Author Topic: Smart Coins & Forced Settlement  (Read 12143 times)

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Offline theoretical


According to the code:

Code: [Select]
/** percentage fields are fixed point with a denominator of 10,000 */                                                                                                                                                                       
#define GRAPHENE_100_PERCENT                                    10000                                                                                                                                                                       
#define GRAPHENE_1_PERCENT                                      (GRAPHENE_100_PERCENT/100)   

Before launch I went through every place in the witness_node where percentages are used and standardized most of them to use GRAPHENE_100_PERCENT.  I just now checked the code which handles the max force settlement, and it definitely uses these constants.  So 2000 definitely represents 20%.

You can see that it is currently set to 2000 for BitUSD (and I don't doubt for the other assets as well):

Code: [Select]
>>> get_asset USD
{
   ...
   "issuer": "1.2.0"
...
  "bitasset_data_id": "2.4.21"
}
>>> get_object 2.4.21
{
...
      "maximum_force_settlement_volume": 2000,
...
}

I can state with certainty that it is currently 20%.  It is possible to change with a committee proposal of asset_update_operation.

Great care should be taken on any such proposal to ensure the issuer permissions and flags have the same values as before.
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Offline alt

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the commitee don't agree me without your command @bytemaster
It's not about a command ... it's about knowing for certainty if it is 2% or 20% .. if it really was 20% .. then most would definitely agree with you!
sorry, maybe it's my misunderstand

Offline tonyk

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Now if only tinyGiantCancer has used his influence on the committee to change/stop a real problem like this [or SQP] instead of using it to defend his business interest on a none issue...



and yes I do believe in some particular days more than 2% of bitCNY were settled.


NOOOOOOOOOOOO it was stopped for something else...re-enable it right now! deal with this 'new' issue after that!
« Last Edit: December 02, 2015, 01:02:47 pm by tonyk »
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline xeroc

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the commitee don't agree me without your command @bytemaster
It's not about a command ... it's about knowing for certainty if it is 2% or 20% .. if it really was 20% .. then most would definitely agree with you!

Offline alt

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We are not so sure about this any more. @roadscape did some analysis of the code:

Quote
generally all percent figures in graphene are based on this:
#define GRAPHENE_100_PERCENT 10000
so if the max_force_settlement_vol is 2,000 that would suggest 20%

also I see this:
#define GRAPHENE_DEFAULT_FORCE_SETTLEMENT_MAX_VOLUME (20* GRAPHENE_1_PERCENT)
@bytemaster
I ask for correct this parameter to 2% before reenable setltement
because if we enable settlement with parameter 20%, it's enough to attrack an attack.
the commitee don't agree me without your command @bytemaster
please give an input

Offline merivercap

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it's my fault not to pay enough attention to the force settlement feature in 2.0, you have the opportunity because transwiser kept on selling BitCNY at 1 CNY to the market in past.

the force settlement feature bring additional risks to the shorter, the result is that BitCNY will worth more than 1 CNY, with a variable premium.

merchant/customers need a cryptocurrency that has fixed value,  they just need a simple value transfer media, nothing more, to calculate/check/split the premium need to pay more time/energy/management cost, a BitCNY with variable premium added to 1 CNY is not what the really need.

BitCNY has been a good payment media for merchant/customers,  there have been merchant(BTC38), customers(btc38 users), acceptance dealer(transwiser), now the introduction of the force settle make all the above have no space to stay and only speculators will enjoy.

market need speculators, but if there are only speculators in the market, speculators will find no chance to make profit.

 +5%

I agree with you and I'm glad to see that it worked well as a payment media for merchants/customers in China.  I don't think it's much different here.  That's precisely how I envision bitCash to work.   

very different, one important principle for the design of a currency system is to balance the responsibility, power, and benefit of each role in the market. you can check the design of DAI for reference, there are also force settlement there, but the rule is that the user who request force settlement will pay penalty according to the collateral ratio of the  short position that will be settled, the higher the collateral ratio, the higher the penalty.

this rule make a better balance. and shorter can enter to the market without many worry, and it is possible to peg.

the current rule in BTS2.0 do too much good to bitcny holders, but do bad to shorters, the balance is destroyed.

to peg is also important, what merchant/customers need is a payment media with fixed value, security and convenience, in bts1.0, transwiser can help BitCNY to realize this, but now, there's no chance for transwiser to do the same.

