Author Topic: settlement is the best method to maniuplate the market  (Read 1972 times)

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Online alt

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settlement is the best method to maniuplate the market
« on: November 30, 2015, 12:05:00 am »
the key is a bitCNY holder can buy any volume at the same price.
imagine bitCNY can peg at rate 1:1 now
1. somebody collect 200K bitCNY first
2. ask for settlement
3. after about 22 hours, before the settlement be executed, he sell 200K CNY at BTC38, maniuplate the price down
4. waitting the settlement execute

if exchange like BTC38 do this, it's more easy.
shorters will found, they always be sold at a low price
it's not because they are unlucky, it's because the stupid rule.
this will loop again and again, until all bitCNY short position be settlement and no more stupid shorter continue the game.

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Re: settlement is the best method to maniuplate the market
« Reply #1 on: November 30, 2015, 12:13:46 am »
you can't  ignore the problem just because it's there from the beginning.
The Heartbleed bug dates back to December 2011
all problem is already there before we found it
pelase consider this serious.

Offline sudo

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Re: settlement is the best method to maniuplate the market
« Reply #2 on: November 30, 2015, 12:26:55 am »
the key is a bitCNY holder can buy any volume at the same price.
imagine bitCNY can peg at rate 1:1 now
1. somebody collect 200K bitCNY first
2. ask for settlement
3. after about 22 hours, before the settlement be executed, he sell 200K CNY at BTC38, maniuplate the price down
4. waitting the settlement execute

if exchange like BTC38 do this, it's more easy.
shorters will found, they always be sold at a low price
it's not because they are unlucky, it's because the stupid rule.
this will loop again and again, until all bitCNY short position be settlement and no more stupid shorter continue the game.

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Offline clayop

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Re: settlement is the best method to maniuplate the market
« Reply #3 on: November 30, 2015, 01:11:31 am »
I think it's difficult to be happened. The manipulator should take risks that other market participants do not allow decreasing BTS price or etc.
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Offline dirnet

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Re: settlement is the best method to maniuplate the market
« Reply #4 on: November 30, 2015, 01:12:44 am »
the key is a bitCNY holder can buy any volume at the same price.
imagine bitCNY can peg at rate 1:1 now
1. somebody collect 200K bitCNY first
2. ask for settlement
3. after about 22 hours, before the settlement be executed, he sell 200K CNY at BTC38, maniuplate the price down
4. waitting the settlement execute

if exchange like BTC38 do this, it's more easy.
shorters will found, they always be sold at a low price
it's not because they are unlucky, it's because the stupid rule.
this will loop again and again, until all bitCNY short position be settlement and no more stupid shorter continue the game.
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Re: settlement is the best method to maniuplate the market
« Reply #5 on: November 30, 2015, 01:16:23 am »
the fact is there always somebody maniuplate the market.
in other market, they have risk can't buy back enough stock after they sell it out.
but in BTS system, we have get rid of this big risk for them,
thanks to all BTS holders, they will like this gift very much.

Offline BTSdac

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Re: settlement is the best method to maniuplate the market
« Reply #6 on: November 30, 2015, 02:31:11 am »
the key is a bitCNY holder can buy any volume at the same price.
imagine bitCNY can peg at rate 1:1 now
1. somebody collect 200K bitCNY first
2. ask for settlement
3. after about 22 hours, before the settlement be executed, he sell 200K CNY at BTC38, maniuplate the price down
4. waitting the settlement execute

if exchange like BTC38 do this, it's more easy.
shorters will found, they always be sold at a low price
it's not because they are unlucky, it's because the stupid rule.
this will loop again and again, until all bitCNY short position be settlement and no more stupid shorter continue the game.
1.I disagree that it is stupid rule; the propose of  force settlement is to make bitcny:cny >=1, 
2. the settlement execute in 24 hours as you said,   eg. the current price is  2.5 cny/bts , you settle force use bitcny at 2.5bitcny/bts, but if the price in btc38.com decrease to 2 cny in 24 hours.
2.5 bitcny/bts is the low price ?   I think the settlement is "buy any volume at the same price in periods of 24 hours
in btc38.com , we cannot buy any volume at the same price. and settlement of bitcny execute in 24 hours , it is similar.
 
