Author Topic: Radical ideas for liquidity  (Read 24282 times)

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Offline kingscrown

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What about making liquidty pools just like NBT has?
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Offline Zapply

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@CoinHoarder to the core of your design your bitasset is backed the BTS blockchain you just play with number only blockchain give UIA better

Offline abit

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IMHO there are flaws. Market making is NOT a 100% safe business, it will definitely loss in a trend, so the system itself should never dilute to operate such service.

Meh. You are arguing that once there is a sufficient amount of liquidity on the books, that there will be sufficient incentive for people to manipulate the market to their advantage. You are effectively saying that the DEX is broken, as once a sufficient to amount of liquidity exists that it will be manipulated and profited off of from bad actors. What your are saying is a possibility whether my proposal is enacted or not. It is possible as long as there is enough incentive on the orderbooks, which can occur naturally. How do you know this isn't already taking place as is?

I get what you are saying, but while bringing up a good reason the proposal should not be implemented, you are also stating the DEX is broken and unfixable. As soon as there is enough liquidity (incentive) then bad actors will manipulate the market for easy profits. This seems more like a flaw with Smart coins than with the proposal as it could easily happen without it.
I've posted the reason above but you didn't quote it.

One of the challenges is: if we have huge liquidity, we shouldn't simply move the feed price when price on external exchange moves, especially when liquidity of external exchanges is less, otherwise it's a good target to manipulate/exploit. But, since the IOU USD backed by exchanges are real USD, on the opposite bitUSD is NOT fully backed especially when huge amount of them are created via dilution, the feed price should move/follow the price on external exchanges, otherwise bitUSD would be considered "not pegged well". Imo BitUSD can be considered as fully backed if there hasn't been unlimited BTS diluted to create them. I'm not saying that smart coins are already broken, but I suspect that it will break if doing this way.

Exactly this:
The challenge is preventing the feed from being abused among a few other things.
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Offline bytemaster

Here is my proposal fully explained. The PDF version is much easier to follow and read. It is available here: http://docdro.id/2OcoImM

This proposal has some really solid concepts and reflects some of the things I have been thinking about. The challenge is preventing the feed from being abused among a few other things.
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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 puppies

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@CoinHoarder the way that you create the bitasset can be forced Settlement?

Yes, other than the issue abit is bringing up, I think force settlement is the only other issue. The issue with that is the demand for forced settlement will increase, based on a statistical assumption. This will force other shorts, that will certainly have less collateral, to be force settled.

I have not come up with a solution to this, other than possibly not allowing Smartcoins to be force settled (which is another can of worms.) I was poking around last night and I noticed that committee-issued SmartCoins currently cannot be force settled. Is that truly the case, or is it a glitch in the GUI? Someone told me the other week that forced settlements were enabled...
Settlement is turned on.  I don't have much USD. but it would allow me to settle it.
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Offline CoinHoarder

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@CoinHoarder the way that you create the bitasset can be forced Settlement?

Yes, other than the issue abit is bringing up, I think force settlement is the only other issue. The issue with that is the demand for forced settlement will increase, based on a statistical assumption. This will force other shorts, that will certainly have less collateral, to be force settled.

I have not come up with a solution to this, other than possibly not allowing Smartcoins to be force settled (which is another can of worms.) I was poking around last night and I noticed that committee-issued SmartCoins currently cannot be force settled. Is that truly the case, or is it a glitch in the GUI? Someone told me the other week that forced settlements were enabled...
« Last Edit: February 01, 2016, 08:48:50 pm by CoinHoarder »
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Offline CoinHoarder

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IMHO there are flaws. Market making is NOT a 100% safe business, it will definitely loss in a trend, so the system itself should never dilute to operate such service.

Meh. You are arguing that once there is a sufficient amount of liquidity on the books, that there will be sufficient incentive for people to manipulate the market to their advantage. You are effectively saying that the DEX is broken, as once a sufficient to amount of liquidity exists that it will be manipulated and profited off of from bad actors. What your are saying is a possibility whether my proposal is enacted or not. It is possible as long as there is enough incentive on the orderbooks, which can occur naturally. How do you know this isn't already taking place as is?

I get what you are saying, but while bringing up a good reason the proposal should not be implemented, you are also stating the DEX is broken and unfixable. As soon as there is enough liquidity (incentive) then bad actors will manipulate the market for easy profits. This seems more like a flaw with Smart coins than with the proposal as it could easily happen without it.
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Offline abit

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@CoinHoarder: I like your idea. Your document is sound and IMHO we should do it. However, it involves quite some coding to have this an integrated automation and we may start trying to convince the committee to provide some liquidity in the short term. Not sure they are willing to do so.

