Author Topic: Subsidizing Market Liquidity  (Read 73665 times)

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Offline abit

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I think I've underestimated the difficulty and/or workload of off-chain data analysis. Current data fetching APIs are not friendly enough to do the analysis work. If it's me to implement this, I may write a plugin of witness_node first to output more data.
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Offline abit

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Offline tbone

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instead of forcibly restricting trading pairs, why not a maker liquidity model like Gemini is implementing?

http://www.coindesk.com/gemini-exchange-new-trading-fees/

dynamic volume-based discount schedule.

I used to advocate for at least initially restricting pairs to the ones that make the most sense.  I mean, do we really need every BitAsset to trade against every other BitAsset?  It doesn't make sense to fragment liquidity across too many markets.  On the other hand, I'm sure there are people who would find some of the exotic pairs interesting.  So rather than restricting the pairs, I think it would be sufficient to leave all pairs in place but simply concentrate liquidity incentives on the pairs that make the most sense.  Also, in order to avoid confusion caused by a clusterfuck of pointless (to most people) trading pairs in the UI, it would be helpful if new accounts have the most sensible pairs starred by default, then the user can find and star any other market of their choice.   

As for the gemini maker/taker model, it's probably worth studying.  It looks like they reward not only volume but also balance of orders between bid and offer.  The only problem with the latter is that the bid/offer balance of trades is not entirely up to the maker.  I mean, what if the market is trending down, for example, and their bids are constantly getting hit but not their offers nearly as much?  So their model seems a bit flawed in that regard unless I'm missing something.

Offline cylonmaker2053

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instead of forcibly restricting trading pairs, why not a maker liquidity model like Gemini is implementing?

http://www.coindesk.com/gemini-exchange-new-trading-fees/

dynamic volume-based discount schedule.

Offline Erlich Bachman

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Smartcoins as a whole is the innovation Bitshares should be marketing, not simply bitUSD.


This "let's get the bitUSD market liquid first then branch off into other smartcoins" is rubbish. That is the same thing everyone's been saying for over two years. By the time the market is liquid we will have lost first mover advantage. Someone could code Smartcoins up on Ethereum in no time. It will happen sooner rather than later. Bitshares will again get caught with its pants down... on the cusp of a viral features (such as bitUSD), but it is unpolished/unfinished and someone else swoops in to take the meal out from under our nose.

on point jack

who is this guy?

I vote to make him king



I've been trying to get into some bitPussy for months now, but damn!


that spread just kills me!





You own the network, but who pays for development?

Offline sudo

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how many  normal people would like to use bitUSD  ……?
is the mobile wallet  easy  enough??
is there more and more forum apps website  use bitUSD?

Offline abit

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We just need to boost bitUSD first, THEN boost OTHER_ASSET:bitUSD pairs, but not make all kinds of xyz:bts pairs as these are much less attractive for non-crypto users. Just like what tonyk has proposed. If we don't already have a stable currency, trading on other commodities is nightmare.
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Offline tbone

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Our (first) goal is only one trading pair: bitUSD/BTS

I hear people say this all the time on these forums, and I think that is the wrong way of looking at it.

A. Cryptocurrency tokens which are USD derivatives (bitUSD/Nubits/Tether/coinoUSD/etc.) are a heavily competitive market.
A1. It is a market in which Bitshares is getting stomped by its competition (in terms of liquidity, volume, adoption, and usage).

B. Bitshares can easily issue autonomous derivatives for things like Gold, Silver, Oil, Corn, Lean Hogs, Live Cattle, Feeder Cattle, Wheat, Cocoa, Coffee, Cotton, Nasdaq, S&P 500, Apple, Google, etc...
B1. This is a market in which there is no competition in the cryptocurrency space.
B2. If we don't capitalize on these markets we are certain to lose first mover advantage.
B3. An extremely large portion of the cryptocurrency community are speculators. Give them something to speculate on. They don't want to speculate on FIAT. FIAT is boring. If I want FIAT, I'll keep my money in my bank account or in cash... it is much more easily accessible, and has more security & utility.
B4. Smartcoins as a whole is the innovation Bitshares should be marketing, not simply bitUSD.

I am not saying that bitUSD is not an important smartcoin, but we should not limit Bitshares' features for the sake of having a liquid USD token. That is an already competitive space. It is possible that these smartcoins that everyone views as obscure and unimportant are actually Bitshares' greatest strength. If the smartcoin markets were liquid enough, I would diversify my cryptocurrency portfolio into many commodities, stock, and stock indexes. I have a feeling there is a large market of people whom would want to stay within the cryptocurrency economy, but still diversify their portfolios outside of cryptocurrencies and FIAT derivatives.

