Smartcoin Designs Do Affect Liquidity

[merivercap]

There are far fewer people who want to short in a platform with forced settlement than one with it.   There are far fewer people who want to trade in a platform with more complex features than one that is easy to understand.   Having one good Smartcoin design or a few can attract businesses and that will be a key to success.

do not agree.

the risk brought by force settlement will be finally reflected in the price of BitAssets. it is obvious now BitCNY's price rose about 1~2% than the time without force settlement.(as a result 1:1 peg lose and some merchant/customer leave, but this is another question)  this price rise compensate the shorter's risk and actually the shorter still want to short if necessary.

as I know, many speculators like complex features, as they can study more and make profits if they understand the feature deeper than others.

so I believe force settlement will motivate speculators to trade more, the real question is: whether the 1:1 peg is necessary to attract merchant/customer.

I disagree with you.    You'll have less people participate because they know that someone can manipulate the markets and use forced settlement against them.   Those that do trade will less likely trade in the future the more often they are force settled.  The only reason why forced settlement might increase transactions is because you can force transactions to happen, but overall less people will trade in the long run.  The premium also makes it less likely for people to trade because it will be perceived to be less useful for consumers & merchants.

Speculators don't care for complex features unless it allows them to trade more efficiently (like having the ability for stop loss/stop limit orders etc.)
Sure if a certain group of users have the ability to take advantage of other newer traders they will like that in the short run, but in the long run there will be fewer traders who will continue to trade. 

Oddly with your reasoning you think the complexity increases speculation.  I think the opposite.  Either way my overall point is that Smartcoin Designs do affect liquidity so even if you disagree with what specific designs are better than the other, it seems you agree that: Smartcoin Designs Do Affect Liquidity.  It can improve it or make it worse. 

If you want to keep forced settlement with bitCNY that's fine.    I'd just like to have an alternate design mainly for bitUSD.   I think it's incredibly important. 



 

[merivercap]

Do you have an alternative way of ensuring BitUSD holders can sell at or near parity whenever they want?

Also, not sure if you saw the question I asked you in another thread:

https://bitsharestalk.org/index.php/topic,16143.msg263597.html#msg263597

I answered your question on that thread. 

I think it's unnecessary to guarantee holders can sell at or near parity.  If you have liquidity you should be able to sell it an an average of $1.  Sometimes you may have a discount and sometimes a premium.  The price of BTS fluctuates at any given time so it probably shouldn't be desired to guarantee a price.  The premium won't even be constant because BTS volatility can change and when you have higher volatility your premium should increase.

The main concern is making people want to trade in the first place.   As long as there is some margin call settlement around the price feed you'll get prices to trend towards parity and that's all that's needed.  The rest is just a matter of liquidity.

I don't know exactly how things will work out, but I have a preference based on certain reasoning about how markets work.  The next step is just to try them out.  That's why I think we should have an alternate design for bitUSD.

[bitcrab]

There are far fewer people who want to short in a platform with forced settlement than one with it.   There are far fewer people who want to trade in a platform with more complex features than one that is easy to understand.   Having one good Smartcoin design or a few can attract businesses and that will be a key to success.

do not agree.

the risk brought by force settlement will be finally reflected in the price of BitAssets. it is obvious now BitCNY's price rose about 1~2% than the time without force settlement.(as a result 1:1 peg lose and some merchant/customer leave, but this is another question)  this price rise compensate the shorter's risk and actually the shorter still want to short if necessary.

as I know, many speculators like complex features, as they can study more and make profits if they understand the feature deeper than others.

so I believe force settlement will motivate speculators to trade more, the real question is: whether the 1:1 peg is necessary to attract merchant/customer.

I am not against force settlement, I had requested to disable force settlement temporarily because:

force settlement is a powerful tool, it can bring price floor to smartcoin, it can also be used by speculators to manipulate the market, so while introducing this feature, it is very important to config the environment carefully to try to prevent it from being abused, and protect the user's benefits.

but even 2 days ago, 2 things are not ready to welcome the force settlement.

1. for BitCNY, the settlement price provided by witness is always obvious lower than the actual price.
2.the max settle volume parameter is wrongly set to 20%, according to the design it should be set to 2%.

these 2 factors give speculators big chance to manipulate the market, and expose the shorters to big risks.

 

[tbone]

Do you have an alternative way of ensuring BitUSD holders can sell at or near parity whenever they want?

Also, not sure if you saw the question I asked you in another thread:

https://bitsharestalk.org/index.php/topic,16143.msg263597.html#msg263597

[merivercap]

Just wanted to make a comment about Smartcoin designs based on BM's comment on the mumble.  Designs do affect liquidity.   It may not be the main factor, but it's very significant.  For example I am not currently trading, recruiting bigger investors  or recruiting market makers on to the platform because of the design.   There are probably others in the same situation.  There are far fewer people who want to short in a platform with forced settlement than one with it.   There are far fewer people who want to trade in a platform with more complex features than one that is easy to understand.   Having one good Smartcoin design or a few can attract businesses and that will be a key to success.

Incentives are a secondary factor to liquidity.  Primary factors include the confidence and trust people have about the Bitshares protocol itself and the number and quality of businesses that use the protocol.  No market maker is going to step in without believing in Bitshares and believing others will.  Incentives are secondary.