« Last Edit: November 30, 2015, 03:15:33 am by BTSdac »
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Re: settlement is the best method to maniuplate the market
« Reply #7 on: November 30, 2015, 02:38:52 am »
sorry totally can't catch your logic
the key is a bitCNY holder can buy any volume at the same price.
imagine bitCNY can peg at rate 1:1 now
1. somebody collect 200K bitCNY first
2. ask for settlement
3. after about 22 hours, before the settlement be executed, he sell 200K CNY at BTC38, maniuplate the price down
4. waitting the settlement execute

if exchange like BTC38 do this, it's more easy.
shorters will found, they always be sold at a low price
it's not because they are unlucky, it's because the stupid rule.
this will loop again and again, until all bitCNY short position be settlement and no more stupid shorter continue the game.
1.I disagree that it is stupid rule; the propose of  force settlement is to make bitcny:cny >=1, 
2. the settlement execute in 22 hours as you said,   eg. the current price is  2.5 cny/bts , you settle force use bitcny at 2.5bitcny/bts, but if the price in btc38.com decrease to 2 cny in 22 hours.
2.5 bitcny/bts is the low price ?   I think the settlement is "buy any volume at the same price in periods of 22 hours
in btc38.com , we cannot buy any volume at the same price. and settlement of bitcny execute in 22 hours , it is similar.

Offline BTSdac

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Re: settlement is the best method to maniuplate the market
« Reply #8 on: November 30, 2015, 04:59:00 am »
sorry totally can't catch your logic
the key is a bitCNY holder can buy any volume at the same price.
imagine bitCNY can peg at rate 1:1 now
1. somebody collect 200K bitCNY first
2. ask for settlement
3. after about 22 hours, before the settlement be executed, he sell 200K CNY at BTC38, maniuplate the price down
4. waitting the settlement execute

if exchange like BTC38 do this, it's more easy.
shorters will found, they always be sold at a low price
it's not because they are unlucky, it's because the stupid rule.
this will loop again and again, until all bitCNY short position be settlement and no more stupid shorter continue the game.
1.I disagree that it is stupid rule; the propose of  force settlement is to make bitcny:cny >=1, 
2. the settlement execute in 22 hours as you said,   eg. the current price is  2.5 cny/bts , you settle force use bitcny at 2.5bitcny/bts, but if the price in btc38.com decrease to 2 cny in 22 hours.
2.5 bitcny/bts is the low price ?   I think the settlement is "buy any volume at the same price in periods of 22 hours
in btc38.com , we cannot buy any volume at the same price. and settlement of bitcny execute in 22 hours , it is similar.
same as clayop said
I think it's difficult to be happened. The manipulator should take risks that other market participants do not allow decreasing BTS price or etc.
but ,if there is no force settlement ,
1. use 1000W bts  borrow a lot of  bitcny,
2. change bitcny to cny   if there are someone want to change , 
3.use cny buy BTS,  make BTS price increase ,
4.use the BTS borrow bitcny  , and repeat the process
just need to use the cny borrow to buy bts make bts price increase . they can repeat this process unceasingly. if the price is not down to call price

compare with two methods  , what is needed  and difficulty levels

                                 force settlement                            without force settlement
Control price                       yes                                                  yes           (easy, there are cny from borrow)
Need bitcny                         yes                                                 no
Need BTS                             no                                                  yes
Need CNY                            yes                                                  no

I  think if there is on force-settlement , it would make more problem.

so  I think it is better to keep force settlement, but change rule as follow 
settlement price is the price in 24 hours (settlement execute  )  ,
3. after about 22 hours, before the settlement be executed, he sell 200K CNY at BTC38, maniuplate the price down
    I think you said "sell 200KCNY at BTC38" mean use 200K CNY buy BTS at BTC38? , if so !  shorters will found, they always be sold at a fit price?


