Mechanics and Design to Borrow bitUSD and Trade - Please Help

[merivercap]

"The process of borrowing/creating stuff is not connected in any way to a 'quality' called price. " Your debt is pegged at the 'quality' called price.  Your margin call depends on the 'quality' called price and your maintenance of collateral depends on the 'quality' called price.   As in the above example when you are creating bitUSD to circulate the 'quality' called price is important.

very important indeed ....to the tune of exactly  1 BTS [ need to close the 'wrong' loan], before you actually sell your bitUSD (or otherwise spend your borrowed bitUSD).... so not much relevant at all.

My example is about the decision for participants to buy bitUSD or create bitUSD.   Assuming they sell 1:1 all the bitUSD they obtain they are getting two different prices to obtain bitUSD to sell.  Sure participants can adjust and sell the bitUSD they buy at the market differently from the bitUSD they create, but most will just sell it 1:1 and receive the same amount of fiat dollars whether they buy or create. It's better if the pricing was the same for the collateral and trading.

It will if we have much more liquidity. But now, you may have to create by yourself.

Yeah.  I don't think the current system is designed to have the same price even with liquidity.  There is supposed to be a permanent premium in the current design. Hopefully we can create a Smartcoin that trades around the price feed so this won't be an issue.  I like the way you can create bitAssets because it's very easy to do, but we'll have to adjust some parameters.  In the meantime yes we were planning to create bitAssets to have enough float for monetary circulation. 

[abit]

"The process of borrowing/creating stuff is not connected in any way to a 'quality' called price. " Your debt is pegged at the 'quality' called price.  Your margin call depends on the 'quality' called price and your maintenance of collateral depends on the 'quality' called price.   As in the above example when you are creating bitUSD to circulate the 'quality' called price is important.

very important indeed ....to the tune of exactly  1 BTS [ need to close the 'wrong' loan], before you actually sell your bitUSD (or otherwise spend your borrowed bitUSD).... so not much relevant at all.

My example is about the decision for participants to buy bitUSD or create bitUSD.   Assuming they sell 1:1 all the bitUSD they obtain they are getting two different prices to obtain bitUSD to sell.  Sure participants can adjust and sell the bitUSD they buy at the market differently from the bitUSD they create, but most will just sell it 1:1 and receive the same amount of fiat dollars whether they buy or create. It's better if the pricing was the same for the collateral and trading.

It will if we have much more liquidity. But now, you may have to create by yourself.

[merivercap]

"The process of borrowing/creating stuff is not connected in any way to a 'quality' called price. " Your debt is pegged at the 'quality' called price.  Your margin call depends on the 'quality' called price and your maintenance of collateral depends on the 'quality' called price.   As in the above example when you are creating bitUSD to circulate the 'quality' called price is important.

very important indeed ....to the tune of exactly  1 BTS [ need to close the 'wrong' loan], before you actually sell your bitUSD (or otherwise spend your borrowed bitUSD).... so not much relevant at all.

My example is about the decision for participants to buy bitUSD or create bitUSD.   Assuming they sell 1:1 all the bitUSD they obtain they are getting two different prices to obtain bitUSD to sell.  Sure participants can adjust and sell the bitUSD they buy at the market differently from the bitUSD they create, but most will just sell it 1:1 and receive the same amount of fiat dollars whether they buy or create.  It's better if the pricing was the same for the collateral and trading. 

[tonyk]

"The process of borrowing/creating stuff is not connected in any way to a 'quality' called price. " Your debt is pegged at the 'quality' called price.  Your margin call depends on the 'quality' called price and your maintenance of collateral depends on the 'quality' called price.   As in the above example when you are creating bitUSD to circulate the 'quality' called price is important.

very important indeed ....to the tune of exactly  1 BTS [ needed to close the 'wrong' loan], before you actually sell your bitUSD (or otherwise spend your borrowed bitUSD)...

