Author Topic: Discussion of a CFD market on Bitshares  (Read 7086 times)

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Offline abit

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what i love is, that anyone just post in "General" because on the subforums your posts get no attention at all.
Maybe you could bring this up on tomorrow's mumble?

would be nice, but i am not available at he mumble times, because of work. I will add this as a question. Thanks for the idea!

Why do you need CDF contracts , when you have a stablecoin?
Imo CDF contracts are new markets for trading. Image that we have a EUR/USD CDF market..
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Offline Shentist

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what i love is, that anyone just post in "General" because on the subforums your posts get no attention at all.
Maybe you could bring this up on tomorrow's mumble?

would be nice, but i am not available at he mumble times, because of work. I will add this as a question. Thanks for the idea!

Why do you need CDF contracts , when you have a stablecoin?

it is a proven concept and both parties can settle any time.

at the moment the shorters are in a bad risk/reward profil i think this kind of market can attract many traders to our plattform.

Offline Bitcoinfan

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what i love is, that anyone just post in "General" because on the subforums your posts get no attention at all.
Maybe you could bring this up on tomorrow's mumble?

would be nice, but i am not available at he mumble times, because of work. I will add this as a question. Thanks for the idea!

Why do you need CDF contracts , when you have a stablecoin? 

Offline Bitcoinfan

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I conclude that BitShares itself should NEVER every run a LMSR market maker.

BUT: we could have a feature that let's others provide funds for the market maker und still offer the prediction market in a decentralized manner.
This could indeed be built into the protocol to remove the trust that would be required if someone just put a buy and a sell wall at the LMSR price.

What's your evidence for this conclusion?  Does the right of the team agree with you?

Could you also explain more how you would do things in a decentralized manner-- that isnt Dan Laimer's competitive price feeds. 

Offline Shentist

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what i love is, that anyone just post in "General" because on the subforums your posts get no attention at all.
Maybe you could bring this up on tomorrow's mumble?

would be nice, but i am not available at he mumble times, because of work. I will add this as a question. Thanks for the idea!

Offline Bhuz

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what i love is, that anyone just post in "General" because on the subforums your posts get no attention at all.
Maybe you could bring this up on tomorrow's mumble?

Offline Shentist

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what i love is, that anyone just post in "General" because on the subforums your posts get no attention at all.

Offline Shentist

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ok, now here is my official propasl, just a draft to disscuss

https://github.com/bitshares/bsips/issues/6

Offline xeroc

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I conclude that BitShares itself should NEVER every run a LMSR market maker.

BUT: we could have a feature that let's others provide funds for the market maker und still offer the prediction market in a decentralized manner.
This could indeed be built into the protocol to remove the trust that would be required if someone just put a buy and a sell wall at the LMSR price.

How can you not find putting an arbitrary market maker in the blockchain itself genius?
Not sure if this is a rhetorical question :(
I'll answer it anyways:

putting a market maker on the blockchain makes sense in blockchains that have a means of handling a loss (read: can dilute their shares to pay the market maker)
Since BitShares has had (and still has) it's issues with "dilution" or coin "earning", I think we should not let the BitShares blockchain/protocol itself run the market maker, but the blockchain could offer others to fund the market maker on a loss.

Or, alternatively (stupid approach ahead), we could force the market maker not to make a loss and cut profits from customers in the event of "bad luck" for the maker

Offline tonyk

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I conclude that BitShares itself should NEVER every run a LMSR market maker.

BUT: we could have a feature that let's others provide funds for the market maker und still offer the prediction market in a decentralized manner.
This could indeed be built into the protocol to remove the trust that would be required if someone just put a buy and a sell wall at the LMSR price.

How can you not find putting an arbitrary market maker in the blockchain itself genius?

PS
at least in his line of reasoning...it is not constantly changing... might be a very bad algo (well it is proven to be) but as long as we stick with the bad long enough it should be good...
ironically the kind of opposite logic to BM's.... who believes that a 75% of a good wheel should turn very smoothly...if it is indeed good wheel.
« Last Edit: January 25, 2016, 07:30:39 am by tonyk »
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline xeroc

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I conclude that BitShares itself should NEVER every run a LMSR market maker.

BUT: we could have a feature that let's others provide funds for the market maker und still offer the prediction market in a decentralized manner.
This could indeed be built into the protocol to remove the trust that would be required if someone just put a buy and a sell wall at the LMSR price.

Offline xeroc

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No it can't be done in Bitshares because Bitshares does not use LMSR.  Bitshare needs another party to have collateral, which ensures liquidity problems and thus the bulk of Bitshares problems.  LMSR does not have liquidity issues. 
It can be done. It is only a matter of adding a new smart contract (e.g. operation) to the protocol.
There is also no magic behind LMSR, it is simply "market maker" (that can be decentralized and even profitable) and is just "another pricing scheme".
You can think of it as an other approach to sell prediction market tickets. Nothing more.

This quote describes it the best:
Quote
Hanson prefers to describe trader behavior in terms of “changing the price” instead of “buying and selling shares”.

//edit: For those that haven't understood the implications of a "market maker": It can make a LOSS also!
Augur has two nice posts that descibe it very well:
http://www.augur.net/blog/what-is-an-automated-market-maker
http://www.augur.net/blog/augur-s-automated-market-maker-the-ls-lmsr
« Last Edit: January 25, 2016, 06:48:02 am by xeroc »

Offline tonyk

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 LMSR is hilarious.

but on the other hand, do not listen to idiots like myself who cannot even publish a well sounding academic paper...
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline Bitcoinfan

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Can this LMSR thing be implemented as a 3rd party market maker bot which runs in BitShares markets, if have some fund? Thanks.

No its a protocol level feature. Otherwise it would be no different from a centralized PM such as Predictit, Intrade, Groupgnosis etc. 

I'd encourage you to take a look at LMSR.  It shouldnt be overlooked. 

Offline abit

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1.So you have never heard of contracts that can be 'settled' before expiration? Or do you believe no trades in them exist, as it is? I will not go that far and ask about knowledge of mathematically correct ways to determine if and when to do such settlements?

Sorry but Hivemind and Augur's Prediction Markets will make use of CDF's go obsolete...  for the reasons I stated before... holding up collateral is risky and just another needless cost for a trader. 

2. While I have my thoughts on if this is gonna actually work (or work better), I want to ask a simple question first.
Why do you believe it cannot be done in bitshares? What is wrong with the feed price being your reference price and forcing trades within 0.5% of that price during your 'freeze window'/ locking period?

No it can't be done in Bitshares because Bitshares does not use LMSR.  Bitshare needs another party to have collateral, which ensures liquidity problems and thus the bulk of Bitshares problems.  LMSR does not have liquidity issues.
Can this LMSR thing be implemented as a 3rd party market maker bot which runs in BitShares markets, if have some fund? Thanks.
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