Subsidizing Market Liquidity

[bytemaster]

Shouldn't there be another rule that the ask/bid be placed with 5% of the feed?

They only get paid of the order is filled, placed too far from the trading price and they wouldn't get paid.

[Empirical1.2]

Btw, I don't understand "that could be  on $7 500 000 worth of BitUSD. " sorry. Could you explain?

The above proposal is suggesting diluting BTS at 2.5BTS/Sec. I think that equates to $365 000 worth of dilution a year.

If that dilution went instead to yield for holders of BitUSD then it would mean we could offer BitUSD yield/interest on up to $7 300 000 worth of BitUSD. ($365 000 is 5% of $7 300 000) 

[bytemaster]

Assuming we implement this feature in the BTS / USD market and voters approve workers funding this at a rate of 2.5 BTS / sec (50% of allowed dilution) and the internal exchange had $100,000 of daily volume then users trading on the internal exchange would see a 1% more than they would get by trading off chain. If daily volume was $50,000 then they would see a 2% profit over doing the same trades off-chain. The impact of this should be a major influx of new traders who can make more money trading on the internal exchange than the external exchange. This added liquidity will dramatically tighten the USD / BTS peg and give shorters much more confidence.

That's $365 000 a year of dilution.  That could be  on $7 500 000 worth of BitUSD.

Even with a lot of yield harvesting that would rapidly make BTS the undisputed Crypto USD market leader.

Uphold: $2 Million
Tether: $1.4 Million
Nubits: $0.76 Million
BitUSD: $0.098 Million

Liquidity is already guaranteed for the longs via forced settlement & with that much in circulation, shorts should have confidence there will be sufficient amounts for sale when they need them.

What about at least putting 1/2 of the proposed dilution towards BitUSD yield? That way you would rapidly increase the BitUSD CAP to >$3.5 million dollars while significantly increasing volume at the same time?

(I would also decrease forced settlement to 98/99%.)

Providing yield on USD doesn't work because of yield harvesting, people would create USD and sit on it until the rate of return approached 0.

[Pheonike]

Shouldn't there be another rule that the ask/bid be placed with 5% of the feed?

[chryspano]

imo one thing at a time, first we need good liquidity, we should do no compromises here, If only we could make clear that bitUSD is the true and only King....

This is specifically to achieve liquidity

I'm just not sure if giving funds intented for liquidity at this point as bitUSD yield would help, imo this can help(bitUSD yield) AFTER we have good liquidity and peg, we need first the world to know that bitUSD works.

[Empirical1.2]

What about at least putting 1/2 of the proposed dilution towards BitUSD yield? That way you would rapidly increase the BitUSD CAP to >$3.5 million dollars while significantly increasing volume at the same time?

(I would also decrease forced settlement to 98/99%.)

Wouldn't that incentive hoarding instead of trading? I would love yield but if we did that we would be sacrificing potential funds that could be used for liquidity. Didn't Tonyk's method give us yield?

Yeah the exploit for BitUSD yield, is yield-harvesting and hoarding, however the potential exploit for negative fees is 'self-trading'.

I would hate to spend $100 000 over 3 months on negative fees only to find perceived liquidity increases but BitUSD total doesn't increase much.

Whereas 1/2 that, $50 000 over 3 months on yield would at least practically guarantee we'd become the Crypto USD market leader in terms of total BitUSD.

Yield is also a big deal now considering the big thing on the horizon is a cashless economy and negative interest rates well below -1%.
http://www.zerohedge.com/news/2016-02-10/something-very-disturbing-spotted-morgan-stanley-presentation-slide

[Akado]

imo one thing at a time, first we need good liquidity, we should do no compromises here, If only we could make clear that bitUSD is the true and only King....

This is specifically to achieve liquidity

[chryspano]

imo one thing at a time, first we need good liquidity, we should do no compromises here, If only we could make clear that bitUSD is the true and only King.... 

[Akado]

What about at least putting 1/2 of the proposed dilution towards BitUSD yield? That way you would rapidly increase the BitUSD CAP to >$3.5 million dollars while significantly increasing volume at the same time?

(I would also decrease forced settlement to 98/99%.)

