Author Topic: BitUSD needs liquidity for those that want to buy it.  (Read 18693 times)

0 Members and 1 Guest are viewing this topic.

Offline paliboy

long time no post by me, real life took off in a good way so I couldn't keep up with crypto world -  but what johnnybitcoin is saying is what I have been saying for 2+ years about bitshares 2.0. There is a bitasset buyer of laser resort (settlement), but there is no bitasset seller of last resort. In bitasset supply and demand terms, the system properly destroys bitassets when there is an oversupply (settlement), but there is no mechanism to have the system create bitassets when there is an undersupply. Supply is created by speculators, which causes a chicken-or-the-egg problem: speculators won't create supply in a market with low liquidity for fear of being trapped with no seller of last resort, so a low liquidity market remains low liquidity.

Using reserves/worker as a buy wall gives BTS the missing feature of creation of bitassets when demand exceeds supply (and the market is too thin to meet supply).

Thank you, couldn't have said it better myself.

"Bitassets have a buyer of last resort. They are missing a seller of last resort."

 +5% people are not willing to sell even with 10% premium, few examples:

https://bitshares.openledger.info/#/market/JPY_BTS
https://bitshares.openledger.info/#/market/HKD_BTS
https://bitshares.openledger.info/#/market/GBP_BTS

Offline JonnyB

  • Hero Member
  • *****
  • Posts: 636
    • View Profile
    • twitter.com/jonnybitcoin
Topic starter suggests to provide liquidity with brute force, by taking all bids above the feed price on regular basis. Of course, MM account will be at loss this way, and traders will game it. Imo, it is ok to use reserve for market making, but strategy must be better than this. There should be a plan for issuing AND liquidating bitAsset. And liquidity should be provided both ways, for buyers and for sellers.

Sellers always have 100% liquidity, they can always sell at the peg, this what forced settlement is. We only need to provide liquidity for buyers.

long time no post by me, real life took off in a good way so I couldn't keep up with crypto world -  but what johnnybitcoin is saying is what I have been saying for 2+ years about bitshares 2.0. There is a bitasset buyer of laser resort (settlement), but there is no bitasset seller of last resort. In bitasset supply and demand terms, the system properly destroys bitassets when there is an oversupply (settlement), but there is no mechanism to have the system create bitassets when there is an undersupply. Supply is created by speculators, which causes a chicken-or-the-egg problem: speculators won't create supply in a market with low liquidity for fear of being trapped with no seller of last resort, so a low liquidity market remains low liquidity.

Using reserves/worker as a buy wall gives BTS the missing feature of creation of bitassets when demand exceeds supply (and the market is too thin to meet supply).

Thank you, couldn't have said it better myself.

"Bitassets have a buyer of last resort. They are missing a seller of last resort."
I run the @bitshares twitter handle
twitter.com/bitshares

Offline maqifrnswa

  • Hero Member
  • *****
  • Posts: 661
    • View Profile
Topic starter suggests to provide liquidity with brute force, by taking all bids above the feed price on regular basis. Of course, MM account will be at loss this way, and traders will game it. Imo, it is ok to use reserve for market making, but strategy must be better than this. There should be a plan for issuing AND liquidating bitAsset. And liquidity should be provided both ways, for buyers and for sellers.

Sellers always have 100% liquidity, they can always sell at the peg, this what forced settlement is. We only need to provide liquidity for buyers.

long time no post by me, real life took off in a good way so I couldn't keep up with crypto world -  but what johnnybitcoin is saying is what I have been saying for 2+ years about bitshares 2.0. There is a bitasset buyer of laser resort (settlement), but there is no bitasset seller of last resort. In bitasset supply and demand terms, the system properly destroys bitassets when there is an oversupply (settlement), but there is no mechanism to have the system create bitassets when there is an undersupply. Supply is created by speculators, which causes a chicken-or-the-egg problem: speculators won't create supply in a market with low liquidity for fear of being trapped with no seller of last resort, so a low liquidity market remains low liquidity.