This "let's get the bitUSD market liquid first then branch off into other smartcoins" is rubbish. That is the same thing everyone's been saying for over two years. By the time the market is liquid we will have lost first mover advantage. Someone could code Smartcoins up on Ethereum in no time. It will happen sooner rather than later. Bitshares will again get caught with its pants down... on the cusp of a viral features (such as bitUSD), but it is unpolished/unfinished and someone else swoops in to take the meal out from under our nose.

I agree with pretty much everything you're saying.  But @abit is not saying to kill off the other Smartcoins.  He's just talking about where to focus initial liquidity incentives.  We have to start somewhere, and USD is the best starting point.  Although I would personally direct initial incentives to all 3 on-ramp fiats i.e. USD, CNY, and EUR on a 75%, 20% and 5% basis respectively.  If it works, then we can expand it quickly to some of other Smartcoins, likely starting with GOLD, SILVER, OIL, etc.  It will be awesome once we really get those markets going, eh?

By the way, I also agree that our window of opportunity is going to start closing.  We need to take action now.  We can't sit on our hands or it will be certain failure.  For that reason, we should all be seriously considering @Empirical1.2 's yield harvesting proposal.  I'm not saying I'm 100% on board yet, I still think some questions need to be answered.  I hope others will also keep an open mind and ask intelligent questions rather than have knee jerk reactions out of ignorance and fear of the unknown.  We have to be willing to try and fail.  Not trying would be the worst failure of all!

Anyway, please take a look at @Empirical1.2's propsal linked below and provide input if you wouldn't mind.  Thanks.

https://bitsharestalk.org/index.php/topic,21597.0.html

Offline CoinHoarder

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Our (first) goal is only one trading pair: bitUSD/BTS

I hear people say this all the time on these forums, and I think that is the wrong way of looking at it.

A. Cryptocurrency tokens which are USD derivatives (bitUSD/Nubits/Tether/coinoUSD/etc.) are a heavily competitive market.
A1. It is a market in which Bitshares is getting stomped by its competition (in terms of liquidity, volume, adoption, and usage).

B. Bitshares can easily issue autonomous derivatives for things like Gold, Silver, Oil, Corn, Lean Hogs, Live Cattle, Feeder Cattle, Wheat, Cocoa, Coffee, Cotton, Nasdaq, S&P 500, Apple, Google, etc...
B1. This is a market in which there is no competition in the cryptocurrency space.
B2. If we don't capitalize on these markets we are certain to lose first mover advantage.
B3. An extremely large portion of the cryptocurrency community are speculators. Give them something to speculate on. They don't want to speculate on FIAT. FIAT is boring. If I want FIAT, I'll keep my money in my bank account or in cash... it is much more easily accessible, and has more security & utility.
B4. Smartcoins as a whole is the innovation Bitshares should be marketing, not simply bitUSD.

I am not saying that bitUSD is not an important smartcoin, but we should not limit Bitshares' features for the sake of having a liquid USD token. That is an already competitive space. It is possible that these smartcoins that everyone views as obscure and unimportant are actually Bitshares' greatest strength. If the smartcoin markets were liquid enough, I would diversify my cryptocurrency portfolio into many commodities, stock, and stock indexes. I have a feeling there is a large market of people whom would want to stay within the cryptocurrency economy, but still diversify their portfolios outside of cryptocurrencies and FIAT derivatives.

This "let's get the bitUSD market liquid first then branch off into other smartcoins" is rubbish. That is the same thing everyone's been saying for over two years. By the time the market is liquid we will have lost first mover advantage. Someone could code Smartcoins up on Ethereum in no time. It will happen sooner rather than later. Bitshares will again get caught with its pants down... on the cusp of a viral features (such as bitUSD), but it is unpolished/unfinished and someone else swoops in to take the meal out from under our nose.
« Last Edit: February 25, 2016, 02:18:10 am by CoinHoarder »
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Offline tbone

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If this is off chain, what will the interface be to specify the parameters?  I suppose for the committee the parameters could be hard-coded, but asset issuers should probably be able to set their own parameters.   

Either way, we'll have to decide what parameters make sense for BitAssets.  Tony proposed 5% minimum time at best bid/ask, but that number is so low that it's pointless.  Nasdaq uses 30% as minimum amount of time at the best bid/ask, and also requires a minimum of 90% of the time within 2% of the best bid/ask.
Yes this is the most important thing. The detailed rules.

Nasdaq's parameters make more sense for me.

//Edit
Now I tend to 5% minimum time on bid/ask in combined with 90% of time within 2% of the best bid/ask.

After more thinking, now I think Nasdaq's parameters don't fit our needs. What Nasdaq need is to improve liquidity of thousands of trading pairs, so maybe one maker focus on one pair, providing at least 30% of liquidity to that pair. Our (first) goal is only one trading pair: bitUSD/BTS, we want more people to provide liquidity to this one market, so it's not good to set a too restrict rule (30% minimum time), otherwise nobody can get reward, then the experience will probably fail.

