Author Topic: Radical ideas for liquidity  (Read 10831 times)

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Offline Akado

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Re: Radical ideas for liquidity
« Reply #30 on: January 29, 2016, 11:57:02 pm »
I only gave it a quick read, but from what I understood, auto bridging could help solve the "issue" of having multiple types of BTC? Multiple markets get synthesized into the same order book? I think I would support a worker proposal for that unless it has any downside? But since Ripple is using it, it seems a proven model.

I really like this because it solves the problem I mentioned a few times of having multiple iliquid markets representing the same assets

thanks [member=448]Xeldal[/member] for bringing that up!
« Last Edit: January 30, 2016, 12:00:30 am by Akado »
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Offline speedy

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Re: Radical ideas for liquidity
« Reply #31 on: January 30, 2016, 12:25:22 am »
yup.  Here's an old thread.  never went anywhere.

It didnt go anywhere because of technical reasons in the old 1.0 code IIRC.

Offline CoinHoarder

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Re: Radical ideas for liquidity
« Reply #32 on: January 30, 2016, 01:49:33 am »
I only gave it a quick read, but from what I understood, auto bridging could help solve the "issue" of having multiple types of BTC? Multiple markets get synthesized into the same order book? I think I would support a worker proposal for that unless it has any downside? But since Ripple is using it, it seems a proven model.

I really like this because it solves the problem I mentioned a few times of having multiple iliquid markets representing the same assets

thanks [member=448]Xeldal[/member] for bringing that up!

Without reading the proposal (and I'm admittedly not fully certain how Ripple works)... doesn't it cause an issue that bitBTC has different risks/value than openBTC has different risks/value than metaBTC ?? What happens to the other xBTC markets when OpenLedger/MetaExchange is defunct and the Bitcoins go missing?

Also, no one has provided an explanation as to why my proposal is so horrible, yet everyone is ignoring it as such. Please provide reasons so I can at least attempt to refute them (or admit to myself that it is flawed and I'm an idiot.)
« Last Edit: January 30, 2016, 01:54:04 am by CoinHoarder »
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Offline BunkerChainLabs-DataSecurityNode

Re: Radical ideas for liquidity
« Reply #33 on: January 30, 2016, 02:23:27 am »
I only gave it a quick read, but from what I understood, auto bridging could help solve the "issue" of having multiple types of BTC? Multiple markets get synthesized into the same order book? I think I would support a worker proposal for that unless it has any downside? But since Ripple is using it, it seems a proven model.

I really like this because it solves the problem I mentioned a few times of having multiple iliquid markets representing the same assets

thanks [member=448]Xeldal[/member] for bringing that up!

It doesn't solve the liquidity problem. It does eliminate the liquidity problem causing the premium to go out of wack. We still would need more people trading and liquidity to have a real market.

What this would mean is.. there would be no reason for other xBTC tokens other than if they want to operate their own markets for whatever reason.

The benefit to this sidechain arrangement would be our DEX for trading. It would be secure and decentralized as opposed to centralized trade markets. It could also potentially mean using bitshare for bitcoin transfers. Though that could be complicated.

It also makes bitshares a great place to store bitcoin in a decentralized way.
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Offline puppies

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Re: Radical ideas for liquidity
« Reply #34 on: January 30, 2016, 02:32:34 am »
I only gave it a quick read, but from what I understood, auto bridging could help solve the "issue" of having multiple types of BTC? Multiple markets get synthesized into the same order book? I think I would support a worker proposal for that unless it has any downside? But since Ripple is using it, it seems a proven model.

I really like this because it solves the problem I mentioned a few times of having multiple iliquid markets representing the same assets

thanks [member=448]Xeldal[/member] for bringing that up!

Without reading the proposal (and I'm admittedly not fully certain how Ripple works)... doesn't it cause an issue that bitBTC has different risks/value than openBTC has different risks/value than metaBTC ?? What happens to the other xBTC markets when OpenLedger/MetaExchange is defunct and the Bitcoins go missing?

