Author Topic: BitUSD needs liquidity for those that want to buy it.  (Read 8768 times)

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Offline yvv

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Re: BitUSD needs liquidity for those that want to buy it.
« Reply #60 on: August 04, 2016, 06:44:09 pm »
Another solution would fit nicely would be that all worker proposals are paid in BitUSD but this would require a hard fork.
That's not true. I proposed on several occasions to create a new multisig account (owned by the committee) that actually creates the workers for people looking to work for BitShares, gets the BTS and borrows bitUSD at ratio 3x or more) to pay them to the "employee" ...
All we need to do is to agree on this process since the shareholder needs to pay 3x - MORE for the worker in BTS terms to fund the collateral.

I'm glad you agree this would be a suitable alternative. We should look to develop this idea further.
When I said it would require a hard fork I meant for it to be done in a decentralised way. 
Yes the committee-account could pay BitUSD to workers that mirrors the pay that they receive for their own worker proposals. (but this isn't very elegant)
The ultimate solution would be if all workers were paid in Bitusd that was created autonomously using the funds in the reserve pool as backing. (this would need a hard fork)

Worker pay should not necessarily be limited to bitUSD. A worker may choose another bitAsset to receive payment. Implementing this through worker proposal is easy to do without any changes in protocol. This could be done now for testing, and if it works as intended it could be coded into the protocol later.

Offline JonnyB

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Re: BitUSD needs liquidity for those that want to buy it.
« Reply #61 on: August 04, 2016, 06:53:26 pm »
Another solution would fit nicely would be that all worker proposals are paid in BitUSD but this would require a hard fork.
That's not true. I proposed on several occasions to create a new multisig account (owned by the committee) that actually creates the workers for people looking to work for BitShares, gets the BTS and borrows bitUSD at ratio 3x or more) to pay them to the "employee" ...
All we need to do is to agree on this process since the shareholder needs to pay 3x - MORE for the worker in BTS terms to fund the collateral.

I'm glad you agree this would be a suitable alternative. We should look to develop this idea further.
When I said it would require a hard fork I meant for it to be done in a decentralised way. 
Yes the committee-account could pay BitUSD to workers that mirrors the pay that they receive for their own worker proposals. (but this isn't very elegant)
The ultimate solution would be if all workers were paid in Bitusd that was created autonomously using the funds in the reserve pool as backing. (this would need a hard fork)

Worker pay should not necessarily be limited to bitUSD. A worker may choose another bitAsset to receive payment. Implementing this through worker proposal is easy to do without any changes in protocol. This could be done now for testing, and if it works as intended it could be coded into the protocol later.

The reserve pool is all BTS. BitUSD is created through debt.  Where would the corresponding debt be held?
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 #62 on: August 04, 2016, 08:34:15 pm »
Another solution would fit nicely would be that all worker proposals are paid in BitUSD but this would require a hard fork.
That's not true. I proposed on several occasions to create a new multisig account (owned by the committee) that actually creates the workers for people looking to work for BitShares, gets the BTS and borrows bitUSD at ratio 3x or more) to pay them to the "employee" ...
All we need to do is to agree on this process since the shareholder needs to pay 3x - MORE for the worker in BTS terms to fund the collateral.

I'm glad you agree this would be a suitable alternative. We should look to develop this idea further.
When I said it would require a hard fork I meant for it to be done in a decentralised way. 
Yes the committee-account could pay BitUSD to workers that mirrors the pay that they receive for their own worker proposals. (but this isn't very elegant)
The ultimate solution would be if all workers were paid in Bitusd that was created autonomously using the funds in the reserve pool as backing. (this would need a hard fork)

Worker pay should not necessarily be limited to bitUSD. A worker may choose another bitAsset to receive payment. Implementing this through worker proposal is easy to do without any changes in protocol. This could be done now for testing, and if it works as intended it could be coded into the protocol later.

The reserve pool is all BTS. BitUSD is created through debt.  Where would the corresponding debt be held?

Committee (or whoever is elected to run a cashier worker) would create an account which receives entire daily worker budget, issues bitUSD, bitCNY, bitBTC etc and pays to other workers. Unspent budget, if any, would be returned to the reserve or used to settle debt. Current workers may continue to be payed in BTS until they expire.

tarantulaz

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Re: BitUSD needs liquidity for those that want to buy it.
« Reply #63 on: August 05, 2016, 02:30:38 am »
In the past I would have agreed with this idea, but after what I've seen recently, I am going to oppose it. I used to think about creating BitUSD from the reserve pool, but there are negatives with it and there are many negatives smartcoins in general.