« Last Edit: November 30, 2015, 10:33:18 am by BTSdac »
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Offline tonyk

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Re: settlement is the best method to maniuplate the market
« Reply #9 on: November 30, 2015, 06:06:54 pm »
the key is a bitCNY holder can buy any volume at the same price.
imagine bitCNY can peg at rate 1:1 now
1. somebody collect 200K bitCNY first
2. ask for settlement
3. after about 22 hours, before the settlement be executed, he sell 200K CNY at BTC38, maniuplate the price down
4. waitting the settlement execute

if exchange like BTC38 do this, it's more easy.
shorters will found, they always be sold at a low price
it's not because they are unlucky, it's because the stupid rule.
this will loop again and again, until all bitCNY short position be settlement and no more stupid shorter continue the game.

I have a solution for your attack alt - use not last feed price but the 24h average price. It seems like 'expensive' operation but the fee is 1000BTS so it should cover it.
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

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Re: settlement is the best method to maniuplate the market
« Reply #10 on: November 30, 2015, 06:49:04 pm »
The attack doesn't seem that realistic though, as it relies on someone going long on BTS and then attacking the BTS price.

1) a buy a bunch of BTS, then a bunch of bitCNY. In a properly functioning market, I paid a premium for bitCNY because 1 bitCNY is supposed to be > 1 CNY.
2) I request a forced settlement (losing the premium I paid).
3) I wait 23 hours and sell all the BTS I bought (which incurs a loss as I drive down the market)
4) my forced settlement goes through, and I get a lot of BTS because of my attack. But those BTS are now worth less than what I paid for them in order to get the CNY in the first place.

In the end: I paid a premium to buy CNY, which I lost. I sold a lot of BTS for less money than I paid for them. I force settled my CNY for more BTS than the CNY was originally worth (as long as I can overcome the premium I paid). Now I have BTS, which are not worth very much since I drove down the price and I overpaid for CNY in the first place.
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Re: settlement is the best method to maniuplate the market
« Reply #11 on: November 30, 2015, 07:02:43 pm »
The attack doesn't seem that realistic though, as it relies on someone going long on BTS and then attacking the BTS price.

1) a buy a bunch of BTS, then a bunch of bitCNY. In a properly functioning market, I paid a premium for bitCNY because 1 bitCNY is supposed to be > 1 CNY.
2) I request a forced settlement (losing the premium I paid).
3) I wait 23 hours and sell all the BTS I bought (which incurs a loss as I drive down the market)
4) my forced settlement goes through, and I get a lot of BTS because of my attack. But those BTS are now worth less than what I paid for them in order to get the CNY in the first place.

In the end: I paid a premium to buy CNY, which I lost. I sold a lot of BTS for less money than I paid for them. I force settled my CNY for more BTS than the CNY was originally worth (as long as I can overcome the premium I paid). Now I have BTS, which are not worth very much since I drove down the price and I overpaid for CNY in the first place.
If one has a lot of bts at the start, she can get more bts by this attack, although the "total value" of her bts may not increase in the end.
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Offline BTSdac

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Re: settlement is the best method to maniuplate the market
« Reply #12 on: December 01, 2015, 01:32:52 am »
The attack doesn't seem that realistic though, as it relies on someone going long on BTS and then attacking the BTS price.

1) a buy a bunch of BTS, then a bunch of bitCNY. In a properly functioning market, I paid a premium for bitCNY because 1 bitCNY is supposed to be > 1 CNY.
2) I request a forced settlement (losing the premium I paid).
3) I wait 23 hours and sell all the BTS I bought (which incurs a loss as I drive down the market)
4) my forced settlement goes through, and I get a lot of BTS because of my attack. But those BTS are now worth less than what I paid for them in order to get the CNY in the first place.