Using reserves/worker as a buy wall gives BTS the missing feature of creation of bitassets when demand exceeds supply (and the market is too thin to meet supply).
maintains an Ubuntu PPA: https://launchpad.net/~showard314/+archive/ubuntu/bitshares [15% delegate] wallet_account_set_approval maqifrnswa true [50% delegate] wallet_account_set_approval delegate1.maqifrnswa true

Offline JonnyB

  • Hero Member
  • *****
  • Posts: 636
    • View Profile
    • twitter.com/jonnybitcoin
Topic starter suggests to provide liquidity with brute force, by taking all bids above the feed price on regular basis. Of course, MM account will be at loss this way, and traders will game it. Imo, it is ok to use reserve for market making, but strategy must be better than this. There should be a plan for issuing AND liquidating bitAsset. And liquidity should be provided both ways, for buyers and for sellers.

Sellers always have 100% liquidity, they can always sell at the peg, this what forced settlement is. We only need to provide liquidity for buyers.

Forced settlement is the last resort for holders to protect them from illiquid market, and it has limitations such as delay, offset and limited volume. Sellers still need market liquidity.

The offset and limited volume will only be become an issue if it gets voted for, it's not an issue yet. 
Another way that would help a lot with liquidity would the ability to place relative orders that move in line with the settlement price. Then for example i could place a buy order that is 0.1 % over the settlement and not havve to worry about the price shifting.
I run the @bitshares twitter handle
twitter.com/bitshares

Offline BunkerChainLabs-DataSecurityNode

personally I do not like this idea, business should be done by businessmen.
+1
+5%

I dislike this as well and have cast that vote multiple times already.
For me, this is not the time to use our reserves to improve the liquidity .. not yet..

Can you give reasons why?

I think it has something to do with the lack of utility that thus is not driving any real demand. By doing something like this 'today' we are creating an artificial market that is more likely to lead to something like nubits than towards growing.

That's just my guess anyways.. not a trader!
+-+-+-+-+-+-+-+-+-+-+
www.Peerplays.com | Decentralized Gaming Built with Graphene - Now with BookiePro and Sweeps!
+-+-+-+-+-+-+-+-+-+-+

Offline yvv

  • Hero Member
  • *****
  • Posts: 1186
    • View Profile
Topic starter suggests to provide liquidity with brute force, by taking all bids above the feed price on regular basis. Of course, MM account will be at loss this way, and traders will game it. Imo, it is ok to use reserve for market making, but strategy must be better than this. There should be a plan for issuing AND liquidating bitAsset. And liquidity should be provided both ways, for buyers and for sellers.

Sellers always have 100% liquidity, they can always sell at the peg, this what forced settlement is. We only need to provide liquidity for buyers.

Forced settlement is the last resort for holders to protect them from illiquid market, and it has limitations such as delay, offset and limited volume. Sellers still need market liquidity.

Offline JonnyB

  • Hero Member
  • *****
  • Posts: 636
    • View Profile
    • twitter.com/jonnybitcoin
personally I do not like this idea, business should be done by businessmen.
+1
+5%

I dislike this as well and have cast that vote multiple times already.
For me, this is not the time to use our reserves to improve the liquidity .. not yet..

Can you give reasons why?
I run the @bitshares twitter handle
twitter.com/bitshares

Offline JonnyB

  • Hero Member
  • *****
  • Posts: 636
    • View Profile
    • twitter.com/jonnybitcoin
Topic starter suggests to provide liquidity with brute force, by taking all bids above the feed price on regular basis. Of course, MM account will be at loss this way, and traders will game it. Imo, it is ok to use reserve for market making, but strategy must be better than this. There should be a plan for issuing AND liquidating bitAsset. And liquidity should be provided both ways, for buyers and for sellers.

