more than a notion, and as a results BitUSD price stays with USD, which voids the motivation for holding BitUSD.
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Offline toast

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Do not use this post as information for making any important decisions. The only agreements I ever make are informal and non-binding. Take the same precautions as when dealing with a compromised account, scammer, sockpuppet, etc.

Offline ebit

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Maybe we can according to market depth change mortgage  rate from 10x to 2x,even from 1x to 0.1x.
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Offline coolspeed

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I have spent the past few days thinking about exploits and designing solutions to them.  This has required some changes to the code that I am working on to do the following:

1) Increase initial margin to 10x rather than 2x to prevent manipulation by triggering short squeezes.  This will reduce leverage in the system and make it very unlikely for a short position to be blown out by a short squeeze.
2) Track market depth and limit trading to a percent of the market depth every block.  This will prevent whales from pushing the price around too much.   
3) Require minimal market depth before the first trade can occur.
4) Figure out how to test all of this :)

are these changes that can be tweaked as bitshares evolves, like bitcoin fees are tweaked, or are they more or less permanent to the XT chain?

These are hard to tweak because they require all nodes to agree / validate the transactions.    Voting is not an option and some of these parameters would have very thin prediction markets (subject to manipulation) if we attempted to set them that way.   

I suppose there is a way for a trusted party to send a transaction to change a parameter within a preset range.  This party would dramatically effect the value of the DAC with every change.    Finding a good solution to 'changing the rules after launch' is very hard... doing a snapshot and fork may be the best way to propose changes that gives everyone an opportunity to voluntarily switch to the new chain.   

Every node has different threshold. Most miners (nodes) agree, then you are agreed. Just like floating transaction fees in the new bitcoin protocol.
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