Also, no one has provided an explanation as to why my proposal is so horrible, yet everyone is ignoring it as such. Please provide reasons so I can at least attempt to refute them (or admit to myself that it is flawed and I'm an idiot.)

We could do the exact same thing as your proposal right now, with a worker proposal to fund trading done by the committee-trade account.  Specifically while your proposal would be more seamless, it does require dev work, which would delay it.

I think the idea should be discussed.  Depending upon how tight you want to hold the peg, and how much collateral you use for the bitassets there could be unintended consequences.  It is risky, but it could really pay off, and could be exactly what we need to move us to the next level.  There has been a lot of discussion of it already in one form or another.  There are many people who have rejected it out of hand, but I don't think they have come up with any earth shattering reasons why.  Its mainly that they don't like the idea, or think its too risky.  afair
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Offline CoinHoarder

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Re: Radical ideas for liquidity
« Reply #35 on: January 30, 2016, 02:44:29 am »
[member=37127]JonnyBitcoin[/member]

I finally have some time to go over your ideas. In my opinion, some of them are good, some of them are not.

- The committee or a worker proposal should use reserve pool funds to create smartcoins and sell them in to the market at feed price plus 10%

I agree. This should have happened yesterday. Fortunately, I think everyone is at least close to the same page on this. However, I posit that the reserve pool liquidity will be bought up faster than it will be generated. So, I consider this to be putting a "band aid" on the problem and not a fix.

- Abandon all smartcoins except BitUSD to drive liquidity to it and then think about adding another smartcoin in a years time.

I disagree. Unfortunately, we will never be able to compete with Nubits/Tether as far as liquidity (as Bitshares currently exists.) Also, one of Bitshares' features over other solutions (Nubits/Tether) is that we can more easily issue other types of SmartCoins (many FIAT, commodity, stock, indexes, etc.) By doing this we are giving up one of our best features versus other competing implementations.

- Get all gateways to offer the same btcUIA instead of each having their own separate ones. Could be a multisig wallet controlled by committee.

This has a similar issue as the last proposal:
Without reading the proposal (and I'm admittedly not fully certain how Ripple works)... doesn't it cause an issue that bitBTC has different risks/value than openBTC has different risks/value than metaBTC ?? What happens to the other xBTC markets when OpenLedger/MetaExchange is defunct and the Bitcoins go missing?

To elaborate, there are more dynamics as well... what if I trust Ronnie but not Shentist? Now, all BTC markets lose my volume instead of just metaBTC or openBTC.

- Get the reserve pool to pay for a bitcoin-BitBTC bridge with guaranteed 2-way liquidity
The reserve pool is not a huge amount of money. If we are already tightening the peg on SmartCoins, I don't think we can afford to tighten the peg on other markets. As stated above... I posit that the reserve pool liquidity will be bought up faster than it will be generated. So, I consider this places a "band aid" on the problem and doesn't solve the issue.

- Limit trading pairs in the GUI to just USD vs XXX
Again, this limits Bitshares functionality and eliminates our competitive advantage as far as features vs competitors features.

- Buy an existing exchange like poloniex and migrate its backend over to bitshares.
This seems unreasonable considering legal, regulatory, and logistics. Not to mention the money it would cost to buy an exchange with a decent amount volume.

- Pay some altcoins that are struggling but have big communities to migrate their coins over to bitshares through proof of burn.

I think this is a good idea. This is similar to my idea here: https://bitsharestalk.org/index.php/topic,21124.0.html

Except, that your idea provides for more users/transaction fees/a bigger community/etc... and mine provides for a way of directly paying for developers without certain downward pressure on the value. Really, I think we could use it for both. This could be a wide-reaching feature... proof of burn and proof of funding. We could monitor other blockchains by allowing network node (or witnesses/committee/users/gateways) to monitor other blockchains' APIs. Both block explorer and exchange APIs, and make the price feed script easy to switch API data sources (so risks are mitigated by the median being used.) If the active nodes can all agree a transaction occurred, the blockchain can autonomously print them their fair share of BTS. There are more secure implementations available.. that would be a quick "down and dirty" implementation.
« Last Edit: January 30, 2016, 03:13:23 am by CoinHoarder »
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Offline CoinHoarder

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Re: Radical ideas for liquidity
« Reply #36 on: January 30, 2016, 02:49:37 am »
I only gave it a quick read, but from what I understood, auto bridging could help solve the "issue" of having multiple types of BTC? Multiple markets get synthesized into the same order book? I think I would support a worker proposal for that unless it has any downside? But since Ripple is using it, it seems a proven model.