As for the implementations, internally, those autonomous sell orders could be 'virtual' orders such that the DAC only borrows at the fixed ration IF there is a buyer for them ..
That way, we could have a ${MARKETCAP} sell order at the feed price in every single bitasset owned by the DAC/committee and the wall will be reduced in all markets simultaneously if a trade happens in any of them.
You should certainly write this together into a BSIP and have the devs thing about it ..
IMHO there are flaws. Market making is NOT a 100% safe business, it will definitely loss in a trend, so the system itself should never dilute to operate such service.
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Offline abit

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If the system dilutes unlimited BTS for market making, what will happen when a whale or a group of whales manipulates the price of BTS?
* buy the BTAs which are borrowed via dilution, dump BTS to external exchange, settle
* borrow BTA, and sell to the system, pump BTS on external exchanges, buy BTA back from system

The autonomous liquidity operations would not ever buy SmartCoins. It only shorts them, and then places them on the sell side of the market above the price feed. I don't understand what you mean by "sell to the system" since the "system" is never buying any coins.

If this works how I think it works, couldn't someone do this type of an exploit as Bitshares exists today?
I wrote above post from a manipulator's perspective.
Since your "autonomous liquidity operations" (in my word: your bot) place orders into the market, I named it "the system", whatever price you place it, a manipulator can take advantage of your open orders. Once your smart coins are bought by the manipulator, you have open short positions, which can be settled by the manipulator. Your bot would passively accept all the commands sent by the manipulator, thus cause losses.

//Update
Quote
If this works how I think it works, couldn't someone do this type of an exploit as Bitshares exists today?
Since no one provides unlimited liquidity without moving the price. The manipulator has no opponent to worth exploiting.
« Last Edit: February 01, 2016, 02:59:56 pm by abit »
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Offline Zapply

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@CoinHoarder the way that you create the bitasset can be forced Settlement?

Offline xeroc

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@CoinHoarder: I like your idea. Your document is sound and IMHO we should do it. However, it involves quite some coding to have this an integrated automation and we may start trying to convince the committee to provide some liquidity in the short term. Not sure they are willing to do so.

As for the implementations, internally, those autonomous sell orders could be 'virtual' orders such that the DAC only borrows at the fixed ration IF there is a buyer for them ..
That way, we could have a ${MARKETCAP} sell order at the feed price in every single bitasset owned by the DAC/committee and the wall will be reduced in all markets simultaneously if a trade happens in any of them.
You should certainly write this together into a BSIP and have the devs thing about it ..

Offline noisy

Maybe this idea is not radical, but it is another idea, which I think we should consider: https://bitsharestalk.org/index.php/topic,21265.0.html - Simple way to create a liquidity? Let's do it at once - Liquidity Event
Take a look on: https://bitsharestalk.org/index.php/topic,19625.msg251894.html - I have a crazy idea - lets convince cryptonomex developers to use livecoding.tv

Offline puppies

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Also coinhoarder your plan is not exactly a new idea.  Perhaps you are not getting as much response as you would like because it has been discussed before.  For example here https://bitsharestalk.org/index.php/topic,20939.0.html  although I am sure there are plenty more.

And yes your plan requires development work to get it to work.  I view that as a negative rather than a positive.
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chryspano

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No, I mean print BTS as in... out of thin air like Bitshares does for worker/delegate dilution.

I have a bad feeling about this...

https://www.youtube.com/watch?v=FQ5YU_spBw0&feature=youtu.be&t=2m28s

Offline CoinHoarder

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If the system dilutes unlimited BTS for market making, what will happen when a whale or a group of whales manipulates the price of BTS?
* buy the BTAs which are borrowed via dilution, dump BTS to external exchange, settle
* borrow BTA, and sell to the system, pump BTS on external exchanges, buy BTA back from system

The autonomous liquidity operations would not ever buy SmartCoins. It only shorts them, and then places them on the sell side of the market above the price feed. I don't understand what you mean by "sell to the system" since the "system" is never buying any coins.

If this works how I think it works, couldn't someone do this type of an exploit as Bitshares exists today?
« Last Edit: February 01, 2016, 05:27:17 am by CoinHoarder »
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