Author Topic: [EBM] Get liquidity into BitCNY / BitBTC market  (Read 4930 times)

0 Members and 1 Guest are viewing this topic.

clout

  • Guest
I don't think this will ever be possible.

The MPAs always bias against the short, which will lead to a price which floats above parity. This is a fundamental design flaw.

The MPA are only biased against the short given an SQP greater than 100%. Otherwise you can borrow a bitAsset while maintaining an unleveraged position and not incurring any of the risks associated with margin calls (mainly that given the current SQP of 110% your collateral may be liquidated at a discount).

Offline Akado

  • Hero Member
  • *****
  • Posts: 2752
    • View Profile
  • BitShares: akado
So you suggest we redesign MPAs or simply forget about them and replace them for UIA? Redesigning the MPAs might be a lot of work, but if we don't do it we will never have a true decentralized solution for pegged currencies, which we claim we have

Yeah, bitshares is stuck between a rock and a hard place here.

You cannot forget about MPAs as that is bitshares core USP - without them, it is just ripple with less liquidity. Longs need to have the same risk profile as shorts for this system to work IMO. I don't have all the answers.

No problem, thanks for the input, just asked as I see you as one of the persons who knows about this stuff the best. This seems like an important topic of discussion.

We could add bitUSD/NUBITS market like I mentioned above... it could help, but that wouldn't be a guaranteed solution.

It seems we will be stuck with UIAs like OPENBTC and METAEX.BTC while we attract more people and can only hope that those same people, as liquidity increases, start using bitAssets bit by bit
https://metaexchange.info | Bitcoin<->Altcoin exchange | Instant | Safe | Low spreads

Offline monsterer

So you suggest we redesign MPAs or simply forget about them and replace them for UIA? Redesigning the MPAs might be a lot of work, but if we don't do it we will never have a true decentralized solution for pegged currencies, which we claim we have

Yeah, bitshares is stuck between a rock and a hard place here.

You cannot forget about MPAs as that is bitshares core USP - without them, it is just ripple with less liquidity. Longs need to have the same risk profile as shorts for this system to work IMO. I don't have all the answers.
My opinions do not represent those of metaexchange unless explicitly stated.
https://metaexchange.info | Bitcoin<->Altcoin exchange | Instant | Safe | Low spreads

Offline Akado

  • Hero Member
  • *****
  • Posts: 2752
    • View Profile
  • BitShares: akado
what about a bitUSD/Nubits market for example, could that help strengthen the peg? They're also interested in adding other currencies so if they add CNY or EUR we can add bitCNY/NUBITS.CNY and bitEUR/NUBITS.EUR

@monsterer
So you suggest we redesign MPAs or simply forget about them and replace them for UIA? Redesigning the MPAs might be a lot of work, but if we don't do it we will never have a true decentralized solution for pegged currencies, which we claim we have
« Last Edit: November 23, 2015, 11:02:40 am by Akado »
https://metaexchange.info | Bitcoin<->Altcoin exchange | Instant | Safe | Low spreads

Offline monsterer

I don't think this will ever be possible.

The MPAs always bias against the short, which will lead to a price which floats above parity. This is a fundamental design flaw.
My opinions do not represent those of metaexchange unless explicitly stated.
https://metaexchange.info | Bitcoin<->Altcoin exchange | Instant | Safe | Low spreads

clout

  • Guest
Ultimately I believe that bitshares needs a sidechain btc that locks up real btc in the bitshares blockchain.
This would be far superior to all BTC UIAs and BitBTC and render them pointless with the outcome of much fewer market pairs and more liquidity.
Also it would make for the perfect collateral for any fiat MPAs has it is a very deep liquid market.

I hope this is what Bytemaster is working on with the top secret Plasma project.

I somewhat agree. BTC would be a better form of collateral (or any other crypto-currencies with higher market cap and higher volume than that of BTS. I don't see that being implemented any time soon. What is the secret Plasma project?

clout

  • Guest

I don't think this is a good idea, people who do this will get ripped off by creating an arbitrage opportunity for other traders. The good thing is that it should help peg the internal markets; the bad thing is that these market makers will be the ones paying the expense. Here's the arbitrage:


Yes, I have reevaluated the market dynamics and a I realize that at present this is not a good idea. The problem is not getting ripped off by other traders that take advantages of arbitrage opportunities, the problem is getting ripped off by the blockchain which will sell under-collateralized positions at a 10 percent discount. This is a large reason why there is the premium on BitBTC

Quote
I posted recently, maybe bitshares UIAs should be the main mechanism for trading... In that case, market making the trade.btc:openbtc markets is more important.