[merivercap]

yes as yvv pointed out using somewhat correct terminology, instead of coming with convoluted ways and own "designs" to explain simple facts would have helped.... a lot

To the question at hand - as there is little practical benefit of what you are suggesting. do not expect it as an official feature soon.

you can make a bot to do what you want for you at a cost of 1 extra BTS [currently], though!!!

It's not like I understand what you are trying to say much of the times either. lol

There is practical benefit especially if it can make things easier to understand and minimize confusion.  If the price of the collateral is different from the actual trading price it may cause confusion.    Also it may make things easier if you remove some of the steps.

Instead of:
1) Borrow bitUSD (at price feed) -> Sell bitUSD/Buy BTS (at trading prices w/ limit order) 
Result: BTS Leverage

You can:
2) Simply Buy BTS on Margin (at trading prices w/ limit order and initiate the dollar loan at the same time at trading prices)
Result: BTS Leverage

Currently you can't combine the steps because the collateral is priced using the feed whereas the trade uses market prices.  It seems to me easier to combine the steps, but who knows what others think. 

Ok I will make it as simple as it gets

Your poor understanding of the whole bitAssets system has not prevented you from having about 50 posts expressing strong opinions of its design in the last 3-4 weeks - from opinions on the forced settlement fiasco, to general statements about the design; to explaining how you will go to private bitAsset [to improve it apparently what is wrong with regular bitAssets].

Your point 1) and 2) once again flashes this poor grasp on your behalf.

1) I get what you want with 1) - the current system does it in 2 steps and cost you 1 extra BTS
what is wrong with your statement - you do not borrow bitUSD at price feed. You borrow them with minimum collateral, min collateral which is a function of the price feed


2) a.Once again - you do not buy them you borrow them [or create them out of thin air], (which one borrow or create analogy you want to use is up to you - my personal opinion is that 'create'  is both more accurate and explains the whole process better... as the borrow camp runs into trouble when trying to explain the stuff further, but this is going way ahead ).
b. you do not buy bitUSD at price feed. You borrow them with minimum collateral determined by the price feed. The process of borrowing/creating stuff is not connected in any way to a 'quality' called price.
c. because of b. there is no concept of limit or market order when borrowing... there can be if there was an interest on the loan itself, but as it is always '0% interest loan'

Finally read my initial post in this thread... as you are becoming both X bitUSD long and X bitUSD short when creating new bitUSD (by providing enough collateral), you can think as the 'price' at which you did it as any price in the [0;infinity] interval. I mean you can think you did it at whatever price makes you feel the best... for the rest of the world you selected price does not make a difference as you have a position:

 -1*#USD* your selected price + 1*#USD* your selected price ... which is always zero

Lol.   Tony, Tony, Tony..... Nothing really has changed from a theoretical standpoint about most of what I understand about the design and so I stand by my statements about forced settlement, SQP etc...and yes I plan to create a Smartcoin regardless of if you choose to trade on it or not. Mechanics are different from theory..  I was just questioning some of the mechanics and still do yet no one wants to answer them.   People like to just explain things I already know.  Should I have tested out the system earlier to see exactly how the mechanics worked?  Sure, but much of the important stuff is as I expected.  I'm busy with the business and figured much of the details would eventually be corrected.  When I realized a few important things probably wouldn't change fast enough I realized a new Smartcoin would be better.  Also there are a lot of people who trade who don't know what they're doing or care much for the design.  Lastly this protocol is still experimental and there's room for improvement so to expect that everything is perfect is a bit naive. 

1.    You're trying too hard with words.    My first point is that your collateral is priced at the feed and that's what determines your call.  There is a difference between using the price at the feed and what the market trades at.   I understand you can adjust your collateral, but when you say "You borrow them with minimum collateral, min collateral which is a function of the price feed"  that is a long version of saying your collateral is priced at the feed to determine when it's called.   Sure as I mentioned before you have an asset & liability that cancels each other, but the price still determines your call price and that's not irrelevant.