In the end: I paid a premium to buy CNY, which I lost. I sold a lot of BTS for less money than I paid for them. I force settled my CNY for more BTS than the CNY was originally worth (as long as I can overcome the premium I paid). Now I have BTS, which are not worth very much since I drove down the price and I overpaid for CNY in the first place.
this attack should been compare with a base,
actually ,everyone  can buy a big volume of BTS on btc38.com , make the price of bts increase , then sell his BTS,  and get profit .
it is more easy than by settlement .
 
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Offline BTSdac

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Re: settlement is the best method to maniuplate the market
« Reply #13 on: December 01, 2015, 01:41:48 am »
the key is a bitCNY holder can buy any volume at the same price.
imagine bitCNY can peg at rate 1:1 now
1. somebody collect 200K bitCNY first
2. ask for settlement
3. after about 22 hours, before the settlement be executed, he sell 200K CNY at BTC38, maniuplate the price down
4. waitting the settlement execute

if exchange like BTC38 do this, it's more easy.
shorters will found, they always be sold at a low price
it's not because they are unlucky, it's because the stupid rule.
this will loop again and again, until all bitCNY short position be settlement and no more stupid shorter continue the game.

I have a solution for your attack alt - use not last feed price but the 24h average price. It seems like 'expensive' operation but the fee is 1000BTS so it should cover it.
24 average price is different to  calculate, why not just use the price when settlement execute.

settlement price is the price in 24 hours (settlement execute  )  ,

actually ,no matter what price you select, there always more or less problem.
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Re: settlement is the best method to maniuplate the market
« Reply #14 on: December 01, 2015, 07:40:29 am »
actually ,everyone  can buy a big volume of BTS on btc38.com , make the price of bts increase , then sell his BTS,  and get profit .
it is more easy than by settlement .

The difference between this and forced settlement is that the above method drives the BTS price down whereas forced settlement doesn't.
Forced settlement happens instantly, for the full amount at a fixed price. Try to achieve that by selling on a market.
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Re: settlement is the best method to maniuplate the market
« Reply #15 on: December 01, 2015, 10:08:31 am »
actually ,everyone  can buy a big volume of BTS on btc38.com , make the price of bts increase , then sell his BTS,  and get profit .
it is more easy than by settlement .

The difference between this and forced settlement is that the above method drives the BTS price down whereas forced settlement doesn't.
Forced settlement happens instantly, for the full amount at a fixed price. Try to achieve that by selling on a market.

There is also a 24h delay for settlements to prevents this exact exploit ..
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Re: settlement is the best method to maniuplate the market
« Reply #16 on: December 01, 2015, 05:25:55 pm »
There is also a 24h delay for settlements to prevents this exact exploit ..

Read the OP again... the attacker waits until just before the 24 hours are over before he starts manipulating the market price. So the delay doesn't help.
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Re: settlement is the best method to maniuplate the market
« Reply #17 on: December 01, 2015, 09:18:21 pm »
There is also a 24h delay for settlements to prevents this exact exploit ..

Read the OP again... the attacker waits until just before the 24 hours are over before he starts manipulating the market price. So the delay doesn't help.
One way for shorters to protect their collateral is to show enough buy power (place buy orders) on external exchanges to keep the price high, and place enough sell orders in internal exchange above feed price to incentive buying instead of settling. Would it be profitable if make a bot to do this?
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Offline bytemaster

Re: settlement is the best method to maniuplate the market
« Reply #18 on: December 01, 2015, 10:21:55 pm »
The attack doesn't seem that realistic though, as it relies on someone going long on BTS and then attacking the BTS price.

