bitSHARES - As True Shares and Not a Currency!

[tonyk]

I don't think we can make this change without impacting the implied right of transfer for BTS.

It does violate the right of transfer. I see 2 solutions
 - majority decision to do so. preferably something like 75% of active/casted vote should approve the change. Plus long long time to vote - months.
- another chain

[tonyk]

Sounds like a closed loop and an even higher barrier to entry than the current system.
What is the benefit to business if we are all just trading shares between ourselves?

I would prefer an open free market with dynamic tools to promote trade.

Because shares aren't the product, bitUSD, butCNY, etc are and those would be more used from what I understood. It's only a higher entry barrier if you want to get shares, not to use the products people are already supposed to use but don't.

Yes but you still have to get shares to have collateral for bitUSD, correct?

Not necessarily. In my proposal everything else, exept bitUSD, is collateralized by bitUSD [probably at  lower ratio than the 1.75x ]

[tonyk]

Under this proposed system what would happen in cases of high demand for bts, and cases of low demand for bts.  I think a couple of thought experiments are in order.

First of all high demand for bts.  Since no one can buy bts directly, they will have to buy bitassets.  As there are more people wanting to buy than to sell the price of these bitassets will rise.  If I really want into bts, but no one is offering a bitusd for $1 of fiat then I might pay $1.10 at some price there will be a seller.  Once I purchase my bitusd I will transfer it to my wallet, and purchase bts with it.  Once again we will assume that there are more people wanting to purchase bts with bitsud internally.  My purchase will push the price of bts vs bitusd up.  Thus a rising of bts price should produce shortages of bitusd for sale on external exchanges, and gluts of bitusd for sale internally. 

When the price of BTS in in uptrend there will be more people willing to short USD (to gain even more) so no shortage of bitUSD here.
More importantly someone willing to pay $1.1 per dollar in order to buy BTS means he is willing to pay 10% more for BTS than the current price. So the price of BTS will move up to that level (assuming he represents the total demand for BTS)

How would it work under low demand for bts.  Once again no one can sell their bts directly.  Internally we can assume that there will be more bts for sale and less bitusd for sale.  The price of bts in relation to bitUSD will decline, and the collateral underlying all bitusd will go down in value.  Once I have my bitusd I will transfer it to an external exchange and attempt to trade it for fiat.  We can once again assume that there will be more bitusd for sale on the external exchange and less fiat to purchase it.  This will naturally depress the price of bitUSD in relation to fiat.  This will result in a shortage of bitusd internally and a glut of bitusd externally.  If the price of bts internally falls far enough then shorters will become under collateralized.  They will either add to their collateral, attempt to purchase bitusd to close their short, or get margin called.  If they attempt to purchase bitusd internally to close their position or are margin called this will further add to the internal shortage of bitusd and further reduce the price of bts in relation.  If the price falls far enough then there will be massive buy orders in the internal bitusd market, but the rational decision for most users will not be to sell their bitusd internally for the depreciating bts.  It will be to sell their bitusd externally for fiat.  If conditions get bad enough then many users will be willing to sell their bitusd externally for fiat at a discount.  This will erode confidence in the system, and further the decline.

In this example the bitUSD sold on external exchanges somehow disappear. (as opposed to returning as a supply to the DEX market). After this is fixed, while this scenario is painful experience for the BTS holders, it describes just a new lower value of BTS. The massive buy walls can only represent people willing to exit but not willing to sell low enough [otherwise they will offer new lower price and 'move in front of that wall' so to speak]. At the extreme - they can always exit instantaneously by offering 1.75 times less than the last seen price.
More fundamental - you still describe the world as if there is some 'fair price' somewhere out there, and the trades in the DEX somehow deviate from it*. When the price in the DEX is THE PRICE
* for example here >>"If conditions get bad enough then many users will be willing to sell their bitusd externally for fiat at a discount.  " Discount from what? This simply means they have somehow sold their BTS for that same premium, which is impossible and simple means the price of BTS is actually lower by this discount amount.

This may be a worst case scenario, but I think it is likely to happen at some point.  We have already seen the price of bts decline by 50% in a day or two.  the current incarnation survived to lick its wounds.  I am not sure that this new version would.  In short I would say that my argument is that attempting to make entry and exit entirely through market pegged assets will hinder the peg, and increase the fragility of the entire system.

I hope this wall of text wasn't too hard to read.  If you disagree with any of my conclusions please let me know.

