Author Topic: We can all help liquidity grow and help get a tighter peg  (Read 2565 times)

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Offline cylonmaker2053

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@JonnyBitcoin @mindphlux and myself had a brief chat on Bitshares Telegram Group chat about this.

We were thinking of setting up a multisig worker proposal to fund borrowing smartcoins, add liquidity and set a recurring daily payment back to the reserve pool.

What would happen when the worker proposal ends? That means no more funds which means no more liquidity. That seems kind of a temporarily solution..
Although I could go for it and maybe support it since we need to start with something, like @cube  mentioned, the blockchain shouldn't take the risk, instead, their users should. I think this would give a nice discussion to understand the whys. I think most people support this, however, what if we can't come up with any other solution? Do you prefer continuing with no liquidity or have the blockchain take the risk? Cause if we see it from another point of view, it's not the blockchain itself taking the risk, the risk is just being taken by every shareholder and evenly distributed according to their holdings right? That's an interesting topic!

And thanks @alt for your work, it's nice seeing more bots around!

@iHashFury do you think you could have a more in depth chat on the telegram group or maybe redirect the members here so we can discuss this?

The bitassets created would get sold on the market at say feed price +7% and then the bts from that sale returned to the reserve pool or fee pool.

A committee run account would have create these new bitassets and once created and sold that account would have 300% collateral positions for the 100% bitassets it created.

On telegram with @mindplux @iHashFury  we discussed the idea of a committee controlled account which could create  $50,000 bitUSD and then destroying the private key for that committee controlled account.

This would create a good base supply of bitusd to jumpstart the dex and get it moving.  If a worker proposal wasn't continuous and  ended it would still be providing liquidty because there would be more bitassets sloshing around in the system in general.

However! those 300% ($150000) worth of BTS would be lost forever. so the equivalent of a burn really. 

You could offset this loss/burn by adding a recurring payment from the committe controlled account that gets deleted so that any bts from forced settlements in the committee account would be returned to the reserve pool.

I think this idea could make sense as a one hit or injection of liquidity to the dex.

You're right to focus effort on creating sell-side liquidity for any of our smartcoins, especially bitUSD. i've shorted my fair share of bitassets into existence, but i'm a small fry in the grand scheme. Any and all efforts to short bitUSD into existence are extremely valuable to the system; creating positive incentives to short would be the ideal thing to do and we ultimately need some big boys to come with serious capital.

The big question should be: Why would someone short x million bitUSD into existence?

I think the answer hinges on a viable bond market. If a big dog or financial institution could short x million bitUSD into existence, park it into a crypto bond, and earn interest over time, then we'll have our liquidity.

The next question is: Who would borrow from the bond market and pay interest? If the borrower isn't using the funds for something economically productive, then it'd be tough to avoid a ponzi-type market failure long term. Figuring this out recursively, starting with figuring out economically productive uses of bitUSD is maybe the first step.

Offline Samupaha

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Then we should have market making in the CNY/USD market where the risks are lower.

That market seems to be nonexistent. Why? The risk really is lower because price changes are so slow compared to cryptos. Even people without bots could trade them. Just leave the bids 5 % from the spot and check every now and then if the price has changed and adjust your bids if needed.

Offline JonnyB

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@JonnyBitcoin @mindphlux and myself had a brief chat on Bitshares Telegram Group chat about this.

We were thinking of setting up a multisig worker proposal to fund borrowing smartcoins, add liquidity and set a recurring daily payment back to the reserve pool.

What would happen when the worker proposal ends? That means no more funds which means no more liquidity. That seems kind of a temporarily solution..
Although I could go for it and maybe support it since we need to start with something, like @cube  mentioned, the blockchain shouldn't take the risk, instead, their users should. I think this would give a nice discussion to understand the whys. I think most people support this, however, what if we can't come up with any other solution? Do you prefer continuing with no liquidity or have the blockchain take the risk? Cause if we see it from another point of view, it's not the blockchain itself taking the risk, the risk is just being taken by every shareholder and evenly distributed according to their holdings right? That's an interesting topic!

And thanks @alt for your work, it's nice seeing more bots around!

@iHashFury do you think you could have a more in depth chat on the telegram group or maybe redirect the members here so we can discuss this?