I agree with you.  There was just some miscommunication.  In my previous comment I just meant  'I don't think there's much difference here [in the US compared to China.]'
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@alt X% force settle per day is independent with each asset

When I talk about prices I always think in FIAT prices.  So USD per BTS or USD per BitUSD.  I know this is the opposite of how many in crypto think in terms of their favorite token.

Few understand the whole system.  Many have discussed it, understood it, and since forgot it.   We have to "re-learn" many times unless you live/breath it full time.

http://cryptofresh.com/a/CNY

Max force settle vol   2000

Does 2000 mean 2% or 20%?

2%

We are not so sure about this any more. @roadscape did some analysis of the code:

Quote
generally all percent figures in graphene are based on this:
#define GRAPHENE_100_PERCENT 10000
so if the max_force_settlement_vol is 2,000 that would suggest 20%

also I see this:
#define GRAPHENE_DEFAULT_FORCE_SETTLEMENT_MAX_VOLUME (20* GRAPHENE_1_PERCENT)
@bytemaster

Offline bitcrab

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it's my fault not to pay enough attention to the force settlement feature in 2.0, you have the opportunity because transwiser kept on selling BitCNY at 1 CNY to the market in past.

the force settlement feature bring additional risks to the shorter, the result is that BitCNY will worth more than 1 CNY, with a variable premium.

merchant/customers need a cryptocurrency that has fixed value,  they just need a simple value transfer media, nothing more, to calculate/check/split the premium need to pay more time/energy/management cost, a BitCNY with variable premium added to 1 CNY is not what the really need.

BitCNY has been a good payment media for merchant/customers,  there have been merchant(BTC38), customers(btc38 users), acceptance dealer(transwiser), now the introduction of the force settle make all the above have no space to stay and only speculators will enjoy.

market need speculators, but if there are only speculators in the market, speculators will find no chance to make profit.

 +5%

I agree with you and I'm glad to see that it worked well as a payment media for merchants/customers in China.  I don't think it's much different here.  That's precisely how I envision bitCash to work.   

very different, one important principle for the design of a currency system is to balance the responsibility, power, and benefit of each role in the market. you can check the design of DAI for reference, there are also force settlement there, but the rule is that the user who request force settlement will pay penalty according to the collateral ratio of the  short position that will be settled, the higher the collateral ratio, the higher the penalty.

this rule make a better balance. and shorter can enter to the market without many worry, and it is possible to peg.

the current rule in BTS2.0 do too much good to bitcny holders, but do bad to shorters, the balance is destroyed.

to peg is also important, what merchant/customers need is a payment media with fixed value, security and convenience, in bts1.0, transwiser can help BitCNY to realize this, but now, there's no chance for transwiser to do the same.


 
Email:bitcrab@qq.com

Offline merivercap

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it's my fault not to pay enough attention to the force settlement feature in 2.0, you have the opportunity because transwiser kept on selling BitCNY at 1 CNY to the market in past.

the force settlement feature bring additional risks to the shorter, the result is that BitCNY will worth more than 1 CNY, with a variable premium.

merchant/customers need a cryptocurrency that has fixed value,  they just need a simple value transfer media, nothing more, to calculate/check/split the premium need to pay more time/energy/management cost, a BitCNY with variable premium added to 1 CNY is not what the really need.

BitCNY has been a good payment media for merchant/customers,  there have been merchant(BTC38), customers(btc38 users), acceptance dealer(transwiser), now the introduction of the force settle make all the above have no space to stay and only speculators will enjoy.

market need speculators, but if there are only speculators in the market, speculators will find no chance to make profit.