I see what you're saying.  But I doubt Nasdaq is trying to have just one market maker per market.  Also, there's no reason why many MMs can't each reach 30% individually.  After all, multiple market participants can all be at the best bid or offer at the same time.  Don't we want to incentivize as much liquidity as possible right at the peg?

Offline abit

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Offline abit

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If this is off chain, what will the interface be to specify the parameters?  I suppose for the committee the parameters could be hard-coded, but asset issuers should probably be able to set their own parameters.   

Either way, we'll have to decide what parameters make sense for BitAssets.  Tony proposed 5% minimum time at best bid/ask, but that number is so low that it's pointless.  Nasdaq uses 30% as minimum amount of time at the best bid/ask, and also requires a minimum of 90% of the time within 2% of the best bid/ask.
Yes this is the most important thing. The detailed rules.

Nasdaq's parameters make more sense for me.

//Edit
Now I tend to 5% minimum time on bid/ask in combined with 90% of time within 2% of the best bid/ask.

After more thinking, now I think Nasdaq's parameters don't fit our needs. What Nasdaq need is to improve liquidity of thousands of trading pairs, so maybe one maker focus on one pair, providing at least 30% of liquidity to that pair. Our (first) goal is only one trading pair: bitUSD/BTS, we want more people to provide liquidity to this one market, so it's not good to set a too restrict rule (30% minimum time), otherwise nobody can get reward, then the experience will probably fail.

« Last Edit: February 24, 2016, 11:00:09 pm by abit »
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Offline abit

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We can rely on Cryptofresh in the short term .. but any thing done with shareholders money should be verify able by any one and shouldn't rely on 3rd party services IMHO ..
I was not saying rely on CryptoFresh's data, I was saying it's tech/skills.
« Last Edit: February 24, 2016, 11:00:33 pm by abit »
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Offline xeroc

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We can rely on Cryptofresh in the short term .. but any thing done with shareholders money should be verify able by any one and shouldn't rely on 3rd party services IMHO ..

Offline tbone

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All numbers/percent are parameters adjustable by the committee (for the bitAssets).

To qualify for the reward (calculated and paid  every 7 days).
1.An account must have the best bid (or ask) for min 5% of the time.[combined for all qualified orders of his during those 7 days]
To qualify:
2.A sell order should be no more than 6% above the peg; a buy order should be no more than 1% from the peg price.
3. The order should be the best bid or ask. (1)
4.The order should be for min of 150 bitUSD [it can be bigger but if the order is  for bigger amount, credit is given for max of 150 biUSD] (2)

Every 7 day the script is run and the funds are divided between accounts having placed qualified MM orders:
- proportional to the time the orders were on the order book and met all other criteria above.
- for the full 150 bitUSD and/or following rule (2)

(1)Orders (say N=10 times) N times smaller than the market maker's order at better prices do not violate the best bid/ask condition.
(2.)The MM in regular stock market place both bid and ask orders to qualify; if we want to give the reward for just a single side we have to weight the order toward the other side of the order book, or some other way. Say MM1 places just a buy order - it is given credit only for the sum of sell orders falling within the max spread (5% spread max in the example above)


Quote

Nasdaq is incentivizing the display of orders for (a) 500 shares at the best bid and 500 shares at the best offer, 30% of the time, and (b) 2500 shares at no wider than 2% of the best bid and 2500 shares at no wider than 2% of the best offer, 90% of the time.  I don't think we need to specify a minimum number of shares or what % of the time they need to satisfy the above conditions, but perhaps we could simply make the reward proportional to the length of time MMs have orders on the books, the size of the orders, and the distance from the price feed.  And maybe we should require that orders be on the book for a minimum period of time, as some have already suggested. 



Thanks for the details explanation. Most of it makes very much sense and could certainly be implemented by the committe-account or committee-trade or any other BTS owned account.
The only thing that I do not fully agree with is that you have two different percentages for placed orders to qualify on the bid and ask side but do understand the reasons for it.
I'd rather combine this with a settlement offset of 2% (or half of whatever the spread has been over the last 2 months) and see orders be placed symmetrically arround the peg .. But I guess that makes things a little more complicated for many traders.

Also, the implementation is quite involved as a script needs to track every order creation time and termination (cancel or fill) time which is not easy to do currently.
We'd need some more development in the backend (specific API calls). Once we have that, we could do this relatively quickly I guess.
How could this be funded is a totally different thing though.

If this is off chain, what will the interface be to specify the parameters?  I suppose for the committee the parameters could be hard-coded, but asset issuers should probably be able to set their own parameters.   

Either way, we'll have to decide what parameters make sense for BitAssets.  Tony proposed 5% minimum time at best bid/ask, but that number is so low that it's pointless.  Nasdaq uses 30% as minimum amount of time at the best bid/ask, and also requires a minimum of 90% of the time within 2% of the best bid/ask.