Author Topic: Trustless, Decentralized Bond Market Draft  (Read 11554 times)

0 Members and 1 Guest are viewing this topic.

Offline morpheus

  • Full Member
  • ***
  • Posts: 81
    • View Profile
Is this SWAN price the same SWAN price that is used now?

Offline abit

  • Committee member
  • Hero Member
  • *
  • Posts: 4664
    • View Profile
    • Abit's Hive Blog
  • BitShares: abit
  • GitHub: abitmore
BM in the last mumble actually said that we should focus on the liquidity proosal and the rate limited fee features next simply because the bond market will take months and you know how long an initial esimate of "a few months" really takes.

He also mentioned that running Ethereum VM on our chain is possible, but I think it might be a better idea to wait until more dapps are made, or not?
EVM is the next BIG thing. We should put in into long term road map. @jakub?
« Last Edit: February 29, 2016, 10:49:37 am by abit »
BitShares committee member: abit
BitShares witness: in.abit

Offline abit

  • Committee member
  • Hero Member
  • *
  • Posts: 4664
    • View Profile
    • Abit's Hive Blog
  • BitShares: abit
  • GitHub: abitmore
Sidechain should be implemented first, before Bond market.

Bond market is feature which will be used by tiny fraction of bitshares users. Sidechain is something which could actually bring thousands of new users which will not have to worry any longer about security of traiding their REAL bitcoins on exchange.

With 100% bitcoin collateral, this will instantly boost all BTC:XYZ markets.

Moreover... there are other exchanges which has bondmarkers. There are none exchange/cryptocurrency which has such feature like sidechain. This should be our top priority which will move Bitshares to all frontpages of services about bitcoin.

Yeah I totally agree with this. Bond market isn't a priority and Bytemaster even said in the previous hangout it is unviable until we have deep liquid markets. Sidechain for BTC would help this alot.

I really think our only focus as a community right now should be liquidity.
Technically the side chain thing requires a totally different skill set. To be simple, if you can describe how the bond market would work in detail, I can implement it within an estimated time. But I have no idea how many efforts are needed to implement the side chain feature.
BitShares committee member: abit
BitShares witness: in.abit

Offline xeroc

  • Board Moderator
  • Hero Member
  • *****
  • Posts: 12922
  • ChainSquad GmbH
    • View Profile
    • ChainSquad GmbH
  • BitShares: xeroc
  • GitHub: xeroc
Quote
TNSTAAFL.

First off, I think describing this as a "Bond Market" is the wrong choice. As far as I know, there's no such thing as a "margin call" in bonds. Instead, this functions most like a margin account with a stockbroker: you can borrow on top of securities you hold with them as collateral, and if the price drops, you are sold out of your position.

The claim of 100% protection is false as well. There can be no guarantee or defense against a black swan event where the market evaporates in the underlying asset. Whether or not this event is considered likely is irrelevant: the claim of perfect security is false and is hidden by a lot of hand waving which ignores the fact that no calculations you do now can tell you what you'll be able to sell something for in the next moment with a guarantee.

Presenting this as a "bond" skips over the major disadvantage to the borrow compared to a real bond market: In a real bond market, if you make your payments, everything is fine. In this proposal, everything must be fully backed by collateral and the payments are irrelevant to being able to prevent the collateral from being sold.

This may be useful technology for allowing people to trade on margin more securely, but I believe it will also tend to increase volatility to the extent it's adopted since it creates exposure to cascading margin calls.

This basic misnomer led to a fair amount of confusion of purpose in that thread as a direct result. It makes no sense to call this a bond because it does not behave at all like a bond.
https://www.reddit.com/r/CryptoCurrency/comments/484cwz/trustless_decentralized_bond_market_draft/d0hcblb?context=3

Offline JonnyB

  • Hero Member
  • *****
  • Posts: 636
    • View Profile
    • twitter.com/jonnybitcoin
Sidechain should be implemented first, before Bond market.

Bond market is feature which will be used by tiny fraction of bitshares users. Sidechain is something which could actually bring thousands of new users which will not have to worry any longer about security of traiding their REAL bitcoins on exchange.

With 100% bitcoin collateral, this will instantly boost all BTC:XYZ markets.

Moreover... there are other exchanges which has bondmarkers. There are none exchange/cryptocurrency which has such feature like sidechain. This should be our top priority which will move Bitshares to all frontpages of services about bitcoin.

Yeah I totally agree with this. Bond market isn't a priority and Bytemaster even said in the previous hangout it is unviable until we have deep liquid markets. Sidechain for BTC would help this alot.

I really think our only focus as a community right now should be liquidity.
I run the @bitshares twitter handle
twitter.com/bitshares

Offline Empirical1.2

  • Hero Member
  • *****
  • Posts: 1366
    • View Profile
 +5% It's pretty impressive that you can create a model with no risk to lenders.

