bitSHARES - As True Shares and Not a Currency!

[Empirical1.2]

Liquidity is king.
Charging Fees hurts liquidity.
Providing Negative Fees will boost liquidity.

If you REALLY want to bootstrap liquidity on the DEX then we should consider eliminating all trading fees and subsidising liquidity like crazy.

Presumably people would just trade with themselves especially during the lowest activity/volume times?

I'd rather subsidize liquidity though than commit to paying a share of future fees which MAKER requires (MAKER locks us into a long term cost that may not solve the problem long term and also I presume commits us to charging fees on that asset in the future which will be paying for past services rendered.)

I'm also not sure the current construct where a BitAsset needs a BTS short to be created is ideal because how close shorts are willing to come to the peg has a lot to do with BTS medium to long term price expectations imo but if we kept the current construct, I'd probably look to subsidize shorts with high short term interest while BTS medium term price expectations were muted, though the current construct probably enables yield harvesting it would at least be halved by having to have a long position too.

Shorts also currently have the burden of forced settlement. If it isn't already at 99% or slightly lower, I'd adjust that to.

[jakub]

@jakub do you have the link to coinhoarders post with the concept?

https://bitsharestalk.org/index.php/topic,21197.msg276084.html#msg276084

[Empirical1.2]

(2) Some people here seem to be concerned that making BTS non-transferable will cause too much "friction" for traders to bother with trading BTS.
OK, if we assume that this two-step process of acquiring BTS is too much hassle, how do we expect anyone to use e.g. bitBTC?


Using bitBTC requires three steps: if you want to buy n BTC with m USD, first you buy m-USD-worth of BTS (a.k.a. bitUSD), next with your bitUSD you buy n-BTC-worth of BTS (a.k.a. bitBTC) and finally you buy real BTC with your bitBTC. This is a three -step process which was the foundation of BitShares DEX two years ago. Everybody who got attracted to BitShares, must have thought this was the ultimate solution for trading crypto-currencies.
Now tonyk suggests we apply a similar logic for BTS:  if you want to buy n BTS with m USD, first you buy m-USD-worth of BTS (a.k.a. bitUSD) and then you buy real BTS with your bitUSD. A two-step process, very similar to the one we propose for bitBTC trading.

I think the concept outlined in the OP is a very good one, but your BitBTC and BitAssets are a poor comparison because our goal with BitAssets, is exactly the opposite because we recognise that the two/three step process of acquiring BitBTC is a lot of hassle.

We're actively attempting to reduce BitAsset friction, give them more external utility and make them available on more external places, like Poloniex & bridges, ideally for a tight spread because we recognise that very few are using BitBTC and other BitAssets atm due to among other things, too much 'friction' and lack of use if the token is only useful on the internal exchange. (By making BitUSD the gateway unit, the OP is partly an atttempt to address that very issue.)

[bytemaster]

Liquidity is king.
Charging Fees hurts liquidity.
Providing Negative Fees will boost liquidity.

If you REALLY want to bootstrap liquidity on the DEX then we should consider eliminating all trading fees and subsidising liquidity like crazy.

[Akado]

@jakub do you have the link to coinhoarders post with the concept?

[ebit]

If someone really want to do this test, I suggest using PTS. IT have some value and I can accept it is non-transferable.

[jakub]

Or we need a fiat ramps that allow you buy bts directly. Until that happens bts will be a 2nd order token and the assets that depend on it 3rd order tokens.

The primary reason of all our troubles (including the weakness of fiat ramps) is lack of liquidity.
This means we need to address liquidity *before* anything else can be addressed.

Regarding liquidity, we could do these three things:
- implement the MAKER concept (incentivize liquidity by redirecting future profits to entrepreneurs who supply it)
- implement CoinHoarder's concept (subsidize liquidity by printing BTS)
- implement tonyk's concept (give DEX the exclusive right to trade BTS)

And we could (and should) do ALL of those at the same time.
Liquidity is our backbone, without it nothing else has any value in BitShares.
It's our be or not to be.

It's utterly stupid that we give away our most valuable asset (i.e. liquidity) to third-party companies (i.e. centralized exchanges).
Until now we thought we needed them due to one important aspect (i.e. price feeds), so it made sense to accept this uncomfortable situation.

But the cool thing about tonyk's concept is the realization that we do not actually need centralized exchanges.
We can have the liquidity they currently enjoy and, as a bonus, benefit from other advantages (no dependence on price feeds, extra fees from trading, less voting apathy etc).

What do we need to give up? The idea that was wrong in the first place: that BTS is a currency.
Our SmartCoins are the currency, BTS are just non-transferable shares in a company.
So tonyk's idea makes perfect sense: it brings BitShares to what it was originally meant to be.
And additionally we stop bleeding our precious liquidity to support our competition.

As we have it now, we are a company which gives away its most crucial asset (i.e. liquidity) to its own competition.
And we wonder why our business doesn't go too well.

[monsterer]

I think tonyk's idea is the most ground-breaking invention that has happened since BitShares was conceived, as it makes the whole concept logically complete.