 +5%

I agree with you and I'm glad to see that it worked well as a payment media for merchants/customers in China.  I don't think it's much different here.  That's precisely how I envision bitCash to work.   
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Offline bitcrab

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after 2 years of experimenting I think the best was the first and original rule..depending on demand for bitassets the bitusd could be at a discount or a premium..period..no expiration no SQP and shinny formulas..nothing..traders would short when bitasset was at premium and people would buy bitasset when in discount forcing the peg
Merchants accepting bitusd as a form of payment would know that at some point their bitasset would worth more or less but at least there would be liquidity from traders and the risk for not beeing able to convert all their bitasset in fiat would be minimal..Now after 2 years we have no liquidity, no traders in the DEX nothing..anyway..

I agree about SQP. Margin calls should only happen when they absolutely must (since it is destroying BTS when in undersupply), and therefore should be tied to whatever is the most liquid/accurate market values. SQP of 1 (fixed to price feed) makes most sense until internal markets are liquid enough.

"traders would short when bitasset was at premium and people would buy bitasset when in discount forcing the peg"
That did not work. The very first bitshares (version 0.1 or something like that)  tried this with no price feed or incentives to maintain peg, and price ran away very quickly. Why should I pay for something with no intrinsic value just because it has the label "USD" on it? I'll sell you 1000 maqifrsnwaUSD for 1000.

forced settlement is both the "gold standard" and the "federal reserve." It is the "gold standard" since you can always redeem your smartcoin for the equivalent value in something else. It is the "federal reserve" since it incentivizes the destruction of smartcoins when supply exceeds demand such that value is maintained. What (fiat) currency in the world exists without either a "gold standard" or a "federal reserve?"

Confession of a force-settler (before the GUI made it easy):
I will confess that I was a forced-settler before the GUI came out. I was a force-settler because I spent the time to learn the system inside and out in order to test some bots for both smartcoins and UIA (I believe UIA with properly regulated KYC is the growth market for BTS). My bots know nothing about the underlying assets, they only know the market rules: Sell high, buy low, never sell an asset for less than it can be settled for, if you can buy an asset for less than it can be settled then buy the assets and settle. This behavior is rational, generates profit, and keeps BitShares working efficiently - so it is a win-win for everyone. I feel it is a "service" to the community. I probably settled 1-2k CNY since it started. No other market presented settlement opportunities. I did not know why CNY presented this opportunity; I guessed there was a larger supply of "whales" trying to gain leverage any way they can in risky ways.

When I first heard of Transwiser, I was shocked at the business model (since it seemed like it would always lose money since 1 bitCNY> 1CNY) but also extremely impressed that they figured out to "beat the system" where I could not. The service was great for BTS and I was looking forward to them expanding to other currencies.

When I heard about the price feed data inaccuracy, at first I felt bad but then realized that the error was in some thinking smartcoins were something they were not. See: https://bitsharestalk.org/index.php/topic,20375.0/topicseen.html Even if the feed was incorrect, all businesses must know that the feed is all that matters and build their business model off of that (or work to correct the feed).

Now that we're almost through this "crisis," I think we're all stronger. Feeds are more accurate, people know what smartcoins are, and businesses know to research the system completely before building on top of it.

it's my fault not to pay enough attention to the force settlement feature in 2.0, you have the opportunity because transwiser kept on selling BitCNY at 1 CNY to the market in past.

the force settlement feature bring additional risks to the shorter, the result is that BitCNY will worth more than 1 CNY, with a variable premium.

merchant/customers need a cryptocurrency that has fixed value,  they just need a simple value transfer media, nothing more, to calculate/check/split the premium need to pay more time/energy/management cost, a BitCNY with variable premium added to 1 CNY is not what the really need.

BitCNY has been a good payment media for merchant/customers,  there have been merchant(BTC38), customers(btc38 users), acceptance dealer(transwiser), now the introduction of the force settle make all the above have no space to stay and only speculators will enjoy.

market need speculators, but if there are only speculators in the market, speculators will find no chance to make profit.