2.  a) Just because I say limit order or market order doesn't necessarily mean buy.  You can have limit/market orders to borrow as well.
     b)  This is what I asked:"Shouldn't we allow the user to decide at what price to create bitUSD?  If I want bitUSD I can either buy bitUSD on the market or create bitUSD using my collateral.  Shouldn't the pricing be the same for either choice?  One relies on the market and other the price feed."
My question still stands.  When I create bitUSD the loan is based on a particular price.  Sure the only thing you set is your call price so that may not be a big a deal to many, but it's not irrelevant and it's important to have consistency.  Furthermore I'll give you a scenario.  I want $100,000 in bitUSD to circulate in a community as money.  I can either purchase $100,000 bitUSD on the market with BTS or create $100,000 bitUSD with BTS collateral.  The decision to buy or create is significant.  Sure in the second scenario it's technically when you send the $100,000 bitUSD out that is equivalent to 'selling' .. but for practical purposes you are setting your debt at a particular price. 

"The process of borrowing/creating stuff is not connected in any way to a 'quality' called price. " Your debt is pegged at the 'quality' called price.  Your margin call depends on the 'quality' called price and your maintenance of collateral depends on the 'quality' called price.   As in the above example when you are creating bitUSD to circulate the 'quality' called price is important.   

[merivercap]

1. when you borrow bitUSD it's no price involved anyway, although you need to put some BTS as collateral. How much BTS you put as collateral is actually as you like, however you may want to put a bit more to avoid being margin called or being forced settled, however others don't care if you're margin called..
2. after you borrowed some bitUSDs, they are "your money" in you wallet, again, you can spend them as you like, e.g. to pay your mobile phone bill. However you need to know that your collateral may become insufficient if BTS's price drops a lot, as a result you may be margin called if you don't add enough collateral or adjust your position in any method in time.
3. if you sell bitUSD for BTS (buy BTS with bitUSD), you bear more risks of BTS price drop.

Honestly I would recommend pause the bitUSD business plan before you understand the bitUSD product itself. It may cause huge risk to you in the future, as which to bitcrab already.

1.  Yes.  I understand that as I posted.  It may not be that big a deal to some when you are forced settled or margin called but it doesn't mean it's irrelevant either. 
2. Yes it's the same as stated in previous posts and nothing new.
3.  Yes. It's stated in previous posts and nothing new.

I'm just trying out the details of the system because there are nuances, but nothing is new from a high level theoretical standpoint.   Much of what I'm asking are mechanics and so I don't see any major differences from what I thought previously based on theory.  The reality is not many people know how the system works, even those that trade. 

[tonyk]

yes as yvv pointed out using somewhat correct terminology, instead of coming with convoluted ways and own "designs" to explain simple facts would have helped.... a lot

To the question at hand - as there is little practical benefit of what you are suggesting. do not expect it as an official feature soon.

you can make a bot to do what you want for you at a cost of 1 extra BTS [currently], though!!!

It's not like I understand what you are trying to say much of the times either. lol

There is practical benefit especially if it can make things easier to understand and minimize confusion.  If the price of the collateral is different from the actual trading price it may cause confusion.    Also it may make things easier if you remove some of the steps.

Instead of:
1) Borrow bitUSD (at price feed) -> Sell bitUSD/Buy BTS (at trading prices w/ limit order) 
Result: BTS Leverage

You can:
2) Simply Buy BTS on Margin (at trading prices w/ limit order and initiate the dollar loan at the same time at trading prices)
Result: BTS Leverage

Currently you can't combine the steps because the collateral is priced using the feed whereas the trade uses market prices.  It seems to me easier to combine the steps, but who knows what others think. 

Ok I will make it as simple as it gets

Your poor understanding of the whole bitAssets system has not prevented you from having about 50 posts expressing strong opinions of its design in the last 3-4 weeks - from opinions on the forced settlement fiasco, to general statements about the design; to explaining how you will go to private bitAsset [to improve it apparently what is wrong with regular bitAssets].

Your point 1) and 2) once again flashes this poor grasp on your behalf.