I really like this because it solves the problem I mentioned a few times of having multiple iliquid markets representing the same assets

thanks [member=448]Xeldal[/member] for bringing that up!

It doesn't solve the liquidity problem. It does eliminate the liquidity problem causing the premium to go out of wack. We still would need more people trading and liquidity to have a real market.

What this would mean is.. there would be no reason for other xBTC tokens other than if they want to operate their own markets for whatever reason.

The benefit to this sidechain arrangement would be our DEX for trading. It would be secure and decentralized as opposed to centralized trade markets. It could also potentially mean using bitshare for bitcoin transfers. Though that could be complicated.

It also makes bitshares a great place to store bitcoin in a decentralized way.

Ah... I remember the term (what I was trying to describe above).... there is no fungibility. 1 metaBTC != 1 openBTC != 1 tradeBTC. When openBTC goes defunct, how does that work? I didn't know I was purchasing openBTC, nor metaBTC, nor tradeBTC. All BTC assets are tainted...? Should we just accept that? Those unlucky ones with openBTC are out of luck and the lucky ones with metaBTC/tradeBTC are golden? I didn't know which kind of BTC I was buying, so how is this fair?

As described above, there are other set backs. If I don't trust Shentist then all xBTC markets lose my volume and transfer fees, leading to lower volume across all markets as a whole instead of one market individually.
« Last Edit: January 30, 2016, 03:24:51 am by CoinHoarder »
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Offline CoinHoarder

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Re: Radical ideas for liquidity
« Reply #37 on: January 30, 2016, 03:02:42 am »
I only gave it a quick read, but from what I understood, auto bridging could help solve the "issue" of having multiple types of BTC? Multiple markets get synthesized into the same order book? I think I would support a worker proposal for that unless it has any downside? But since Ripple is using it, it seems a proven model.

I really like this because it solves the problem I mentioned a few times of having multiple iliquid markets representing the same assets

thanks [member=448]Xeldal[/member] for bringing that up!

Without reading the proposal (and I'm admittedly not fully certain how Ripple works)... doesn't it cause an issue that bitBTC has different risks/value than openBTC has different risks/value than metaBTC ?? What happens to the other xBTC markets when OpenLedger/MetaExchange is defunct and the Bitcoins go missing?

Also, no one has provided an explanation as to why my proposal is so horrible, yet everyone is ignoring it as such. Please provide reasons so I can at least attempt to refute them (or admit to myself that it is flawed and I'm an idiot.)

We could do the exact same thing as your proposal right now, with a worker proposal to fund trading done by the committee-trade account.  Specifically while your proposal would be more seamless, it does require dev work, which would delay it.

I think the idea should be discussed.  Depending upon how tight you want to hold the peg, and how much collateral you use for the bitassets there could be unintended consequences.  It is risky, but it could really pay off, and could be exactly what we need to move us to the next level.  There has been a lot of discussion of it already in one form or another.  There are many people who have rejected it out of hand, but I don't think they have come up with any earth shattering reasons why.  Its mainly that they don't like the idea, or think its too risky.  afair

I don't see it as risky considering we are printing BTS, and we can put as much collateral down as we like. Hell, we could do 100x collateral. The price would have to fall to 1% of what it is now for a margin call. At that time the market cap would be approximately $90,391.89, or with 1000x collateral the price would have to be 0.1% of what it is now for a margin call. At that time the market cap would be approximately $9039.19 ... Wouldn't you consider Bitshares to already be in dire straights and on its death bed by that point? If it is in the latter position, then I think it is quite likely that the SmartCoins are no longer backed by a sufficient amount of BTS, and Bitshares could get into this position without ever passing this proposal. This is an inherent risk with SmartCoins (with or without my proposal.)