1) a buy a bunch of BTS, then a bunch of bitCNY. In a properly functioning market, I paid a premium for bitCNY because 1 bitCNY is supposed to be > 1 CNY.
2) I request a forced settlement (losing the premium I paid).
3) I wait 23 hours and sell all the BTS I bought (which incurs a loss as I drive down the market)
4) my forced settlement goes through, and I get a lot of BTS because of my attack. But those BTS are now worth less than what I paid for them in order to get the CNY in the first place.

In the end: I paid a premium to buy CNY, which I lost. I sold a lot of BTS for less money than I paid for them. I force settled my CNY for more BTS than the CNY was originally worth (as long as I can overcome the premium I paid). Now I have BTS, which are not worth very much since I drove down the price and I overpaid for CNY in the first place.

Great analysis.  Furthermore, the attack can be mitigated dramatically by rate limiting force settlement.  If the maximum daily force settlement amount is not enough value to manipulate the market by enough to overcome the premium paid then this is a non-issue.   Furthermore, I am not convinced that a 24 hour delay is ideal for force settlement.  Perhaps closer to a few hours would be better.
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Re: settlement is the best method to maniuplate the market
« Reply #19 on: December 02, 2015, 12:15:53 am »
The attack doesn't seem that realistic though, as it relies on someone going long on BTS and then attacking the BTS price.

1) a buy a bunch of BTS, then a bunch of bitCNY. In a properly functioning market, I paid a premium for bitCNY because 1 bitCNY is supposed to be > 1 CNY.
2) I request a forced settlement (losing the premium I paid).
3) I wait 23 hours and sell all the BTS I bought (which incurs a loss as I drive down the market)
4) my forced settlement goes through, and I get a lot of BTS because of my attack. But those BTS are now worth less than what I paid for them in order to get the CNY in the first place.

In the end: I paid a premium to buy CNY, which I lost. I sold a lot of BTS for less money than I paid for them. I force settled my CNY for more BTS than the CNY was originally worth (as long as I can overcome the premium I paid). Now I have BTS, which are not worth very much since I drove down the price and I overpaid for CNY in the first place.
the attack don't need to be a BTS longer. he can borrow BTS from others(in polo),
or maybe the attack is an exchange like BTC38, sell BTS don't belong to themself.

you  should think these from another vision.
maniuplate always happen, when whales dump a stock, they always want to get more stock at the low price.
BTS have give them a gift, get these cheap stock much easy than all other stock.  and the shorters never have a way to save themselves.

only the volume limit can protect something.  but I think it is not enough, and if we want this protect work good, maybe we need to adjust this very often, it can be very complex.

we need give the shorters a more easy way to save them from the settle, just like can't be settled if my collatereal is more than 200%

Offline bytemaster

Re: settlement is the best method to maniuplate the market
« Reply #20 on: December 02, 2015, 10:26:52 pm »
Shorts can pick their place in line for settlement.  Think of it this way, if you fall in the bottom 2% of shorters by collateral you have been given notice of potential margin call.  This is like any other market where they give you 24 hours to add collateral.  If someone is short and doesn't want to meet the new higher collateral limits then they can either cover on their own terms or add collateral.

By giving 24 hours shorts have an opportunity to cover prior to any price manipulation. 

If there is a 10% premium on BitUSD relative to the feed, then the attacker would have to increase reported price feed (value of BTS) by 10% just to get the force-settlement price to equal the previously fair value for BitUSD.  They would have to push beyond 10% before the short starts taking a loss relative to a voluntary cover.     All savvy market participants would be aware of a large force-settle order and would therefore reset the manipulator making it much harder to manipulate the price.  In effect, price manipulation represents "free money" to those who know it is going on.

Look at it another way, someone enters a large force-settlement order it becomes an opportunity for the shorter to do reverse manipulation. It is a tug of war where both sides (short and long) have equal opportunity to manipulate the market in their favor.  They go to battle and the result is just the fair market price at that point in time.  It is not a guaranteed win for the potential manipulator.

 
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