The bitassets created would get sold on the market at say feed price +7% and then the bts from that sale returned to the reserve pool or fee pool.

A committee run account would have create these new bitassets and once created and sold that account would have 300% collateral positions for the 100% bitassets it created.

On telegram with @mindplux @iHashFury  we discussed the idea of a committee controlled account which could create  $50,000 bitUSD and then destroying the private key for that committee controlled account.

This would create a good base supply of bitusd to jumpstart the dex and get it moving.  If a worker proposal wasn't continuous and  ended it would still be providing liquidty because there would be more bitassets sloshing around in the system in general.

However! those 300% ($150000) worth of BTS would be lost forever. so the equivalent of a burn really. 

You could offset this loss/burn by adding a recurring payment from the committe controlled account that gets deleted so that any bts from forced settlements in the committee account would be returned to the reserve pool.

I think this idea could make sense as a one hit or injection of liquidity to the dex.
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Offline Akado

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@JonnyBitcoin @mindphlux and myself had a brief chat on Bitshares Telegram Group chat about this.

We were thinking of setting up a multisig worker proposal to fund borrowing smartcoins, add liquidity and set a recurring daily payment back to the reserve pool.

What would happen when the worker proposal ends? That means no more funds which means no more liquidity. That seems kind of a temporarily solution..
Although I could go for it and maybe support it since we need to start with something, like @cube  mentioned, the blockchain shouldn't take the risk, instead, their users should. I think this would give a nice discussion to understand the whys. I think most people support this, however, what if we can't come up with any other solution? Do you prefer continuing with no liquidity or have the blockchain take the risk? Cause if we see it from another point of view, it's not the blockchain itself taking the risk, the risk is just being taken by every shareholder and evenly distributed according to their holdings right? That's an interesting topic!

And thanks @alt for your work, it's nice seeing more bots around!

@iHashFury do you think you could have a more in depth chat on the telegram group or maybe redirect the members here so we can discuss this?
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Offline alt

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btsbots want to provide a service, let everyone can run a bots easily
https://bitsharestalk.org/index.php/topic,20837.0/topicseen.html

1. someone who has private asset, like bitcrab, need this service, provide liquility for TCNY&TUSD
http://cryptofresh.com/u/jerryliu

2. someone like me,  think wtih a good parameter, can make profit with the mm bots.
http://cryptofresh.com/u/exchange.btsbots

I'll use about 1M BTS to run the mm bots after the bots test enough
and I think this is a profitable business for myself, so I will not need donation from community.

Offline cube

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What do you think would be an acceptable level of pay for providing market maker services? 

Lets say someone was willing to provide 10M BTS to provide a peg for bitUSD on poloniex at 98% and 105%.  Would a worker proposal worth 10k bts per day be enough to incentivise this risk?

It seems that the greatest risk is that you would get stuck short on bitUSD to the tune of 10M bts with no bitUSD available to purchase back. 

I don't have 10M bts, and I realize maker will help to incentivize market making.  I am more just spitballing what we would need to pay someone with that capital to have them risk it. 

In the short term, I think everything we can do to solve our problems without having to rely upon our limited development capital needs to be explored.

Well I guess that would need to be voted on.

Exactly, there's some risk so instead of having someone fund the 10M or even 1M we would all donate a bit. I don't know the level of acceptance it would have but if everyone donated anything from 5 to 20k bts, we could start with something. Mumble had +60 listeners in the past, I doubt all would participate but if for example 50 people did we could get at least 1M. That way if we lost anything, it would be a small loss divided by everyone.

I'm talking about doins this on our DEX and not Polo since a small amount would immediately be eaten up

I think the blockchain be a platform for trading and not bear the risk nor subsidise the liquidity making.  This role should be handled by someone who is good at it and willing to take some risks eg http://cryptofresh.com/u/exchange.btsbots

The community can chip in with donation to fund a liquidity bot or support an existing one as suggested by Akado.
ID: bitcube
bitcube is a dedicated witness and committe member. Please vote for bitcube.

iHashFury

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@JonnyBitcoin @mindphlux and myself had a brief chat on Bitshares Telegram Group chat about this.

We were thinking of setting up a multisig worker proposal to fund borrowing smartcoins, add liquidity and set a recurring daily payment back to the reserve pool.


