Proposal for Having Alternate Smartcoin Designs

[yvv]

I don't think the short seller is a lender/borrower.

The current BitAssets are bit like a contract for difference so it's just a market that matches buyers and sellers.

It is a contract for difference, but you still need to borrow bitAsset to create it into existence. It becomes your liability, aka debt.

If the shorts were extremely bullish they'd be wiling to pay a premium to longs to take the other side of the contract and vice versa.

I don't know though.

This is true. Saying that shorts should not pay premium, I was not correct. They may agree to pay under certain conditions.

[abit]

Opinions and facts must be tested.  How are the alternatives being tested?

I tend to agree with proposal to test bitAssets which pay premium or interest to holders. Setting positive interest would motivate holders and demotivate borrowers, increasing demand and reducing supply which would push the price up. Setting negative interest would reduce  demand and increase supply which would push the price down.  This could give an efficient way to keep the asset close to peg.

Why not fork a chain and test if impossible to test by a private MPA?

[yvv]

Wrong answer.  I will give you the correct answer.  The short seller is a lender, not a borrower.

You get it 180 degree wrong. Go to bitshares.openledger.info then "Trade" tab and press "Borrow USD" button. See what happens.

That "borrow USD" button should say "loan USD".  Actually it should say "create USD."  That would be more correct terminology.

Did you try to do exercise which I suggested? Just go and press the damn button, then check your account overview.

[yvv]

Edit:  If I buy a house and go to the bank for a loan, I am not required to put a 200% down payment toward the loan as the borrower.  Same logic applies.

You continue messing things up. Banks either charge interest for loans or require collateral or do both. Usually, higher collateral you deposit, less interest they charge you. You don't have to pay interest for borrowing bitAssets, because you need to deposit very high collateral.

[Empirical1.2]

Wrong answer.  I will give you the correct answer.  The short seller is a lender, not a borrower.

You get it 180 degree wrong. Go to bitshares.openledger.info then "Trade" tab and press "Borrow USD" button. See what happens.

That "borrow USD" button should say "loan USD".  Actually it should say "create USD."  That would be more correct terminology.

I don't think the short seller is a lender/borrower.

The current BitAssets are bit like a contract for difference so it's just a market that matches buyers and sellers.

If the shorts were extremely bullish they'd be wiling to pay a premium to longs to take the other side of the contract and vice versa.

I don't know though.

[Helikopterben]

Wrong answer.  I will give you the correct answer.  The short seller is a lender, not a borrower.

You get it 180 degree wrong. Go to bitshares.openledger.info then "Trade" tab and press "Borrow USD" button. See what happens.

That "borrow USD" button should say "loan USD".  Actually it should say "create USD."  That would be more correct terminology.

[yvv]

Wrong answer.  I will give you the correct answer.  The short seller is a lender, not a borrower.

You get it 180 degree wrong. Go to bitshares.openledger.info then "Trade" tab and press "Borrow USD" button. See what happens.

[Helikopterben]

First, we need to understand the roll of the short seller.  The short seller is a lender that provides a service to the network by lending bts to borrowers in the form of smartcoins.  Lenders do not lend money for free so they will either charge interest or charge a premium.  Otherwise, the risk/reward doesn't work.  For example, if I lend 1 usd into existence at a rate of 300 bts/usd with 2x collateral of 600bts, then my risk of loss is 100% of outlay (with a 50% drop in price) while my potential gains are only 50% of outlay.  It just does not make sense to enter this agreement unless I charge a fee to compensate for the added risk.

The short seller is a borrower, not a lender. You borrow bitUSD to provide them to the market. Those who buy these bitUSD are the lenders.

If that is correct, then why do short sellers not PAY premium to smartcoin buyers?  Borrowers almost always pay either premium or interest to lenders.  By your logic, the short seller should pay premium to the buyer.

Short sellers should not pay any premiums, they are already fucked up enough for borrowing bitAssets. Why do you want them to be fucked up even more?

I asked you a question that you failed to answer.  I will ask the question again.  Why do short sellers not pay a premium if they are borrowers?

Because this is how the devs made the bitshares. You don't have to pay a premium for a loan, but you have to keep 200% collateral instead. You are asking trivial questions.

Wrong answer.  I will give you the correct answer.  The short seller is a lender, not a borrower.

Edit:  If I buy a house and go to the bank for a loan, I am not required to put a 200% down payment toward the loan as the borrower.  Same logic applies.

[yvv]

Opinions and facts must be tested.  How are the alternatives being tested?

I tend to agree with proposal to test bitAssets which pay premium or interest to holders. Setting positive interest would motivate holders and demotivate borrowers, increasing demand and reducing supply which would push the price up. Setting negative interest would reduce  demand and increase supply which would push the price down.  This could give an efficient way to keep the asset close to peg.

[fuzzy]

First, we need to understand the roll of the short seller.  The short seller is a lender that provides a service to the network by lending bts to borrowers in the form of smartcoins.  Lenders do not lend money for free so they will either charge interest or charge a premium.  Otherwise, the risk/reward doesn't work.  For example, if I lend 1 usd into existence at a rate of 300 bts/usd with 2x collateral of 600bts, then my risk of loss is 100% of outlay (with a 50% drop in price) while my potential gains are only 50% of outlay.  It just does not make sense to enter this agreement unless I charge a fee to compensate for the added risk.

The short seller is a borrower, not a lender. You borrow bitUSD to provide them to the market. Those who buy these bitUSD are the lenders.

If that is correct, then why do short sellers not PAY premium to smartcoin buyers?  Borrowers almost always pay either premium or interest to lenders.  By your logic, the short seller should pay premium to the buyer.

