Author Topic: BitUSD needs liquidity for those that want to buy it.  (Read 23651 times)

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Offline prebuffo

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 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.

Offline yvv

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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?

tarantulaz

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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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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.

Offline JonnyB

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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

tarantulaz

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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 yvv

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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.

Offline JonnyB

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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?
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Offline yvv

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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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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)


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

Offline Akado

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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.

wouldn't that be positive since workers wouldn't inflate? bts would be instantly locked while increasing bitassets supply. true, it wouldn't reduce available supply since it came from the reserve pool, but at least we wouldn't have bts dumped. It would most likely be traded for bitcoin and then withdrawn, increasing volume and liquidity
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Offline Chris4210

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Yes, I mean around 200 BTC inflow in the Bitshares platform per day.

BlockPay works like that.
We have 40 Ambassadors in around 20 countries. If each Ambassador signs up 5 stores per month, we start with around 200 BlockPay installation on the market. We will start with Bitcoin meetups, bars, and restaurants who just have to download the free app and can accept Bitcoin payments at zero costs.  Business are still paying with Coinbase, Xapo etc.

200 BlockPays with let us say 1 BTC (550 USD) per day in Bitcoin sales brings in 200 BTC/day.

But how does it work?

BlockPay generates a Bitcoin QR-Code from our partner Blocktrades.us and the money will be converted through Blocktrades in BitUSD, BitEUR, BitCNY.

Bitcoin->Blocktrades->BitUSD ->?

What are the Merchant options?


a) Sell BitUSD for USD
b) Sell BitUSD for BTC to USD
c) Settle BitUSD for BTS to BTC to USD
d) Keep BitUSD and pay bills, salaries and other services from other partners ( Do you have a service for bitUSD ;) )

No matter what the business will do with their BitUSD, they will get it. And we will have a big increase in Liq on BitShares.

Would a merchant have to do the "bitUSD to USD" conversion himself by hand or can he set it up to do it automatically after so many transactions?  Doing it himself could be a deterrent to using BlockPay.

At the beginning, the Merchant has to do the conversion from BitUSD to USD by himself. Since that can be very confusing, we want to build a very simple merchant wallet where he can do the transfer and withdraw his funds to his bank account. The conversion will be handled by selected gateways.
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Offline BunkerChainLabs-DataSecurityNode

There is the problem to it. :) .. Everyone freaks out when they see the amount of BTS being asked for.. regardless of the conversion.. its the number they see they are voting on.

Other than the human issue.. I think its a fantastic idea though.
Thinking about it .. it's actually not an issue at all .. if they pay 3x the BTS .. only 1/3 will be payed to the worker .. and 2/3 will be "leverage" on BTS ..
Interestingly .. we can do BOTH .. at the same time .. the worker can create his own worker paying BTS .. and the committee-owned worker account can create the same worker asking for 3x the BTS with the promise to pay the original worker in USD and have leverage on BTS .. If the ordinary worker is voted in .. anything the committee worker receives can be kept (or returns) as owned by the committee and thus shareholders anyway .. nothing to loose ..

I like that also because it adds a degree of 'curation' to the process.... but in this case we then have to maintain 2 workers being voted in if I understand this correctly. What happens when one is voted in but the other is not?
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Offline xeroc

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There is the problem to it. :) .. Everyone freaks out when they see the amount of BTS being asked for.. regardless of the conversion.. its the number they see they are voting on.

Other than the human issue.. I think its a fantastic idea though.
Thinking about it .. it's actually not an issue at all .. if they pay 3x the BTS .. only 1/3 will be payed to the worker .. and 2/3 will be "leverage" on BTS ..
Interestingly .. we can do BOTH .. at the same time .. the worker can create his own worker paying BTS .. and the committee-owned worker account can create the same worker asking for 3x the BTS with the promise to pay the original worker in USD and have leverage on BTS .. If the ordinary worker is voted in .. anything the committee worker receives can be kept (or returns) as owned by the committee and thus shareholders anyway .. nothing to loose ..

Offline kingslanding

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Yes, I mean around 200 BTC inflow in the Bitshares platform per day.

BlockPay works like that.
We have 40 Ambassadors in around 20 countries. If each Ambassador signs up 5 stores per month, we start with around 200 BlockPay installation on the market. We will start with Bitcoin meetups, bars, and restaurants who just have to download the free app and can accept Bitcoin payments at zero costs.  Business are still paying with Coinbase, Xapo etc.

200 BlockPays with let us say 1 BTC (550 USD) per day in Bitcoin sales brings in 200 BTC/day.

But how does it work?

BlockPay generates a Bitcoin QR-Code from our partner Blocktrades.us and the money will be converted through Blocktrades in BitUSD, BitEUR, BitCNY.

Bitcoin->Blocktrades->BitUSD ->?

What are the Merchant options?


a) Sell BitUSD for USD
b) Sell BitUSD for BTC to USD
c) Settle BitUSD for BTS to BTC to USD
d) Keep BitUSD and pay bills, salaries and other services from other partners ( Do you have a service for bitUSD ;) )

No matter what the business will do with their BitUSD, they will get it. And we will have a big increase in Liq on BitShares.

Would a merchant have to do the "bitUSD to USD" conversion himself by hand or can he set it up to do it automatically after so many transactions?  Doing it himself could be a deterrent to use Blockpay.
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