1) I get what you want with 1) - the current system does it in 2 steps and cost you 1 extra BTS
what is wrong with your statement - you do not borrow bitUSD at price feed. You borrow them with minimum collateral, min collateral which is a function of the price feed


2) a.Once again - you do not buy them you borrow them [or create them out of thin air], (which one borrow or create analogy you want to use is up to you - my personal opinion is that 'create'  is both more accurate and explains the whole process better... as the borrow camp runs into trouble when trying to explain the stuff further, but this is going way ahead ).
b. you do not buy bitUSD at price feed. You borrow them with minimum collateral determined by the price feed. The process of borrowing/creating stuff is not connected in any way to a 'quality' called price.
c. because of b. there is no concept of limit or market order when borrowing... there can be if there was an interest on the loan itself, but as it is always '0% interest loan'

Finally read my initial post in this thread... as you are becoming both X bitUSD long and X bitUSD short when creating new bitUSD (by providing enough collateral), you can think as the 'price' at which you did it as any price in the [0;infinity] interval. I mean you can think you did it at whatever price makes you feel the best... for the rest of the world you selected price does not make a difference as you have a position:

 -1*#USD* your selected price + 1*#USD* your selected price ... which is always zero

[abit]

1. when you borrow bitUSD it's no price involved anyway, although you need to put some BTS as collateral. How much BTS you put as collateral is actually as you like, however you may want to put a bit more to avoid being margin called or being forced settled, however others don't care if you're margin called..
2. after you borrowed some bitUSDs, they are "your money" in you wallet, again, you can spend them as you like, e.g. to pay your mobile phone bill. However you need to know that your collateral may become insufficient if BTS's price drops a lot, as a result you may be margin called if you don't add enough collateral or adjust your position in any method in time.
3. if you sell bitUSD for BTS (buy BTS with bitUSD), you bear more risks of BTS price drop.

Honestly I would recommend pause the bitUSD business plan before you understand the bitUSD product itself. It may cause huge risk to you in the future, as which to bitcrab already.

[merivercap]

yes as yvv pointed out using somewhat correct terminology, instead of coming with convoluted ways and own "designs" to explain simple facts would have helped.... a lot

To the question at hand - as there is little practical benefit of what you are suggesting. do not expect it as an official feature soon.

you can make a bot to do what you want for you at a cost of 1 extra BTS [currently], though!!!

It's not like I understand what you are trying to say much of the times either. lol

There is practical benefit especially if it can make things easier to understand and minimize confusion.  If the price of the collateral is different from the actual trading price it may cause confusion.    Also it may make things easier if you remove some of the steps.

Instead of:
1) Borrow bitUSD (at price feed) -> Sell bitUSD/Buy BTS (at trading prices w/ limit order) 
Result: BTS Leverage

You can:
2) Simply Buy BTS on Margin (at trading prices w/ limit order and initiate the dollar loan at the same time at trading prices)
Result: BTS Leverage

Currently you can't combine the steps because the collateral is priced using the feed whereas the trade uses market prices.  It seems to me easier to combine the steps, but who knows what others think. 

Also why does the feed price determine how much collateral is needed?   Shouldn't the internal trading market dictate that?

As far as I understand, it is needed to peg bitUSD to USD as close as possible. Same for other bitAssets.  There are a lot of debates on this forum if this is done a correct way or not, but let's hope that these discussions will end up with the best of possible solutions.
 

I'm sure there is a reason, but if someone can clarify that would be good.  As I stated above the price of the collateral is different from the trading price can cause confusion and may limit ease of use. 

[yvv]

Also why does the feed price determine how much collateral is needed?   Shouldn't the internal trading market dictate that?

As far as I understand, it is needed to peg bitUSD to USD as close as possible. Same for other bitAssets.  There are a lot of debates on this forum if this is done a correct way or not, but let's hope that these discussions will end up with the best of possible solutions.
 

[merivercap]

Does the timing of when you borrow bitUSD not matter to you?   The instant you create a loan you are obligated at that USD/BTS price.   If you wait a few hours that USD/BTS price will be different.   The instant you borrow bitUSD that is equivalent to a trade and you instantly have less exposure to BTS and exposure to USD.  The instant you sell what you borrow (ie. USD) you instantly have leverage and you have more exposure to BTS. 