Dynamic peg is dangerous! NuBits failed and that should be a lesson to us as well. There are many dangers here, that people should look at :

What happens if the committee goes rogue or gets hacked? The more assets that exist, the harder it will be to stop the losses. It would take days for the community to vote for another committee. Most people here would agree that governments create more problems than they solve. Same should go here too. We've created something decentrilised, just to make it centralised again? Yes I know, we are the ones voting for the committee, but who guarantees that we are voting for the right people?

What is the best collateral ratio and who says what is best? What if BTS' price drops 80% in one day? MakerDAO is a clever idea that is taking this a step further with their special SDR solution, that gives one of their tokens stable value, but not pegged on to anything. BitShares holders don't gain much from those assets, but they are also not going to lose much in case something goes wrong. The price might go up because people are buying BTS, but that's irrelevant.

Why would someone buy BTS and convert them into BitUSD, when the only thing he does is to raise the value of BTS and then risk losing all his money in an extreme scenario where the price goes down? It doesn't make sense to risk so much, in order to get 50% or less in a form of a stable token and then probably end up losing up to 100% of your total value in during extreme situations. Nobody, with the right mind, would take that risk. Again this is addressed by MakerDAO, in a special way.

The whole SDB is a scam guys. You have to face it sooner than later. Same thing as Nubits. If there are no actual USD/CNY reserves, then these tokens rely wholly on speculation of BTS. That's what I'd call an amazing ponzi scheme. Yes a PONZI! Who do you think we are? The FED and we can print USD from our blockchain? This is mental guys. Not even the FED itself should have the ability to print dollars, let alone the BitShares community.

The value of those BitUSD solely relies only on people buying BTS and nothing else. As long as BTS has a 'price', they have some value. Even with limitless dilution there is a limit in the dilution which BTS can take before its price crashes and then ends up crashing the value of those BitUSD.
Markets are clever despite that they are irrational most of the time. There is a reason that BitShares are low in market cap and that smartcoins haven't gained traction. If you can't trust a bank or an exchange, what would make you trust a 10M start up? Dynamic peg is fiction and might be currently working under some certain conditions, but the fact that it could fail under specific ones, should be worrisome.

TL;DR
1) Dynamic peg = Fantasy
2) Printing our stable coins = Scam/Ponzi
3) Dynamic peg has no protection against : the exchanges we are fighting against (yes we take the price feed from exchanges),  the committee which decides the price feeds and depends solely on people constantly buying BTS on those exchange so that the price doesn't go to 0 or just even drop substantially.
« Last Edit: August 05, 2016, 02:42:05 am by tarantulaz »

Offline JonnyB

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Re: BitUSD needs liquidity for those that want to buy it.
« Reply #64 on: August 05, 2016, 11:55:09 am »
In the past I would have agreed with this idea, but after what I've seen recently, I am going to oppose it. I used to think about creating BitUSD from the reserve pool, but there are negatives with it and there are many negatives smartcoins in general.

Dynamic peg is dangerous! NuBits failed and that should be a lesson to us as well. There are many dangers here, that people should look at :

What happens if the committee goes rogue or gets hacked? The more assets that exist, the harder it will be to stop the losses. It would take days for the community to vote for another committee. Most people here would agree that governments create more problems than they solve. Same should go here too. We've created something decentrilised, just to make it centralised again? Yes I know, we are the ones voting for the committee, but who guarantees that we are voting for the right people?

What is the best collateral ratio and who says what is best? What if BTS' price drops 80% in one day? MakerDAO is a clever idea that is taking this a step further with their special SDR solution, that gives one of their tokens stable value, but not pegged on to anything. BitShares holders don't gain much from those assets, but they are also not going to lose much in case something goes wrong. The price might go up because people are buying BTS, but that's irrelevant.

Why would someone buy BTS and convert them into BitUSD, when the only thing he does is to raise the value of BTS and then risk losing all his money in an extreme scenario where the price goes down? It doesn't make sense to risk so much, in order to get 50% or less in a form of a stable token and then probably end up losing up to 100% of your total value in during extreme situations. Nobody, with the right mind, would take that risk. Again this is addressed by MakerDAO, in a special way.

The whole SDB is a scam guys. You have to face it sooner than later. Same thing as Nubits. If there are no actual USD/CNY reserves, then these tokens rely wholly on speculation of BTS. That's what I'd call an amazing ponzi scheme. Yes a PONZI! Who do you think we are? The FED and we can print USD from our blockchain? This is mental guys. Not even the FED itself should have the ability to print dollars, let alone the BitShares community.