« Last Edit: December 02, 2015, 03:42:26 am by bitcrab »
Email:bitcrab@qq.com

Offline merivercap

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the rule should guarentee two thing:
1. if I want to buy bitCNY, I can buy it at price 1.0 + premium
2. if I want to sell bitCNY, I can sell it at price 1.0 - premium
and the premium should not too small, my suggest is more than 2%
then market maker will give a better offer, with more small premium
then we can buy/sell bitCNY at price 1.0 with small premium from the free wallet market.

force settlement is a way to guarentee you can sell bitCNY at a floor price, so I think the price should set to  * (1.0 - premium) CNY/bitCNY
when the price of BTS is 0.02 CNY/BTS, witness should set settlement price to 0.02 / (1.0 - premium)

on the other hand, force settlement will hurt shorters, because this force them sell BTS even when they have enough collatereal.
so we should  not encourage people use this, we can set the premium to 2% or more,  as compensate for the one be settled.

for all witness, if you approve my point, you can change the parameter at xeroc's price scripts
set discount to 1.02
to avoid add aditional fee for bitCNY,  you should change core_exchange_factor to 1.02 too

Something like this would balance the market more, but many bitAsset holders want to keep it for the long term so adding that uncertainty of forced settlement would not be attractive.  We want long term bitAsset holders and long term shorters.... not the unpredictability of force settlement battles...
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Offline alt

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the rule should guarentee two thing:
1. if I want to buy bitCNY, I can buy it at price 1.0 + premium
2. if I want to sell bitCNY, I can sell it at price 1.0 - premium
and the premium should not too small, my suggest is more than 2%
then market maker will give a better offer, with more small premium
then we can buy/sell bitCNY at price 1.0 with small premium from the free wallet market.

force settlement is a way to guarentee you can sell bitCNY at a floor price, so I think the price should set to  * (1.0 - premium) CNY/bitCNY
when the price of BTS is 0.02 CNY/BTS, witness should set settlement price to 0.02 / (1.0 - premium)

on the other hand, force settlement will hurt shorters, because this force them sell BTS even when they have enough collatereal.
so we should  not encourage people use this, we can set the premium to 2% or more,  as compensate for the one be settled.

for all witness, if you approve my point, you can change the parameter at xeroc's price scripts
set discount to 1.02
to avoid add aditional fee for bitCNY,  you should change core_exchange_factor to 1.02 too
and set SQP more than 1020

and I want to tell again, let witness just input feed price, which is the real price from exchange
let commitee adust SQP, settlement price
« Last Edit: December 02, 2015, 03:28:49 am by alt »

Offline alt

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@Bytemаsteг can you tell me when market price is 0.02CNY/BTS, what should I set settlement price?
I want set 2% premium, the settlement price should be 0.02*1.02 or 0.02/1.02?

1. as a bitCNY holder, I think price floor means the minimal BTS I can buy with my bitCNY, it's BTS/CNY
so if you want to price it with CNY/BTS, it should be called price ceiling
so the settlement price should greater than real price we got from the exchange?

2. you have set a volume limit, I think of course you want to protect some attack.
but I think this volume limit is still too weak.
may I ask you, do you belive current 0.02CNY/BTS is the real price of BTS? do you belive there are no manipulate?
I think the price is totally unbeliveable, it's because of manipulate of couse.
what I have seen is the whals can manipulate the price so easy, and keep the period so long.
so I don't think the  volume protect is enough.
and if somebody ask force settlement my short position at this price, I can never accept it. so my choise is I'll never short more bitasset.
we are lucky the whals don't read the whitepater carefully, if he know, he can force settlement all short position at such a long time.

I want to ask all the BTS holders, do you accepet the deal? whals buy out all your BTS at such a price, 0.02CNY/BTS
if the answer is no, never short, or this can happend very possible.

@alt X% force settle per day is independent with each asset

When I talk about prices I always think in FIAT prices.  So USD per BTS or USD per BitUSD.  I know this is the opposite of how many in crypto think in terms of their favorite token.

Few understand the whole system.  Many have discussed it, understood it, and since forgot it.   We have to "re-learn" many times unless you live/breath it full time.

Offline bytemaster

@alt X% force settle per day is independent with each asset

When I talk about prices I always think in FIAT prices.  So USD per BTS or USD per BitUSD.  I know this is the opposite of how many in crypto think in terms of their favorite token.

Few understand the whole system.  Many have discussed it, understood it, and since forgot it.   We have to "re-learn" many times unless you live/breath it full time.

http://cryptofresh.com/a/CNY

Max force settle vol   2000

Does 2000 mean 2% or 20%?

2%
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Offline xeroc

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