No UIA's should not be the main mechanism for trading. The point of Bitshares is to get rid of the reliance on financial intermediaries. If UIA's are the main mechanism for trading, we haven't improved anything.

Quote
An alternative idea would be to mirror the bts:btc market in the openbtc:btc market with some profit. That requires bots (and to properly map bts to openbtc), but why would someone trade that way when they could directly go openbtc:bts:btc on their own without paying a premium?

I'm not sure I follow your logic here. If you want to go from OPENBTC to BitBTC you shouldn't have to think about the price of BTS.






Offline JonnyB

  • Hero Member
  • *****
  • Posts: 636
    • View Profile
    • twitter.com/jonnybitcoin
Ultimately I believe that bitshares needs a sidechain btc that locks up real btc in the bitshares blockchain.
This would be far superior to all BTC UIAs and BitBTC and render them pointless with the outcome of much fewer market pairs and more liquidity.
Also it would make for the perfect collateral for any fiat MPAs has it is a very deep liquid market.

I hope this is what Bytemaster is working on with the top secret Plasma project.
I run the @bitshares twitter handle
twitter.com/bitshares

Offline Akado

  • Hero Member
  • *****
  • Posts: 2752
    • View Profile
  • BitShares: akado
Hmmh, this got me thinking...

What is the value of bitBTC? Why would anybody want to acquire it?

For a common user bitBTC doesn't offer any benefit. It can be used only in the Bitshares exchange, compared to real BTC that can be used for many different things like buying stuff online.

So basically bitBTC is useful for only (1) traders, (2) who use Bitshares DEX and (3) want to avoid counterparty risk that UIA-BTC has. That's a quite small market segment. Do we really want to serve them well in this point or rather focus on other things that might bring greater benefits for more users?

agree, I also feel that BitBTC make little sense, BTC is not a stable currency, why should I lock one unstable asset (BTS) as collateral to get another?

surely we need to introduce BTC to Bitshares, is it possible to make another kind of "BTC" as NXT did using multisig? it is closer to real BTC and we can lock it as collateral to generate BitCNY or BitUSD.

So people can't print another 21M bitBTC and dump them?

Also it's useful for the exchanges to use the same orderbook, but I guess that won't happen anymore
https://metaexchange.info | Bitcoin<->Altcoin exchange | Instant | Safe | Low spreads

Offline bitcrab

  • Committee member
  • Hero Member
  • *
  • Posts: 1928
    • View Profile
  • BitShares: bitcrab
  • GitHub: bitcrab
Hmmh, this got me thinking...

What is the value of bitBTC? Why would anybody want to acquire it?

For a common user bitBTC doesn't offer any benefit. It can be used only in the Bitshares exchange, compared to real BTC that can be used for many different things like buying stuff online.

So basically bitBTC is useful for only (1) traders, (2) who use Bitshares DEX and (3) want to avoid counterparty risk that UIA-BTC has. That's a quite small market segment. Do we really want to serve them well in this point or rather focus on other things that might bring greater benefits for more users?

agree, I also feel that BitBTC make little sense, BTC is not a stable currency, why should I lock one unstable asset (BTS) as collateral to get another?

surely we need to introduce BTC to Bitshares, is it possible to make another kind of "BTC" as NXT did using multisig? it is closer to real BTC and we can lock it as collateral to generate BitCNY or BitUSD.
Email:bitcrab@qq.com

Offline Samupaha

  • Sr. Member
  • ****
  • Posts: 479
    • View Profile
  • BitShares: samupaha
Hmmh, this got me thinking...

What is the value of bitBTC? Why would anybody want to acquire it?

For a common user bitBTC doesn't offer any benefit. It can be used only in the Bitshares exchange, compared to real BTC that can be used for many different things like buying stuff online.

So basically bitBTC is useful for only (1) traders, (2) who use Bitshares DEX and (3) want to avoid counterparty risk that UIA-BTC has. That's a quite small market segment. Do we really want to serve them well in this point or rather focus on other things that might bring greater benefits for more users?

Offline well.attenuated

bitBTC should not trade at parity with any other flavor of BTC because of the downside risk of shorting/creating bitBTC.  bitBTC should theoretically always command a premium over these gateway assets.  The correct model is Price=(1+R)+/-spread where R=risk premium and is >0
https://metaexchange.info | Bitcoin<->Altcoin exchange | Instant | Safe | Low spreads

Offline GaltReport

How to provide liquidity in bridge markets

  • Borrow BitBTC with BTS
  • Sell BitBTC at 1.005
  • Buy BitBTC back at 0.995
  • Repay loan
  • Net 1% profit

Executing this simple algorithm allows individuals that are long BTS to generate a profit of 1% while still remaining long BTS. I would like to encourage anyone, who would like to help Bitshares liquidity problem, to Borrow BTC and begin selling it at less than a 1% spread on one of these bridge markets.