Sellers always have 100% liquidity, they can always sell at the peg, this what forced settlement is. We only need to provide liquidity for buyers.
I run the @bitshares twitter handle
twitter.com/bitshares

Offline xeroc

  • Board Moderator
  • Hero Member
  • *****
  • Posts: 12922
  • ChainSquad GmbH
    • View Profile
    • ChainSquad GmbH
  • BitShares: xeroc
  • GitHub: xeroc
personally I do not like this idea, business should be done by businessmen.
+1
+5%

I dislike this as well and have cast that vote multiple times already.
For me, this is not the time to use our reserves to improve the liquidity .. not yet..

Offline yvv

  • Hero Member
  • *****
  • Posts: 1186
    • View Profile
Topic starter suggests to provide liquidity with brute force, by taking all bids above the feed price on regular basis. Of course, MM account will be at loss this way, and traders will game it. Imo, it is ok to use reserve for market making, but strategy must be better than this. There should be a plan for issuing AND liquidating bitAsset. And liquidity should be provided both ways, for buyers and for sellers.

Offline cube

  • Hero Member
  • *****
  • Posts: 1404
  • Bit by bit, we will get there!
    • View Profile
  • BitShares: bitcube

WHAT HAPPENS IF THE COMMITTEE MAKES A LOSS
If bitshare go up the committee-trade account will make a profit.
If bitshares goes down the committee-trade account will make a loss.
It doesn't matter. However my guess would be it makes a profit.
Making a profit and avoiding a loss would be a bonus but the purpose is to get more BitUSD out in the wild not to make money.


Thanks for bringing up this liquidity bootstrap idea and getting a lively discussion going.  I am all for increasing liquidity but I like to have a detailed carefully draft out plan before going ahead. 

Making a loss does matter, especailly if the espected liquidity did not happen but some users gained from 'wrongly' executed orders by the committee-trade members.  A loss means a loss for the bts shareholders.  At what price (loss) when it becomes too much for the shareholders to bear?  We should mitigate this risk as much as possible.  My concerns are:

1) Committee members are not traders and do not have the necessary experiences nor know-how to trade without making (significant) losses or gamed by experienced traders

2) How to make this into a self-sustainable process and when would it become profitable for users/shorters to step in and take over from this committee-run liquidity-subsidy effort?
ID: bitcube
bitcube is a dedicated witness and committe member. Please vote for bitcube.

Offline karnal

  • Hero Member
  • *****
  • Posts: 1068
    • View Profile
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.

FWIW, personally I do not bother adding orders for BitUSD because the spread is always huge and there is no stop-loss feature in graphene, which means a distraction would cost me money.

I'd bet many others are in the same position and simply don't bother placing an order.. especially when BitCNY is decently liquid.

I would rather hodl USD, but if I can get my order filled instantly or in minutes with CNY ..

Offline ebit

  • Committee member
  • Hero Member
  • *
  • Posts: 1873
    • View Profile
  • BitShares: ebit
Worker is used for coding.
BitCNY is growing fast,Why?

Or we need a lawsuit´╝îand tell the world what is bitUSD.
« Last Edit: July 31, 2016, 01:26:29 am by ebit »
telegram:ebit521
https://weibo.com/ebiter

Offline paliboy

I suggest that we either adjust bitUSD's parameters first (see https://bitsharestalk.org/index.php/topic,22936.msg297124) or start with bitCNY.

After I saw what happens when a DAC wastes all of its assets (see what happened in Nushares/Nubits), we should be very careful with reserves, i.e. if this gets support and even though profit isn't goal, commitee should aim to at least break even. Therefore I think that collateral ratio should be set as high as practically possible (my suggestion would be at least 3).

Committee's smartcoins being force settled does matter - it causes dilution with unpredictable outcomes.

Offline JonnyB

  • Hero Member
  • *****
  • Posts: 636
    • View Profile
    • twitter.com/jonnybitcoin
personally I do not like this idea, business should be done by businessmen.
+1
This is not helpful. You need to explain how the committee creating a supply of BitUSD and selling it to those who want it could be negative.
Why would a businessman create and sell a bit asset if he cannot buy it back in the future to close his position?
I run the @bitshares twitter handle
twitter.com/bitshares