Author Topic: BitUSD needs liquidity for those that want to buy it.  (Read 8758 times)

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Offline JonnyB

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BitUSD needs liquidity for those that want to buy it.
« on: July 29, 2016, 10:40:12 am »
After almost a year it's clear to me that the current system where speculators are expected to short BitUSD into existence will not create the large supply of BitUSD  needed to make bitshares successful.

All bitassets have this same issue but we should on concentrate BitUSD or maybe BitCNY first.

We can learn from Steem backed dollars (SBD) which are backed by even more collateral than BitUSD but are created in an autonomous way by the system and not by traders.

I believe Bitshares needs an autonomous solution for creating a supply of BitUSD so that it is always available to buy and without a huge markup against USD.
This would require a hard fork and community consensus.

The easier option is to get the committee to create a worker proposal where all the received funds are used to create BitUSD and sell it to anyone who wants it.

I propose the committee make a worker proposal called (BitUSD liquidity) for 100k BTS per week which is used solely to create $2000 bitUSD every week.
This will all be sold to the highest bidder each week.

It is important to note that even though the committee will receiving 100k BTS each week for creating BitUSD there will not be an increase in the overall supply of BTS available to the public. Also the increase in supply of BITUSD will be 100% offset with the BTS used to buy it. This means dilution is not an issue at all unless the committee goes rogue and attempts to spend these funds on anything other than the creation of bitUSD.

This isn't the first time this idea has been suggested but I think now is the time to try it and if the community doesn't like it they don't have to support this worker proposal but I would like to see the committee propose it so it can be voted on.
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Offline fav

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Re: BitUSD needs liquidity for those that want to buy it.
« Reply #1 on: July 29, 2016, 10:53:19 am »
nothing to lose, a lot to win. I'm in favor of it - give it a try

Offline paliboy

Re: BitUSD needs liquidity for those that want to buy it.
« Reply #2 on: July 29, 2016, 11:16:35 am »
  • I don't understand how would be 2000 bitUSD created using 100k BTS... looking into market right now, you can create 170 bitUSD with 100k BTS (collateral ratio 3)
  • What collateral ratio would you choose?
  • You want to sell it to highest bidder... at this moment it would mean that some of these 2000 bitUSD would be sold for as low as 170 BTS (feed price 195.73)
  • Who is going to buy these created bitUSD? There are bids for about 580 bitUSD around/above feed price

Offline Chris4210

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Re: BitUSD needs liquidity for those that want to buy it.
« Reply #3 on: July 29, 2016, 11:23:43 am »
I would like to see a financial model for this idea so that we can crunch some numbers and see how such worker should be structured. Steem sure made some differnet exp with SBD, but right now one SBD is traded for .85 USD? What is that about?
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Offline btswildpig

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Re: BitUSD needs liquidity for those that want to buy it.
« Reply #4 on: July 29, 2016, 11:36:02 am »
Note that STEEM's payout in STEEMUSD can only be withdrawn slowly in 2 years.
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Offline paliboy

Re: BitUSD needs liquidity for those that want to buy it.
« Reply #5 on: July 29, 2016, 11:41:02 am »
Note that STEEM's payout in STEEMUSD can only be withdrawn slowly in 2 years.

That's not true, you can convert SteemUSD to Steem immediately, SteemPOWER can be withdrawn slowly in 2 years

Offline fav

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Re: BitUSD needs liquidity for those that want to buy it.
« Reply #6 on: July 29, 2016, 11:49:45 am »
I would like to see a financial model for this idea so that we can crunch some numbers and see how such worker should be structured. Steem sure made some differnet exp with SBD, but right now one SBD is traded for .85 USD? What is that about?

that's due to the "sudden" price drop, the median price is much higher than the real price. the peg is catching up

Offline JonnyB

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Re: BitUSD needs liquidity for those that want to buy it.
« Reply #7 on: July 29, 2016, 12:03:46 pm »
  • I don't understand how would be 2000 bitUSD created using 100k BTS... looking into market right now, you can create 170 bitUSD with 100k BTS (collateral ratio 3)
  • What collateral ratio would you choose?
  • You want to sell it to highest bidder... at this moment it would mean that some of these 2000 bitUSD would be sold for as low as 170 BTS (feed price 195.73)
  • Who is going to buy these created bitUSD? There are bids for about 580 bitUSD around/above feed price
100,000 bts x 0.5 cent = $5000 with a collateral ratio of 2.5  would create $2000 bitUSD ( plus when sold by the committee for BTS it would create an additional 40,000 bts which could be either added to the collateral or used to create even more bitUSD)

Obviously it makes no sense to sell bitusd below the feed price as anyone could buy them up and then force settle them for a profit as I have done in the past.

Theres plenty of willing buyers for bitUSD but nobody wants to buy with huge mark ups.
I run the @bitshares twitter handle
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Offline JonnyB

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Re: BitUSD needs liquidity for those that want to buy it.
« Reply #8 on: July 29, 2016, 12:12:13 pm »
I would like to see a financial model for this idea so that we can crunch some numbers and see how such worker should be structured. Steem sure made some differnet exp with SBD, but right now one SBD is traded for .85 USD? What is that about?