The value of those BitUSD solely relies only on people buying BTS and nothing else. As long as BTS has a 'price', they have some value. Even with limitless dilution there is a limit in the dilution which BTS can take before its price crashes and then ends up crashing the value of those BitUSD.
Markets are clever despite that they are irrational most of the time. There is a reason that BitShares are low in market cap and that smartcoins haven't gained traction. If you can't trust a bank or an exchange, what would make you trust a 10M start up? Dynamic peg is fiction and might be currently working under some certain conditions, but the fact that it could fail under specific ones, should be worrisome.

TL;DR
1) Dynamic peg = Fantasy
2) Printing our stable coins = Scam/Ponzi
3) Dynamic peg has no protection against : the exchanges we are fighting against (yes we take the price feed from exchanges),  the committee which decides the price feeds and depends solely on people constantly buying BTS on those exchange so that the price doesn't go to 0 or just even drop substantially.

You raise some interesting points and I agree with some of what you say.

- The committee is not to be fully trusted as it is run by humans who are fallible and inconsistent. 
- If this issuance of BitUSD was done autonomously by the blockchain then it would be a much better solution. (as steem dollars are issued)
- SDRs that you mentioned are just a basket of 5 major currencies and a BitSDR would just be another bitasset.
- dillution is limited to about 10 million bts a month
 
Our bitassets are not perfect pegged coins they have the flaws that you mention such as:
relying solely on the 10 million dollar market cap of BTS, relying on price feeds from poloniex, relying on witnesses for accurate prices.

However, these issues will be reduced if BTS is more widely adopted and the market cap improves. Even then the bitassets will not be perfect but they will be a better choice for many people. To me it was obvious that nubits would fail because of the human element, BTS is much smarter and much more decentralised and autonomous.  Perfect no, but the best chance I have seen to create a synthetic dollar that is not an IOU and cannot be controlled.
Remember BTS is an experiment.

The conversation in this thread has changed to worker proposals being paid in bitassets rather than just creating bitusd and selling it. Maybe I should start a new thread with this heading.


I run the @bitshares twitter handle
twitter.com/bitshares

Offline yvv

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Re: BitUSD needs liquidity for those that want to buy it.
« Reply #65 on: August 05, 2016, 12:14:57 pm »
Quote
Our bitassets are not perfect pegged coins they have the flaws that you mention such as:
relying solely on the 10 million dollar market cap of BTS, relying on price feeds from poloniex, relying on witnesses for accurate prices.

BitAssets will not need to rely on price feed from poloniex when UIAs which are pegged 1:1 to the underlying assets get more liquidity. Then you get the feed price for bitAssets from DEX order book.

tarantulaz

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Re: BitUSD needs liquidity for those that want to buy it.
« Reply #66 on: August 05, 2016, 02:44:22 pm »
Quote
Our bitassets are not perfect pegged coins they have the flaws that you mention such as:
relying solely on the 10 million dollar market cap of BTS, relying on price feeds from poloniex, relying on witnesses for accurate prices.

BitAssets will not need to rely on price feed from poloniex when UIAs which are pegged 1:1 to the underlying assets get more liquidity. Then you get the feed price for bitAssets from DEX order book.

This can lead to a massive failure. This is exactly what Nubits did. They relied on liquidity providers, rather than their reserves. Obviously BitShares use collateral which is much better than what they did, but nevertheless, really flawed. What happens if the liquidity goes away? Who guarantees constant liquidity? Who will want those BitUSD if BitShares goes to 0?

You raise some interesting points and I agree with some of what you say.

- The committee is not to be fully trusted as it is run by humans who are fallible and inconsistent. 
- If this issuance of BitUSD was done autonomously by the blockchain then it would be a much better solution. (as steem dollars are issued)
- SDRs that you mentioned are just a basket of 5 major currencies and a BitSDR would just be another bitasset.
- dillution is limited to about 10 million bts a month
 
Our bitassets are not perfect pegged coins they have the flaws that you mention such as:
relying solely on the 10 million dollar market cap of BTS, relying on price feeds from poloniex, relying on witnesses for accurate prices.

However, these issues will be reduced if BTS is more widely adopted and the market cap improves. Even then the bitassets will not be perfect but they will be a better choice for many people. To me it was obvious that nubits would fail because of the human element, BTS is much smarter and much more decentralised and autonomous.  Perfect no, but the best chance I have seen to create a synthetic dollar that is not an IOU and cannot be controlled.
Remember BTS is an experiment.