Re: Dilution is bad

I understand the word dilution has a very negative connotation, however I think that this kind of dilution is not bad. It never makes its way into the market. It is always autonomously shorted in SmartCoins purely for the use of providing liquidity. There is never any downward pressure on the market. In supply and demand, supply only affects demand if it makes its way to the BTS/"off ramp" markets (BTS/BTC, BTS/USD, etc.. any asset that isn't a smart contract on Bitshares). This BTS never makes its way there because it is autonomously shorted purely for liquidity. People hear the word dilution and automatically think "that's bad", but I don't think that is always necessarily the case. All dilution is not created equally.

Dilution for developer pay can and will exert negative value force on the BTS off ramps. I agree this kind of dilution is bad. However, I am not so sure the kind of dilution I am proposing is bad... or at least no one has convinced me yet.
« Last Edit: January 30, 2016, 03:20:45 am by CoinHoarder »
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Offline BunkerChainLabs-DataSecurityNode

Re: Radical ideas for liquidity
« Reply #38 on: January 30, 2016, 03:21:14 am »
I only gave it a quick read, but from what I understood, auto bridging could help solve the "issue" of having multiple types of BTC? Multiple markets get synthesized into the same order book? I think I would support a worker proposal for that unless it has any downside? But since Ripple is using it, it seems a proven model.

I really like this because it solves the problem I mentioned a few times of having multiple iliquid markets representing the same assets

thanks [member=448]Xeldal[/member] for bringing that up!

It doesn't solve the liquidity problem. It does eliminate the liquidity problem causing the premium to go out of wack. We still would need more people trading and liquidity to have a real market.

What this would mean is.. there would be no reason for other xBTC tokens other than if they want to operate their own markets for whatever reason.

The benefit to this sidechain arrangement would be our DEX for trading. It would be secure and decentralized as opposed to centralized trade markets. It could also potentially mean using bitshare for bitcoin transfers. Though that could be complicated.

It also makes bitshares a great place to store bitcoin in a decentralized way.

Ah... I remember the term (what I was trying to describe above).... there is no fungibility. 1 metaBTC != 1 openBTC != 1 tradeBTC

When openBTC goes defunct, how does that work? I didn't know I was purchasing openBTC, nor metaBTC, nor tradeBTC.

All BTC assets are tainted...? Should we just accept that? Those unlucky ones with openBTC are out of luck and the lucky ones with metaBTC/tradeBTC are golden?

There is no reason why all of them cannot move to this one market.. or for any individual to decide they want their balance to be in bitBTC. As I said though, some may choose to maintain their own markets for various reasons. They continue as IOUs with counterparty risk. These would be zero counterparty risk trading against fully 100% collateralized BTC balances without any spreads/conversions on exit.

I think what it will do is make the other BTC IOU markets illiquid because all of the action would be in the bitBTC markets. Mainly because I think that is where everyone coming to the DEX to trade is going to want that only. Do you want a piece of paper saying you own 10oz of gold.. or do you want a stick of 10oz of gold in your hand? Of course you want the gold! :)

I keep saying bitBTC but I think it would need a new market.. otherwise there is going to be real confusion about what is a UIA, a Smartcoin, and a Sidechain Asset. So maybe call this scBTC.. or more descript.. realBTC. :)

This is all an experiment. 
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Offline CoinHoarder

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Re: Radical ideas for liquidity
« Reply #39 on: January 30, 2016, 03:42:25 am »
There is no reason why all of them cannot move to this one market.. or for any individual to decide they want their balance to be in bitBTC. As I said though, some may choose to maintain their own markets for various reasons. They continue as IOUs with counterparty risk. These would be zero counterparty risk trading against fully 100% collateralized BTC balances without any spreads/conversions on exit.