Offline Akado

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What do you think would be an acceptable level of pay for providing market maker services? 

Lets say someone was willing to provide 10M BTS to provide a peg for bitUSD on poloniex at 98% and 105%.  Would a worker proposal worth 10k bts per day be enough to incentivise this risk?

It seems that the greatest risk is that you would get stuck short on bitUSD to the tune of 10M bts with no bitUSD available to purchase back. 

I don't have 10M bts, and I realize maker will help to incentivize market making.  I am more just spitballing what we would need to pay someone with that capital to have them risk it. 

In the short term, I think everything we can do to solve our problems without having to rely upon our limited development capital needs to be explored.

Well I guess that would need to be voted on.

Exactly, there's some risk so instead of having someone fund the 10M or even 1M we would all donate a bit. I don't know the level of acceptance it would have but if everyone donated anything from 5 to 20k bts, we could start with something. Mumble had +60 listeners in the past, I doubt all would participate but if for example 50 people did we could get at least 1M. That way if we lost anything, it would be a small loss divided by everyone.

I'm talking about doins this on our DEX and not Polo since a small amount would immediately be eaten up
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Offline puppies

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What do you think would be an acceptable level of pay for providing market maker services? 

Lets say someone was willing to provide 10M BTS to provide a peg for bitUSD on poloniex at 98% and 105%.  Would a worker proposal worth 10k bts per day be enough to incentivise this risk?

It seems that the greatest risk is that you would get stuck short on bitUSD to the tune of 10M bts with no bitUSD available to purchase back. 

I don't have 10M bts, and I realize maker will help to incentivize market making.  I am more just spitballing what we would need to pay someone with that capital to have them risk it. 

In the short term, I think everything we can do to solve our problems without having to rely upon our limited development capital needs to be explored.
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Offline Akado

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I am not in the market making business for tax reasons and because I am not smart enough :D
However, I am currently improving my python library to make integrating of python-based bots easier ..

Oh okay, you're developing the tools! That's nice. Still, what do you think about this? Do you know of anyone else running bots?

And thanks Xypher for sharing
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Offline Xypher

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We had three bot like systems developed in-house,  With our key focus for 2017 being games - I don't think we'll be launching them under our banner. However if others would want to take over / run them in collaboration with us, am open to discussions. Of the three projects, the third one can be run solely with around 10-15 btc in arb capital.

5.  Electrons.io

Electrons.io is a user intuitive exchange system designed to empower retail and enterprise consumers to have quick and easy exchanges while enabling exchanges to tackle their liquidity issue. In the current iteration of the product, an individual basically sends the amount of Bitshares he needs exchanged to a bitshares wallet (electron-io) with his bitcoin wallet id in the memo of the transaction and receives his bitcoin in a matter of ten minutes (or less). This is the quickest form of exchanging an alt currency can currently have and requires absolutely no sign ups from the users side. The user further benefits by the fact that he receives the best prices at the lowest amount of time during each and every exchange. This is revolutionary in the sense that it is is no longer traders with arbitrage bots set up across exchanges that have the ability to get the best prices but the average retail consumer too. The exchanges, the system is currently plugged into further benefits by a higher level of liquidity on the platform and thereby benefits by a constant inflow of orders.
 
6. Proton

Proton is a cross platform user issued asset marketplace that allows individuals to buy assets from other crypto-currencies without having to acquire the base currency itself. For instance, an investor having a large holding in Bitshares will be able to acquire an asset that has been released on the Nxt Asset Exchange without ever having to exchange to nxt. All he would have to do is transact the BTS to a central account with his nxt account in the memo of the transaction. The system would automatically exchange his currency to Nxt, place a buy bid on the Nxt asset exchange and get him the required number of assets from the other market. The system, currnetly plugged into Ethereum, Nxt and Bts offers the average investor an opportunity to buy assets from any other platform without having to bother with an actual exchange. Since the prices obtained in the counter currency are the best , they could at the time, the system also ensures the user receives the maximum amount of nxt for the money they invest.

7, Barter.