The conversation in this thread has changed to worker proposals being paid in bitassets rather than just creating bitusd and selling it. Maybe I should start a new thread with this heading.




I agree that this is an experiment, but a rather dangerous one. How do you expect to trust so much money in it? Steem seems like a massive scam, that I can believe people can't see.

Also, the MakerDAO SDR isn't related to the IMF SDR. It has stable value, but isn't pegged on to any FIAT or 'real' world asset.

The dilution is limited, but what happens if the 200-1000% collateral is worth less than 1USD? That is the problem, not how much BitUSD we create. What will happen in the case of margin calls? Even if just some of the BitUSD are margin called, this will start a barrage of margin calls as the price of BTS starts collapsing.

Offline yvv

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Re: BitUSD needs liquidity for those that want to buy it.
« Reply #67 on: August 05, 2016, 03:05:27 pm »

Quote
BitAssets will not need to rely on price feed from poloniex when UIAs which are pegged 1:1 to the underlying assets get more liquidity. Then you get the feed price for bitAssets from DEX order book.

This can lead to a massive failure. This is exactly what Nubits did. They relied on liquidity providers, rather than their reserves. Obviously BitShares use collateral which is much better than what they did, but nevertheless, really flawed. What happens if the liquidity goes away? Who guarantees constant liquidity? Who will want those BitUSD if BitShares goes to 0?


You are talking about things which are common to any financial asset out there as if it is a tragedy. What if SPD500 ETF goes to 0? Should we all die?

Offline prebuffo

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Re: BitUSD needs liquidity for those that want to buy it.
« Reply #68 on: August 05, 2016, 03:33:11 pm »

 Hallo, I'm a crypto trader and I was a Forex trader (I worked for an evil non commercial bank :) )
 I endorse this liquidity-by-workers proposal because I know the importance of the Market Maker to give some initial trust to every market (mainly dervative markets and every smartcoin IIS a DERVATE by Design. Market Makers, HAVE TO give to every asset a minimum liquidity trought a decent bid-ask spread.
 In this case we are not talking about milions of dollars so I think we can try this proposal.

Just My 2 cents.

tarantulaz

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Re: BitUSD needs liquidity for those that want to buy it.
« Reply #69 on: August 05, 2016, 04:06:19 pm »

Quote
BitAssets will not need to rely on price feed from poloniex when UIAs which are pegged 1:1 to the underlying assets get more liquidity. Then you get the feed price for bitAssets from DEX order book.

This can lead to a massive failure. This is exactly what Nubits did. They relied on liquidity providers, rather than their reserves. Obviously BitShares use collateral which is much better than what they did, but nevertheless, really flawed. What happens if the liquidity goes away? Who guarantees constant liquidity? Who will want those BitUSD if BitShares goes to 0?


You are talking about things which are common to any financial asset out there as if it is a tragedy. What if SPD500 ETF goes to 0? Should we all die?

That doesn't make any sense. It is totally unrelated. The problem is that if traders want to trade BitUSD they need insurance that no matter what happens to BitShares that they will get their money. We are talking about a product of the company, which if it collapses its customers will lose their money. FXCM offers protection to all deposit. Does BitShares do that? No!

Would it make sense, if a solvent bank used its customers' deposits buyback their shares, just because its share price dropped? Bail-ins happen when someone is insolvent, not when his share price go down. 200% collateral or above is extremely inefficient too. If I had 200$, I would want to use all of them, not half. Again, I am talking about a scam invented by Bytemaster and that has too many risks. The last thing I want is BitShares to become NuShares 2.0... Ask [member=22994]Chronos[/member] who lost a lot of money in his beloved NuBits scam...

Offline yvv

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Re: BitUSD needs liquidity for those that want to buy it.
« Reply #70 on: August 05, 2016, 04:22:34 pm »

Quote
BitAssets will not need to rely on price feed from poloniex when UIAs which are pegged 1:1 to the underlying assets get more liquidity. Then you get the feed price for bitAssets from DEX order book.

This can lead to a massive failure. This is exactly what Nubits did. They relied on liquidity providers, rather than their reserves. Obviously BitShares use collateral which is much better than what they did, but nevertheless, really flawed. What happens if the liquidity goes away? Who guarantees constant liquidity? Who will want those BitUSD if BitShares goes to 0?


You are talking about things which are common to any financial asset out there as if it is a tragedy. What if SPD500 ETF goes to 0? Should we all die?