I think what it will do is make the other BTC IOU markets illiquid because all of the action would be in the bitBTC markets. Mainly because I think that is where everyone coming to the DEX to trade is going to want that only. Do you want a piece of paper saying you own 10oz of gold.. or do you want a stick of 10oz of gold in your hand? Of course you want the gold! :)

I keep saying bitBTC but I think it would need a new market.. otherwise there is going to be real confusion about what is a UIA, a Smartcoin, and a Sidechain Asset. So maybe call this scBTC.. or more descript.. realBTC. :)

This is all an experiment.

Yes, it would definitely need its own market. Otherwise, I can see the benefits if you are separating it from the SmartCoin bitBTC.

However, I think you must admit it makes the whole realBTC market more risk prone. I am not sure if that is a good thing or a bad thing. I assumed it was bad in my posts above because the risks the UIA would be greater of the value no longer closely resemble the value of BTC at some point (eventually... an exchange will go defunct). Alternatively, you could look at the same time as a good thing because the risks of total value loss (the realBTC equaling 0) is lower since the risk is mitigated across exchanges. After more thought, this causes issues because those that don't act quickly could have their overpriced sell/buy orders filled. That would make for an unhappy community and PR event.

So, are the combined risks of exchange default across a UIA SmartCoin markets a good thing or a bad thing? I am sure I am not mentioning a complete list of pros and cons of both sides (I have mentioned at least one other up-thread)...
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Offline BunkerChainLabs-DataSecurityNode

Re: Radical ideas for liquidity
« Reply #40 on: January 30, 2016, 04:24:26 am »
There is no reason why all of them cannot move to this one market.. or for any individual to decide they want their balance to be in bitBTC. As I said though, some may choose to maintain their own markets for various reasons. They continue as IOUs with counterparty risk. These would be zero counterparty risk trading against fully 100% collateralized BTC balances without any spreads/conversions on exit.

I think what it will do is make the other BTC IOU markets illiquid because all of the action would be in the bitBTC markets. Mainly because I think that is where everyone coming to the DEX to trade is going to want that only. Do you want a piece of paper saying you own 10oz of gold.. or do you want a stick of 10oz of gold in your hand? Of course you want the gold! :)

I keep saying bitBTC but I think it would need a new market.. otherwise there is going to be real confusion about what is a UIA, a Smartcoin, and a Sidechain Asset. So maybe call this scBTC.. or more descript.. realBTC. :)

This is all an experiment.

Yes, it would definitely need its own market. Otherwise, I can see the benefits if you are separating it from the SmartCoin bitBTC.

However, I think you must admit it makes the whole realBTC market more risk prone. I am not sure if that is a good thing or a bad thing. I assumed it was bad in my posts above because the risks the UIA would be greater of the value no longer closely resemble the value of BTC at some point (eventually... an exchange will go defunct). Alternatively, you could look at the same time as a good thing because the risks of total value loss (the realBTC equaling 0) is lower since the risk is mitigated across exchanges. After more thought, this causes issues because those that don't act quickly could have their overpriced sell/buy orders filled. That would make for an unhappy community and PR event.

So, are the combined risks of exchange default across a UIA SmartCoin markets a good thing or a bad thing? I am sure I am not mentioning a complete list of pros and cons of both sides (I have mentioned at least one other up-thread)...

I really didn't get the point you were trying to make here about realBTC being more risk prone. It's gold in hand instead of a paper promising gold.. how is that risk prone?

UIA markets can still exist.. at present there is a premium to use them. If you have realBTC that doesn't come with this premiums then demand is going to go there unless there is some other creative use for those UIA markets.

It's just another option.. how people/businesses choose to use it will be completely up to them. Though I already gave a really good reason for why people would prefer to have gold in hand instead of paper promising it.
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Offline CoinHoarder

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Re: Radical ideas for liquidity
« Reply #41 on: January 30, 2016, 04:37:51 am »
It's gold in hand instead of a paper promising gold.. how is that risk prone?
It is not gold in hand. It is a derivative backed by different methods than SmartCoins. It is backed by wallets in control of the exchanges and is still subject to risks- just different risks than SmartCoins. I am not convinced yet that the pros outweigh the cons. I am not sure what would happen in all these scenarios...