Wouldn't that incentive hoarding instead of trading? I would love yield but if we did that we would be sacrificing potential funds that could be used for liquidity. Didn't Tonyk's method give us yield?

Btw, I don't understand "hat could be  on $7 500 000 worth of BitUSD. " sorry. Could you explain?

[Empirical1.2]

Assuming we implement this feature in the BTS / USD market and voters approve workers funding this at a rate of 2.5 BTS / sec (50% of allowed dilution) and the internal exchange had $100,000 of daily volume then users trading on the internal exchange would see a 1% more than they would get by trading off chain. If daily volume was $50,000 then they would see a 2% profit over doing the same trades off-chain. The impact of this should be a major influx of new traders who can make more money trading on the internal exchange than the external exchange. This added liquidity will dramatically tighten the USD / BTS peg and give shorters much more confidence.

That's $365 000 a year of dilution.  That could be  on $7 500 000 worth of BitUSD.

Even with a lot of yield harvesting that would rapidly make BTS the undisputed Crypto USD market leader.

Uphold: $2 Million
Tether: $1.4 Million
Nubits: $0.76 Million
BitUSD: $0.098 Million

Liquidity is already guaranteed for the longs via forced settlement & with that much in circulation, shorts should have confidence there will be sufficient amounts for sale when they need them.

What about at least putting 1/2 of the proposed dilution towards BitUSD yield? That way you would rapidly increase the BitUSD CAP to >$3.5 million dollars while significantly increasing volume at the same time?

(I would also decrease forced settlement to 98/99%.)

[Akado]

What's the reasoning behind the 10 minutes restriction? During the mumble it was mentioned 24h to prevent abuse. The lower the volume, the higher the time limit one should wait before earning the reward. The more volume, the less chance one has to cheat and so, the time limit should be less.

[chono]

How long would it be until this hardfork would be ready?

[cylonmaker2053]

As a regular wanna-be market maker trader on the DEX, i heart this idea. Anything we can do to encourage liquidity is a step in the right direction.

[BunkerChainLabs-DataSecurityNode]

How long would it be until this hardfork would be ready?

[bytemaster]

I would like to propose a new feature for BTS that CNX will provide free of charge if a hard fork is approved.

We would like to allow any market pair to reward users who provide liquidity in that market. The feature would work as follows:

Every order that is filled after being open on the books for at least 10 minutes earns shares a reward pool. The shares earned are proportional to the size of the order filled.

Any user *or* worker can contribute funds to the reward pool. These funds can be denominated in any asset specified by the issuer.

At most once per day users may convert their shares in the reward pool to a pro-rata share of the rewards.

The asset issuer has the ability to enable this feature for any market their asset trades in and to specify the asset used to fund the reward pool.

With this feature Open Ledger *could* pay out OBITS to those who provide liquidity in the OPEN.BTC / BTS market.
BTS can vote for a worker to provide liquidity in the BTS / USD and BTS / CNY markets.

It is possible that trades in the BTS / OPEN.BTC market could earn rewards from both BTS and OBITS *if* shareholders voted to subsidize this market.

Assuming we implement this feature in the BTS / USD market and voters approve workers funding this at a rate of 2.5 BTS / sec (50% of allowed dilution) and the internal exchange had $100,000 of daily volume then users trading on the internal exchange would see a 1% more than they would get by trading off chain. If daily volume was $50,000 then they would see a 2% profit over doing the same trades off-chain.

The impact of this should be a major influx of new traders who can make more money trading on the internal exchange than the external exchange. This added liquidity will dramatically tighten the USD / BTS peg and give shorters much more confidence.

This implementation will require 3 new operations on the blockchain:

1. create_liquidity_reward_pool issuer ASSET FUND_ASSET MARKET_ASSET    ie: openledger OBIT OPEN.BTC OPEN.USD
2. fund_liquidity_reward_pool funding_account AMOUNT FUND_ASSET ASSET MARKET_ASSET
3. claim_liquidity_rewards username AMOUNT FUND_ASSET  ASSET MARKET_ASSET

It will also create a new worker type that can direct BTS to any fund where FUND_ASSET is BTS.



Note: CNX reserves the right to retract this offer or request payment for adding this feature. This proposal does not commit CNX to develop the feature if we decide to pursue other options.