What kind of financial model do you mean?
The comittee-account or comittee-trade worker just asks for 100k per week to create a bitusd supply from the BTS and sells it to anyone that wants it.

Steem backed dollars at 0.85 usd on external exchanges but not internally on the steem blockchain.
Might be because when you sell you SBD for Steem you have to wait a week to get them. Steem prices are very volatile and could crash a lot in one week.
I run the @bitshares twitter handle
twitter.com/bitshares

Offline fav

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Re: BitUSD needs liquidity for those that want to buy it.
« Reply #9 on: July 29, 2016, 12:30:38 pm »

Steem backed dollars at 0.85 usd on external exchanges but not internally on the steem blockchain.
Might be because when you sell you SBD for Steem you have to wait a week to get them. Steem prices are very volatile and could crash a lot in one week.

nope. you can sell instantly. there's a median feature that takes 7 days until you get the median exchange steem, but that's another story

Offline JonnyB

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Re: BitUSD needs liquidity for those that want to buy it.
« Reply #10 on: July 29, 2016, 12:41:03 pm »

Steem backed dollars at 0.85 usd on external exchanges but not internally on the steem blockchain.
Might be because when you sell you SBD for Steem you have to wait a week to get them. Steem prices are very volatile and could crash a lot in one week.

nope. you can sell instantly. there's a median feature that takes 7 days until you get the median exchange steem, but that's another story

I guess people are taking a 15% hit to get their money out sooner then. But you can settle your SBD for $1 worth of steem with 7 days notice.
I run the @bitshares twitter handle
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Offline paliboy

Re: BitUSD needs liquidity for those that want to buy it.
« Reply #11 on: July 29, 2016, 01:00:38 pm »
100,000 bts x 0.5 cent = $5000 with a collateral ratio of 2.5  would create $2000 bitUSD ( plus when sold by the committee for BTS it would create an additional 40,000 bts which could be either added to the collateral or used to create even more bitUSD)

Now I understand where the bug is :)

100,000 bts x 0.5 cent = $500 with a collateral ratio of 2.5  would create $200 bitUSD

Obviously it makes no sense to sell bitusd below the feed price as anyone could buy them up and then force settle them for a profit as I have done in the past.

 +5%

Theres plenty of willing buyers for bitUSD but nobody wants to buy with huge mark ups.

I wish you were right. At the moment there are bids for 145 bitUSD at prices +-2% of feed price and 31 bitUSD at prices +-1% of feed price.

IMHO it would be much safer to do it as a one-time event at the beginning.

Offline JonnyB

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Re: BitUSD needs liquidity for those that want to buy it.
« Reply #12 on: July 29, 2016, 01:22:10 pm »
my bad. got a decimal place wrong. So it would have to be 1 million BTS a week which is almost half the dilution budget!

The committee account would have to keep recreating the BitUSD whenever it got force settled so I'm not sure it can be done as a one off thing.

I run the @bitshares twitter handle
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Offline yvv

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Re: BitUSD needs liquidity for those that want to buy it.
« Reply #13 on: July 29, 2016, 02:55:28 pm »
Totally support the idea of actively managing the reserve funds to increase bitAsset liquidity. Here is financial model which could work:

1. Create a worker which receives 100K BTS per day (or whatever voters decide).
2. The worker uses available funds to issue bitUSD and build a sell wall at call price up to 1K bitUSD. If the wall drops below 1K, issue more bitUSD to raise it back.
3. Use available funds to build a buy wall at feed price up to 1K bitUSD. If the wall drops below 1K, settle debt and raise it back.
4. Adjust bid/ask orders to match the current feed/call price hourly.
5. Adjust collateral ratio to safe level hourly.
6. Send unspent funds (if any) back to reserve every week.

If this works:
I Raise the walls to 10K bitUSD.
II Apply this scheme to other bitAssets.

Comments? Can this be automated?


Offline 天籁

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Re: BitUSD needs liquidity for those that want to buy it.
« Reply #14 on: July 29, 2016, 04:31:40 pm »
Totally support the idea of actively managing the reserve funds to increase bitAsset liquidity. Here is financial model which could work:

1. Create a worker which receives 100K BTS per day (or whatever voters decide).
2. The worker uses available funds to issue bitUSD and build a sell wall at call price up to 1K bitUSD. If the wall drops below 1K, issue more bitUSD to raise it back.
3. Use available funds to build a buy wall at feed price up to 1K bitUSD. If the wall drops below 1K, settle debt and raise it back.
4. Adjust bid/ask orders to match the current feed/call price hourly.
5. Adjust collateral ratio to safe level hourly.
6. Send unspent funds (if any) back to reserve every week.

If this works:
I Raise the walls to 10K bitUSD.
II Apply this scheme to other bitAssets.

Comments? Can this be automated?
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