Short sellers should not pay any premiums, they are already fucked up enough for borrowing bitAssets. Why do you want them to be fucked up even more?

I asked you a question that you failed to answer.  I will ask the question again.  Why do short sellers not pay a premium if they are borrowers?

Because this is how the devs made the bitshares. You don't have to pay the premium for the loan, but you have to keep 200% collateral instead. You are asking trivial questions.

Opinions and facts must be tested.  How are the alternatives being tested?

[yvv]

First, we need to understand the roll of the short seller.  The short seller is a lender that provides a service to the network by lending bts to borrowers in the form of smartcoins.  Lenders do not lend money for free so they will either charge interest or charge a premium.  Otherwise, the risk/reward doesn't work.  For example, if I lend 1 usd into existence at a rate of 300 bts/usd with 2x collateral of 600bts, then my risk of loss is 100% of outlay (with a 50% drop in price) while my potential gains are only 50% of outlay.  It just does not make sense to enter this agreement unless I charge a fee to compensate for the added risk.

The short seller is a borrower, not a lender. You borrow bitUSD to provide them to the market. Those who buy these bitUSD are the lenders.

If that is correct, then why do short sellers not PAY premium to smartcoin buyers?  Borrowers almost always pay either premium or interest to lenders.  By your logic, the short seller should pay premium to the buyer.

Short sellers should not pay any premiums, they are already fucked up enough for borrowing bitAssets. Why do you want them to be fucked up even more?

I asked you a question that you failed to answer.  I will ask the question again.  Why do short sellers not pay a premium if they are borrowers?

Because this is how the devs made the bitshares. You don't have to pay a premium for a loan, but you have to keep 200% collateral instead. You are asking trivial questions.

[yvv]

First, we need to understand the roll of the short seller.  The short seller is a lender that provides a service to the network by lending bts to borrowers in the form of smartcoins.  Lenders do not lend money for free so they will either charge interest or charge a premium.  Otherwise, the risk/reward doesn't work.  For example, if I lend 1 usd into existence at a rate of 300 bts/usd with 2x collateral of 600bts, then my risk of loss is 100% of outlay (with a 50% drop in price) while my potential gains are only 50% of outlay.  It just does not make sense to enter this agreement unless I charge a fee to compensate for the added risk.

The short seller is a borrower, not a lender. You borrow bitUSD to provide them to the market. Those who buy these bitUSD are the lenders.

If that is correct, then why do short sellers not PAY premium to smartcoin buyers?  Borrowers almost always pay either premium or interest to lenders.  By your logic, the short seller should pay premium to the buyer.

Short sellers should not pay any premiums, they are already fucked up enough for borrowing bitAssets. Why do you want them to be fucked up even more?

I see alot of disagreements here.  Why not test your opinions in the market by having a smartcoin competition that awards something like a month's worth of worker proposal wages after x months to the smartcoin that best maintains the peg?

Seems to me the best way to go about this while being productive...

These are not opinions. This is how shorting currently works. Short seller is a borrower, not a lender. He borrows money to have a leverage. He pays for loan by exposing himself to a risk. Paying interest or premium would demotivate from borrowing bitAsset and reduce the supply. I agree, however, that this would be an interesting experiment.

[xeroc]

Risk of being margin called ..

[Helikopterben]

First, we need to understand the roll of the short seller.  The short seller is a lender that provides a service to the network by lending bts to borrowers in the form of smartcoins.  Lenders do not lend money for free so they will either charge interest or charge a premium.  Otherwise, the risk/reward doesn't work.  For example, if I lend 1 usd into existence at a rate of 300 bts/usd with 2x collateral of 600bts, then my risk of loss is 100% of outlay (with a 50% drop in price) while my potential gains are only 50% of outlay.  It just does not make sense to enter this agreement unless I charge a fee to compensate for the added risk.

The short seller is a borrower, not a lender. You borrow bitUSD to provide them to the market. Those who buy these bitUSD are the lenders.

If that is correct, then why do short sellers not PAY premium to smartcoin buyers?  Borrowers almost always pay either premium or interest to lenders.  By your logic, the short seller should pay premium to the buyer.

Short sellers should not pay any premiums, they are already fucked up enough for borrowing bitAssets. Why do you want them to be fucked up even more?

I asked you a question that you failed to answer.  I will ask the question again.  Why do short sellers not pay a premium if they are borrowers?

[fuzzy]

First, we need to understand the roll of the short seller.  The short seller is a lender that provides a service to the network by lending bts to borrowers in the form of smartcoins.  Lenders do not lend money for free so they will either charge interest or charge a premium.  Otherwise, the risk/reward doesn't work.  For example, if I lend 1 usd into existence at a rate of 300 bts/usd with 2x collateral of 600bts, then my risk of loss is 100% of outlay (with a 50% drop in price) while my potential gains are only 50% of outlay.  It just does not make sense to enter this agreement unless I charge a fee to compensate for the added risk.

The short seller is a borrower, not a lender. You borrow bitUSD to provide them to the market. Those who buy these bitUSD are the lenders.

If that is correct, then why do short sellers not PAY premium to smartcoin buyers?  Borrowers almost always pay either premium or interest to lenders.  By your logic, the short seller should pay premium to the buyer.

Short sellers should not pay any premiums, they are already fucked up enough for borrowing bitAssets. Why do you want them to be fucked up even more?

I see alot of disagreements here.  Why not test your opinions in the market by having a smartcoin competition that awards something like a month's worth of worker proposal wages after x months to the smartcoin that best maintains the peg?

Seems to me the best way to go about this while being productive...