 

[Pheonike]

Or we need a fiat ramps that allow you buy bts directly. Until that happens bts will be a 2nd order token and the assets that depend on it 3rd order tokens.

2nd order meaning bts is dependent on btc in order to be acquired.

[jakub]

Two thoughts:

(1) BM once said it would be a big boost for BitShares, if our DEX had exclusive rights to trade some important assets. This implies that a user could not trade e.g. ETH anywhere except DEX. I fully agree with that.
So if we think this idea makes sense, isn't it logical to start with... our own shares? This is what tonyk's idea boils down to: offer our own DEX the exclusive right to trade BTS.
How can we expect any issuer to take our exclusivity offer, if we do not use it ourselves for our own shares?

(2) Some people here seem to be concerned that making BTS non-transferable will cause too much "friction" for traders to bother with trading BTS.
OK, if we assume that this two-step process of acquiring BTS is too much hassle, how do we expect anyone to use e.g. bitBTC?

Using bitBTC requires three steps: if you want to buy n BTC with m USD, first you buy m-USD-worth of BTS (a.k.a. bitUSD), next with your bitUSD you buy n-BTC-worth of BTS (a.k.a. bitBTC) and finally you buy real BTC with your bitBTC. This is a three -step process which was the foundation of BitShares DEX two years ago. Everybody who got attracted to BitShares, must have thought this was the ultimate solution for trading crypto-currencies.
Now tonyk suggests we apply a similar logic for BTS:  if you want to buy n BTS with m USD, first you buy m-USD-worth of BTS (a.k.a. bitUSD) and then you buy real BTS with your bitUSD. A two-step process, very similar to the one we propose for bitBTC trading.

Seriously, those who think that tonyk's idea causes too much hassle for BTS trading, need to revise their opinion about the BitShares concept itself.
The BitShares concept assumes this hassle is acceptable, as this is the very foundation of BitShares DEX.
All assets traded there are not the real things, they are derivatives that eventually need to be converted to the real thing.
So if we assume that this is acceptable for all assets traded on DEX, why can't we apply the same assumption for BTS itself?

It smells like total hypocrisy: we expect our customers to use a solution that we are not willing to use ourselves for our own shares.

We need to decide: either we believe in the DEX concept and use it ourselves *or* we need to openly say we don't believe in it and shut down this whole thing.
I think tonyk's idea is the most ground-breaking invention that has happened since BitShares was conceived, as it makes the whole concept logically complete.

[monsterer]

I'm not sure what you're trying to say.  It's a given that BTS cannot be transferred in the OP scenario.  But user will still be able to transfer BTC to Poloniex and trade a POLO.BTS token.  They'll also still be able to move funds from Poloniex to the DEX by buying BitUSD (or BitCNY) and then transfering THAT to the DEX.  Sure, it would be less practical for users, but that just means fewer people moving funds to the DEX. And from Poloniex's standpoint there would be NO CHANGE, other than disabling BTS transfers on their withdrawal page. 

Where does polonix get the BTS to back the POLO.BTS token?

Either:

1. They have to hold a massive stash of real BTS to cope with wildly varying demand
2. They have to somehow convert real BTC into a DEX BTC.IOU (no existing infrastructure), then trade it for BTS on the DEX

Neither of these options is going to be tenable for them; they have to become a bridge, and what you are suggesting is that polonix print BTS out of nothing.

edit: think about it some more; how can their POLO.BTS token affect the price of BTS when no arbitrage is possible? It would be totally pointless.

[tonyk]

What the hell are you talking about?  Why would they have to do anything different than what they are ALREADY doing to enable their users to trade POLONIEX.BTS IOU tokens?   

 

Nothing different man...[and I never said preventing trading of derivatives on anything is something preventable/stoppable.... hell BTS is trading such derivatives on USD, CNY...anything we chose to for that matter.... but we mainly do it cause those are bad...]

Well nothing else other than a small, very small, tiny one might say difference... one should run the BTS wallet to deposit / give polo their real BTS and get the fakes/derivatives...[and pay BTS a fee. And not just transfer but actually go and BUY their UIA in the market. This is no different from now, according to your thought process] or even better - they (polo) will have to integrate BTS wallet into their interface, just so people can deposit BTS?

Nice!
I think...
I am not sure...should I dare consider it good without tbone's approval???


PS
The other alternative is even nicer (monsterer's explanation up thread). Polo is so big on the new BTS/dShares. They buy a ton of BTS (from the DEX where else?), and start acting as a gateway just so their customers can freely buy POLO.BTS on their exchange.

[Pheonike]

It seems the key to this working is getting people to hold their bts in the DEX by offering a dividend for using their funds for generating smartcoin liquidity. So can we just decide on a plan already!!!

[Empirical1.2]

@tbone While a 3rd party could trade an IOU, there has been mention of paying a BTS holder a dividend.  This could not be replicated outside the DEX.

Unless the IOU offerer also held the underlying and passed the dividend onto their customers.

[Brekyrself]

@tbone While a 3rd party could trade an IOU, there has been mention of paying a BTS holder a dividend.  This could not be replicated outside the DEX.