Barter is a project launched with the intention of giving the deepest order books to consumers looking to exchange their questions via combining the order books of a number of exchanges together. A single api communicates with a number of other exchanges and thereby combines the order books of all other exchanges together to provide the user with a single orderbook that’s deep and highly liquid. What this offers is the ability for a user to buy and sell his coins at the best rate, every single time. This is highly useful for individuals looking to do enterprise level exchanges through combining the order books of multiple exchanges together.


Offline xeroc

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I am not in the market making business for tax reasons and because I am not smart enough :D
However, I am currently improving my python library to make integrating of python-based bots easier ..

Offline Akado

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Bots should never place orders that consume the book, they should always leave orders on the book.

A smart bot will use automatic timeouts on their orders so that if their network connection goes down their orders will automatically get canceled before the price can move too far.

A bot needs to operate with enough spread that they can resell their inventory and maintain a neutral balance sheet before the market price can change enough to consume the spread.

The MAKER proposal would provide financial incentive for the participants and greatly reduce the risks to the market makers.

We should focus on only one BTS/BITASSET market.  Probably CNY or USD.  Then we should have market making in the CNY/USD market where the risks are lower.

So do you think it's safer to wait for MAKER? Or are you just giving some advices on how the bots should run if we do this? As for the last part I agree and mentioned that. We first should start with bitUSD/BTS and then slowly move on to other markets, either bitCNY or bitBTC

edit: ok I got it, that was in response to my question. Since bots don't consume orders and let their own orders sit on the order book, they wouldn't eat each other.
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Offline bytemaster

Bots should never place orders that consume the book, they should always leave orders on the book.

A smart bot will use automatic timeouts on their orders so that if their network connection goes down their orders will automatically get canceled before the price can move too far.

A bot needs to operate with enough spread that they can resell their inventory and maintain a neutral balance sheet before the market price can change enough to consume the spread.

The MAKER proposal would provide financial incentive for the participants and greatly reduce the risks to the market makers.

We should focus on only one BTS/BITASSET market.  Probably CNY or USD.  Then we should have market making in the CNY/USD market where the risks are lower. 
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Anything said on these forums does not constitute an intent to create a legal obligation or contract between myself and anyone else.   These are merely my opinions and I reserve the right to change them at any time.

Offline Akado

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So the main problem it seems is we have low liquidity and our bitAssets might not have the best peg. We are all interested in getting more liquidity, but some can't, either because they don't know how to make or run bots or because they don't have enough funds, so why not do the following.

Get a list of every trustworthy member running a bot
- @maqifrnswa
- @alt
- @xeroc
- @iHashFury
- @Riverhead
- @kenCode

I dont know if all have their own bots but if I remember correctly you all showed interest in providing liquidity right? So if each one of you has a bot there would already be 6 different ones.

Now if each member donated a few BTS for each or even only one bot and they would be active on bitUSD/BTS market, we would help tighten the peg. With time liquidity would naturally flow there since it's a chicken and egg problem and then we could slowly remove and redirect liquidity to other market like bitBTC/BTS and so on.

We could get the community to help by donating or get it from the pool which I doubt I think some might disagree. In the end I think that a community effort could help with this and it's up to us to have some initiative. This because I would like to help but I don't think I have the skills to manage a bot. This way anyone can help.

If we had 1 million BTS, even if distributed by 4 - 6 bots, each with 250k-166k per each all acting on the same market with the objective of providing liquidity and at least not loosing money and hold that for a couple months, more people would end up joining naturally. Then we could slowly redirect that and move on to other markets and get the DEX the liquidity it needs. It's a slow process but we need to start somewhere right?

We could start with 1M or even half of that, once it reaches for example 2M we could slowly move on to other market. Step by step, if everything goes right, who knows in 1 year what this could achieve.

______

I have one question, could the bots end up eating each other, say, since they would be on the same market, some would win and some would loose trades. This could lead to some getting higher returns and others loosing the BTS needed to provide the liquidity centralizing that on fewer ones, which can increase the risk in case something bad happens right? What if the bot owners, for the purpose of this objective, could reach a gentleman's agreement and if there is a big disparity in the end, they all return the funds in excess to the ones who lost? The objective here would be more focused in providing liquidity than necessarily profit. Just not loosing money to other people would be good enough since we could maintain operations.

Unless bot owners decide to compete, let people lend them BTS and then pay back a piece of the gains? That's also an option, although getting liquidity first is more important imo.
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