That doesn't make any sense. It is totally unrelated. The problem is that if traders want to trade BitUSD they need insurance that no matter what happens to BitShares that they will get their money. We are talking about a product of the company, which if it collapses its customers will lose their money. FXCM offers protection to all deposit. Does BitShares do that? No!

Would it make sense, if a solvent bank used its customers' deposits buyback their shares, just because its share price dropped? Bail-ins happen when someone is insolvent, not when his share price go down. 200% collateral or above is extremely inefficient too. If I had 200$, I would want to use all of them, not half. Again, I am talking about a scam invented by Bytemaster and that has too many risks. The last thing I want is BitShares to become NuShares 2.0... Ask [member=22994]Chronos[/member] who lost a lot of money in his beloved NuBits scam...

You are mixing completely different concepts together. Bitshares is not a bank. Neither of crypto is. All investments are risky. Some of them are more risky and some are less risky. Collateral in bitshares is adjustable, it is the community who chose it to be as high as it is. You don't like BTS collateral? Then go ahead  and create assets which are fully backed by physical gold and silver. Good luck with that.

tarantulaz

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Re: BitUSD needs liquidity for those that want to buy it.
« Reply #71 on: August 05, 2016, 04:45:40 pm »

You are mixing completely different concepts together. Bitshares is not a bank. Neither of crypto is. All investments are risky. Some of them are more risky and some are less risky. Collateral in bitshares is adjustable, it is the community who chose it to be as high as it is. You don't like BTS collateral? Then go ahead  and create assets which are fully backed by physical gold and silver. Good luck with that.

It isn't a different concept and I don't understand why do you get so confused. You take an extremely risky asset and you try to make it stable, which is abnormal. Never heard of : With Bitcoin you are your own bank? With BitShares it has gone as far as : You are your own bank and you can issue your own USD. You are the FED. Is it so bloody hard to understand that if we start printing our own USD, we are essentially like the FED? The fact that it is done in a decentralized fashion, by non-professionals, doesn't mean that it is going to be good. Somehow with crypto everyone things that he is a professional and he knows how do shit.

Why did you bring gold and silver up? I am talking about FIAT. Normal easy  stuff, using secured customer deposits, that 100% risk free. I never said that I want to create token anyways. It is very early to introduce such a thing in any crypto, except if you have direct fiat gateways, that are fully insured.

This thing is not going to be successful, no matter how hard you try. It either won't take off or it will die miserably.

Offline yvv

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Re: BitUSD needs liquidity for those that want to buy it.
« Reply #72 on: August 05, 2016, 05:53:12 pm »

You are mixing completely different concepts together. Bitshares is not a bank. Neither of crypto is. All investments are risky. Some of them are more risky and some are less risky. Collateral in bitshares is adjustable, it is the community who chose it to be as high as it is. You don't like BTS collateral? Then go ahead  and create assets which are fully backed by physical gold and silver. Good luck with that.

It isn't a different concept and I don't understand why do you get so confused. You take an extremely risky asset and you try to make it stable, which is abnormal. Never heard of : With Bitcoin you are your own bank? With BitShares it has gone as far as : You are your own bank and you can issue your own USD. You are the FED. Is it so bloody hard to understand that if we start printing our own USD, we are essentially like the FED? The fact that it is done in a decentralized fashion, by non-professionals, doesn't mean that it is going to be good. Somehow with crypto everyone things that he is a professional and he knows how do shit.

Chill out dude. You are not FED. Nobody here is. Never heard of secured loans? They are known to humankind for ages. BitAsset is nothing more than secured loan. Anything of value can be used as collateral, including crypto tokens. What problem do you have with this?

Quote
Why did you bring gold and silver up? I am talking about FIAT.

Make an account at openledger.info, search for bitGold and bitSilver. Guess what? They work exactly the same way as fiat pegged assets without the need to store tons of physical metals.

Quote
This thing is not going to be successful, no matter how hard you try. It either won't take off or it will die miserably.

I know. And we all gonna die.

Offline dxdxdx5889702

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Re: BitUSD needs liquidity for those that want to buy it.
« Reply #73 on: August 05, 2016, 06:47:55 pm »
You think the perfect solution, means that can not be promoted. I don't believe that windows is weaker than mac.

Please pay attention to what the negative rate of steem brings. Bitshares reduce the transfer fee with what.

Offline dxdxdx5889702

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Re: BitUSD needs liquidity for those that want to buy it.
« Reply #74 on: August 05, 2016, 06:49:47 pm »
I mean, bitcrab's proposal is good for the system to be used and to increase the customer.