I don't think this is a good idea, people who do this will get ripped off by creating an arbitrage opportunity for other traders. The good thing is that it should help peg the internal markets; the bad thing is that these market makers will be the ones paying the expense. Here's the arbitrage:

I start with 1 real BTC. I use openledger and trade for 1 openbtc (minus small fee). I trade my 1 openbtc for .99 bitBTC (because of the proposed openbtc:BTC market makers). 1 bitBTC is sold for 1.10 times the value of 1 BTC in the BTS:bitBTC market. I sell my .99 bitBTC for 1.089 bitBTC worth of BTS on the DEX. I then take my 1.089 bitBTC worth of BTS to openledger and trade it to BTC.

I start with 1 BTC, I end with 1.089 BTC.
The BTC:BTS market moved closer to peg.
The market maker is now short .99 BTC (and the value of BTC dropped).
No one will sell me openbtc when they can go to openledger and get a better deal, so the market maker will go short forever until the market makers run out of funds or until the spread between settlement and bitBTC < 1%.

I posted recently, maybe bitshares UIAs should be the main mechanism for trading... In that case, market making the trade.btc:openbtc markets is more important.

An alternative idea would be to mirror the bts:btc market in the openbtc:btc market with some profit. That requires bots (and to properly map bts to openbtc), but why would someone trade that way when they could directly go openbtc:bts:btc on their own without paying a premium?

Nice Analysis.  Glad we have people here that can noodle this stuff through...

Offline maqifrnswa

  • Hero Member
  • *****
  • Posts: 661
    • View Profile
How to provide liquidity in bridge markets

  • Borrow BitBTC with BTS
  • Sell BitBTC at 1.005
  • Buy BitBTC back at 0.995
  • Repay loan
  • Net 1% profit

Executing this simple algorithm allows individuals that are long BTS to generate a profit of 1% while still remaining long BTS. I would like to encourage anyone, who would like to help Bitshares liquidity problem, to Borrow BTC and begin selling it at less than a 1% spread on one of these bridge markets.

I don't think this is a good idea, people who do this will get ripped off by creating an arbitrage opportunity for other traders. The good thing is that it should help peg the internal markets; the bad thing is that these market makers will be the ones paying the expense. Here's the arbitrage:

I start with 1 real BTC. I use openledger and trade for 1 openbtc (minus small fee). I trade my 1 openbtc for .99 bitBTC (because of the proposed openbtc:BTC market makers). 1 bitBTC is sold for 1.10 times the value of 1 BTC in the BTS:bitBTC market. I sell my .99 bitBTC for 1.089 bitBTC worth of BTS on the DEX. I then take my 1.089 bitBTC worth of BTS to openledger and trade it to BTC.

I start with 1 BTC, I end with 1.089 BTC.
The BTC:BTS market moved closer to peg.
The market maker is now short .99 BTC (and the value of BTC dropped).
No one will sell me openbtc when they can go to openledger and get a better deal, so the market maker will go short forever until the market makers run out of funds or until the spread between settlement and bitBTC < 1%.

I posted recently, maybe bitshares UIAs should be the main mechanism for trading... In that case, market making the trade.btc:openbtc markets is more important.

An alternative idea would be to mirror the bts:btc market in the openbtc:btc market with some profit. That requires bots (and to properly map bts to openbtc), but why would someone trade that way when they could directly go openbtc:bts:btc on their own without paying a premium?
« Last Edit: November 20, 2015, 06:44:37 pm by maqifrnswa »
maintains an Ubuntu PPA: https://launchpad.net/~showard314/+archive/ubuntu/bitshares [15% delegate] wallet_account_set_approval maqifrnswa true [50% delegate] wallet_account_set_approval delegate1.maqifrnswa true

Offline xeroc

  • Board Moderator
  • Hero Member
  • *****
  • Posts: 12922
  • ChainSquad GmbH
    • View Profile
    • ChainSquad GmbH
  • BitShares: xeroc
  • GitHub: xeroc
I dont think the wallet devs are inclined to integrate the bot in the the wallet. This also doesnt need to to be done by a bot since there are no realtime price changes that need to be considered. These orders could be handled manually although i would of course want them to be automated in the future.
Very good point ..