You don't really care when you borrow bitUSD?  Is that what you're telling me?

I surely care when I borrow bitUSD or USD or anything else. I never want to borrow an asset which will raise in prise and sell it for asset which will drop in price. So what? This is all irrelevant to feed price in bitshares. Feed price determines how much of collateral should you put aside when you borrow bitUSD. Nothing else. This collateral remains your asset. You own it, but you can't spend it until you pay of your debt.

Ok so I assume the only concern you have when you initiate the debt is when you can be called and be forced out.    If you only have 2x the collateral and think BTS will go down you could wait until you think BTS is bottoming to create bitUSD.    That may not be a big deal, but it still seems like a limit order to create bitUSD can be helpful. 

Other than that you create a debt & an asset at the same time so you aren't getting any additional exposure until you trade in the market.  I misspoke about the immediate exposure in the previous post. 

Anyways that may not be too big a deal, but it still seems like you're trading twice.  The second trade may be more important, but it seems you should be able to just initiate the borrow and sell USD at the same time and with the same pricing mechanisms. 

Also why does the feed price determine how much collateral is needed?   Shouldn't the internal trading market dictate that? 

[yvv]

Does the timing of when you borrow bitUSD not matter to you?   The instant you create a loan you are obligated at that USD/BTS price.   If you wait a few hours that USD/BTS price will be different.   The instant you borrow bitUSD that is equivalent to a trade and you instantly have less exposure to BTS and exposure to USD.  The instant you sell what you borrow (ie. USD) you instantly have leverage and you have more exposure to BTS. 

You don't really care when you borrow bitUSD?  Is that what you're telling me?

I surely care when I borrow bitUSD or USD or anything else. I never want to borrow an asset which will raise in prise and sell it for asset which will drop in price. So what? This is all irrelevant to feed price in bitshares. Feed price determines how much of collateral should you put aside when you borrow bitUSD. Nothing else. This collateral remains your asset. You own it, but you can't spend it until you pay off your debt.

[merivercap]

When I asked 'Shouldn't we allow the user to decide at what price to create bitUSD? ' , it's about having a limit order of when you want the bitUSD to be created.  When you create bitUSD you are forced to create market orders and that doesn't work well unless you always want to be in front of your computer. 

Secondly I see two different trading mechanisms for the borrower as I mentioned above.

You don't decide 'at what price to create bitUSD'. You borrow it from the network. And network requires a collateral from you to secure your loan. It is not a limit order. When you create bitUSD you don't create any orders, you borrow it, and it becomes your debt.

Does the timing of when you borrow bitUSD not matter to you?   The instant you create a loan you are obligated at that USD/BTS price.   If you wait a few hours that USD/BTS price will be different.   The instant you borrow bitUSD that is equivalent to a trade and you instantly have less exposure to BTS and exposure to USD.  The instant you sell what you borrow (ie. USD) you instantly have leverage and you have more exposure to BTS. 

You don't really care when you borrow bitUSD?  Is that what you're telling me?

[tonyk]

yes as yvv pointed out using somewhat correct terminology, instead of coming with convoluted ways and own "designs" to explain simple facts would have helped.... a lot

To the question at hand - as there is little practical benefit of what you are suggesting. do not expect it as an official feature soon.

you can make a bot to do what you want for you at a cost of 1 extra BTS [currently], though!!!

[yvv]

When I asked 'Shouldn't we allow the user to decide at what price to create bitUSD? ' , it's about having a limit order of when you want the bitUSD to be created.  When you create bitUSD you are forced to create market orders and that doesn't work well unless you always want to be in front of your computer. 

Secondly I see two different trading mechanisms for the borrower as I mentioned above.

You don't decide 'at what price to create bitUSD'. You borrow it from the network. And network requires a collateral from you to secure your loan. It is not a limit order. When you create bitUSD you don't create any orders, you borrow it, and it becomes your debt.