What if one exchange gets hacked (if the BTC is stored in their own separate wallets)? Or, several of them are hacked and all funds are compromised (if the BTC stored is in a multi-signature address controlled by exchanges)? What if the exchanges don't agree on who/what/where/when about BTC deposits/withdrawals? I suppose everyone would monitor the BTC chain as well as a notary, and have a way to overrule a suddenly malicious (hacked) exchange? What if the two smaller exchanges blackmail the one large exchange and steal its funds?
« Last Edit: January 30, 2016, 05:14:36 am by CoinHoarder »
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Offline BunkerChainLabs-DataSecurityNode

Re: Radical ideas for liquidity
« Reply #42 on: January 30, 2016, 05:19:07 am »
It's gold in hand instead of a paper promising gold.. how is that risk prone?
It is not gold in hand. It is a derivative backed by different methods than SmartCoins. It is backed by wallets in control of the exchanges and is still subject to risks- just different risks than SmartCoins. I am not convinced yet that the pros outweigh the cons. I am not sure what would happen in all these scenarios...

What if one exchange gets hacked (if the BTC is stored in their own separate wallets)? Or, several of them are hacked and all funds are compromised (if the BTC stored is in a multi-signature address controlled by exchanges)? What if the exchanges don't agree on who/what/where/when about BTC deposits/withdrawals? I suppose everyone would monitor the BTC chain as well as a notary, and have a way to overrule a suddenly malicious (hacked) exchange? What if the two smaller exchanges blackmail the one large exchange and steal its funds?

My bad.. I learned today that sidechaining BTC is possible and this  is what I was actually referring to.. autobridging as ripple does it is cute compared to what I am actually talking about.

We are just talking about two different things here.
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Offline CoinHoarder

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Re: Radical ideas for liquidity
« Reply #43 on: January 30, 2016, 06:44:32 pm »
It's gold in hand instead of a paper promising gold.. how is that risk prone?
It is not gold in hand. It is a derivative backed by different methods than SmartCoins. It is backed by wallets in control of the exchanges and is still subject to risks- just different risks than SmartCoins. I am not convinced yet that the pros outweigh the cons. I am not sure what would happen in all these scenarios...

What if one exchange gets hacked (if the BTC is stored in their own separate wallets)? Or, several of them are hacked and all funds are compromised (if the BTC stored is in a multi-signature address controlled by exchanges)? What if the exchanges don't agree on who/what/where/when about BTC deposits/withdrawals? I suppose everyone would monitor the BTC chain as well as a notary, and have a way to overrule a suddenly malicious (hacked) exchange? What if the two smaller exchanges blackmail the one large exchange and steal its funds?

My bad.. I learned today that sidechaining BTC is possible and this  is what I was actually referring to.. autobridging as ripple does it is cute compared to what I am actually talking about.

We are just talking about two different things here.

I am confused now haha. I am not even certain all my criticisms of that proposal are valid after giving it more though.. I made some assumptions as to how it would be setup/organized and if (or not) it would use multisignature addresses. I think it should be discussed more, and I think it is possibly a good solution if it can be made to work and doesn't cause any issues.

However, I still would not consider this as a "sure thing" as far as fixing our liquidity problems. To be honest, the only proposal I see as being a "sure thing" to fix liquidity is mine so far. I am of course biased, but no one has been able to explain why it would not work (other than make blanket statements such as "it is a horrible idea" etc... which is not helpful at all.)
« Last Edit: January 30, 2016, 06:46:17 pm by CoinHoarder »
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Offline prutser

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Re: Radical ideas for liquidity
« Reply #44 on: January 31, 2016, 10:30:43 am »
Here is maybe a idea for fixing liquidity problems:
 - make youtube movies about bitshares usecases
 - make understandable tutorials (not cli man mages :))

for some unknown reasons i like bitshares, but i have a damn hard time to understand what kind of things you can do with bitshare platform.

I really think that would help poeple adopting bitshares, there for more liquidity.