[iHashFury]

Everything on the DEX now is a product.
BTS, Smartcoin, User Issued Asset or Prediction Market Asset

Education and promotion is needed.
Re-inventing the wheel again a few months after 2.0 - Who would invest?

[abit]

Sounds like a closed loop and an even higher barrier to entry than the current system.
What is the benefit to business if we are all just trading shares between ourselves?

I would prefer an open free market with dynamic tools to promote trade.

Because shares aren't the product, bitUSD, butCNY, etc are and those would be more used from what I understood. It's only a higher entry barrier if you want to get shares, not to use the products people are already supposed to use but don't.

Yes but you still have to get shares to have collateral for bitUSD, correct?

To create it I guess, but you can just buy it, which should be way easier assuming this model does provide the expected liquidity.

If nobody create it, how to just buy it? Chicken and egg.

[abit]

This may be a worst case scenario, but I think it is likely to happen at some point.  We have already seen the price of bts decline by 50% in a day or two.  the current incarnation survived to lick its wounds.  I am not sure that this new version would.  In short I would say that my argument is that attempting to make entry and exit entirely through market pegged assets will hinder the peg, and increase the fragility of the entire system.

I hope this wall of text wasn't too hard to read.  If you disagree with any of my conclusions please let me know.

I've thought of this as well. We need to think about the worse scenario SERIOUSLY.
With the new design, BTS price will be backed by (expected) PROFIT of the platform, or say, fees - costs. It's more or less the bottom line.

[Akado]

Sounds like a closed loop and an even higher barrier to entry than the current system.
What is the benefit to business if we are all just trading shares between ourselves?

I would prefer an open free market with dynamic tools to promote trade.

Because shares aren't the product, bitUSD, butCNY, etc are and those would be more used from what I understood. It's only a higher entry barrier if you want to get shares, not to use the products people are already supposed to use but don't.

Yes but you still have to get shares to have collateral for bitUSD, correct?

To create it I guess, but you can just buy it, which should be way easier assuming this model does provide the expected liquidity.

[mint chocolate chip]

Great idea! Actual shares, real dividends...it all sounds so good.

[morpheus]

Sounds like a closed loop and an even higher barrier to entry than the current system.
What is the benefit to business if we are all just trading shares between ourselves?

I would prefer an open free market with dynamic tools to promote trade.

Because shares aren't the product, bitUSD, butCNY, etc are and those would be more used from what I understood. It's only a higher entry barrier if you want to get shares, not to use the products people are already supposed to use but don't.

Yes but you still have to get shares to have collateral for bitUSD, correct?

[Akado]

Sounds like a closed loop and an even higher barrier to entry than the current system.
What is the benefit to business if we are all just trading shares between ourselves?

I would prefer an open free market with dynamic tools to promote trade.

Because shares aren't the product, bitUSD, butCNY, etc are and those would be more used from what I understood. It's only a higher entry barrier if you want to get shares, not to use the products people are already supposed to use but don't.

[iHashFury]

Sounds like a closed loop and an even higher barrier to entry than the current system.
What is the benefit to business if we are all just trading shares between ourselves?

I would prefer an open free market with dynamic tools to promote trade.

[fuzzy]

Sooo is this change going to happen? Maybe we could talk about it in tomorrow's mumble.

Um... definitely.  I am more interested though in talking about how we are going to start testing things before we implement them.  And I mean this with respect to how we actually assess the value of doing these things.

We can talk about it all day, but really need more actual real world data collection on these ideas...

[bytemaster]

I don't think we can make this change without impacting the implied right of transfer for BTS.

All this change does is use the value of "transferring BTS" to fund liquidity in the on chain markets. The impact on BTS price would be like allocating a worker proposal to subsidize the same liquidity.  The difference is that it wouldn't be disruptive to the holders of BTS and the exchanges.

[oldmine]

Sooo is this change going to happen? Maybe we could talk about it in tomorrow's mumble.

[donkeypong]

I still don't get it. ... bitshares reputation would be even further in the toilet. 

The only way I see this going well is to create a completely separate chain, like others have suggested.  Whether it is ever possible to merge the two together again remains to be seen.  It may be that both chains run indefinitely and the better chain wins.

Why not create another chain or token for this? A couple of people have posed this question in the thread, but I have not seen any answers (from people who understand the whole ball of wax better than I do). It seems like a discussion worth having.

If we had a new chain or token, a great name would be....DEXshares!