The only thing I wonder is whether we would be better off introducing the widely popular, currently used model but with more conservative initial and maintenance collateral settings? (Rather than a more complex, unfamiliar and also perhaps less favourable/uncertain for borrowers model.)

The lending prices you see on Poloniex and BitFinex are probably taking into account an exchange failure risk of >20% per annum. So while our Black Swan risk to lenders might be higher, our DEX failure rate is much lower so prices may end up being fairly similar to exchanges.

They do bear risk of leaving an order on the book.  No different than a bank taking risk of you mailing in the keys rather than payment. 

If even one person is left holding the bag for a default it makes the entire block chain look bad. Block chains must have higher standards.

It appears to be setting higher standards for one party in the trade at the expense of the other (poorer terms for borrowers) which might make it hard to create a successful market.

Similar to BitAssets forced settlement at 1-1. While great for providing 100% certainty for the longs, the burden & uncertainty this creates to shorts is part of the reason we see such a high BitAsset premium? Lowering forced settlement considerably and introducing a maintenance collateral requirement level above which you couldn't be force settled would still provide the majority of the benefits but create a more successful, active market imo. (The current setting also allows longs to profit when the market moves slightly in their favour at the expense of shorts or even gain a few % by manipulating BTS price fairly cheaply at forced settlement time.)
« Last Edit: February 29, 2016, 05:59:20 am by Empirical1.2 »
If you want to take the island burn the boats

Offline emailtooaj

Sidechain should be implemented first, before Bond market.

Bond market is feature which will be used by tiny fraction of bitshares users. Sidechain is something which could actually bring thousands of new users which will not have to worry any longer about security of traiding their REAL bitcoins on exchange.

With 100% bitcoin collateral, this will instantly boost all BTC:XYZ markets.

Moreover... there are other exchanges which has bondmarkers. There are none exchange/cryptocurrency which has such feature like sidechain. This should be our top priority which will move Bitshares to all frontpages of services about bitcoin.
This^^^ times One billion trillion!
We really need to get our think tanks together and collaborate on this. 
If we can't get viable fiat gateways to integrate and carry Bitshares, then we must build our own decentralized vault and what better start than one which holds BTC! 
Sound Editor of Beyondbitcoin Hangouts. Listen to latest here - https://beyondbitcoin.org support the Hangouts! BTS Tri-Fold Brochure https://bitsharestalk.org/index.php/topic,15169.0.html
Tip BROWNIE.PTS to EMAILTOOAJ

Offline noisy

Sidechain should be implemented first, before Bond market.

Bond market is feature which will be used by tiny fraction of bitshares users. Sidechain is something which could actually bring thousands of new users which will not have to worry any longer about security of traiding their REAL bitcoins on exchange.

With 100% bitcoin collateral, this will instantly boost all BTC:XYZ markets.

Moreover... there are other exchanges which has bondmarkers. There are none exchange/cryptocurrency which has such feature like sidechain. This should be our top priority which will move Bitshares to all frontpages of services about bitcoin.
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 tonyk

  • Hero Member
  • *****
  • Posts: 3308
    • View Profile
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline onceuponatime

does bts have enough users to support Bond Market?

Bytemaster has said that liquidity needs to come first. I think he is just planning ahead so that it is a drop and play once liquidity is achieved.

Offline sudo

  • Hero Member
  • *****
  • Posts: 2255
    • View Profile
  • BitShares: ags
does bts have enough users to support Bond Market?

Offline lil_jay890

  • Hero Member
  • *****
  • Posts: 1197
    • View Profile
Calling this a bond market is misleading...  It doesn't have any of the charactertics of a bond.

There's no call date and no coupon.  Also the collateralization of this doesn't fit the description of a traditional bond market.

To properly do a bond market, there needs to be some sort of reputation system in place so that investors can evaluate risk.  Lending to an anonymous person you no nothing about is a non-starter.


Offline Pheonike

I think there should be two styles of bonds. One treasury style dedicated to smartcoins and a general bond for users to lend to each other. Not sure if they can  have the exact same mechanics because the risk profiles are different in my opinion

Offline JonnyB

  • Hero Member
  • *****
  • Posts: 636
    • View Profile
    • twitter.com/jonnybitcoin
This is to enable collateralized margin trading, not unsecured debt.

I suppose this is a new type of debt:

Unsecured debt

Secured debt.

And now.....Cryptographically secured debt
I run the @bitshares twitter handle
twitter.com/bitshares

Offline sittingduck

  • Sr. Member
  • ****
  • Posts: 246
    • View Profile
This is to enable collateralized margin trading, not unsecured debt.