Author Topic: Incentivize SmartCoin collateralization  (Read 3908 times)

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Offline kani

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Re: Incentivize SmartCoin collateralization
« Reply #15 on: January 18, 2017, 05:05:31 pm »
But yeah, you may be right...  I might not have a full grasp on the complete picture.  Which is why I'm not going push the idea too much longer.

While I do think there is some merit here, perhaps someone else has something better.  Bottom line is that with all the talk of taking fees for other purposes, I really think it's best to use any new fees to improve markets.

(EDIT: And what better way to improve a market than by taking fees FROM that market FOR that market)
« Last Edit: January 18, 2017, 05:07:26 pm by kani »
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Offline kani

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Re: Incentivize SmartCoin collateralization
« Reply #16 on: January 18, 2017, 05:21:30 pm »
Not to beat a dead horse, but there's one more point I meant to make and forgot.

This idea has a NET ZERO effect on Bitshares inflation -- it does not touch the reserve pool.
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Offline nmywn

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Re: Incentivize SmartCoin collateralization
« Reply #17 on: January 19, 2017, 01:30:50 am »


http://cryptofresh.com/fees

What about:
if order price sits between lowest ask and highest bid  AND  volume of order is higher than (some amount in BTS)
 THEN Limit Orders Create fee = 0 ( because this order provides usable liquidity and better peg).

Then what about:
  If order price is not between ask <->bid, but there is no matching orders and order volume is more than (some ammount in BTS)
  THEN Order Create fee = 0.050 BTS (order provides liquidity,  increasing market depth)
Next:
  if order pirce looks like above but order volume is higher than (some lower than above ammount in BTS)
  THEN Order Create fee = 0.100

  (Can be more steps if needed)
 

And final:
  If order price doesn't meet above criteria fee = 0.247 BTS ( Market taker should pay higher fees, as a compensation for destroying market depth... but no to high, we need him also)

For preventing abuse some other changes must be applied, for example:
Cancel of  100% unfilled order shouldn't be free.

Also i think this scheme should be limited only for committee Smartcoins and (step amounts in BTS) should be smartcoin option.
UIA's could be abused for cheap spam, so not good idea.


Is this to complex, impossible or can be abused? Zero or super low fees for big market makers would be nice feature also from marketing perspective.

Offline Pheonike

Re: Incentivize SmartCoin collateralization
« Reply #18 on: January 21, 2017, 01:20:20 am »
Why are users involved in creating smartcoins in the first place? Why shouldn't the blockchain produce them? Does it matter if all the collateral is put up by a user? What if creating a smartcoin was as simple as just buying it from the chain.  If I want 50 bitusd I send the equivalent value in BTS to the chain. The blockchain lockes 200% plus the 101% collateral given to it. The 1% is a fee for this instant conversion.  Same thing in reverse. I send the blockchain the 50 bitusd, it sends me 99% of the value in BTS and unlocks the other 200% it was holding. The 1% fee can be burned or used as dividend payment to bond holders.

This way shorting can work normally and not involve creating supply. The collateral used doesn't made any smartcoins. It is just used to measure position in terms of the smartcoin being shorted. Trader's can short for what they really want to do which is speculate.
« Last Edit: January 21, 2017, 01:24:04 am by Pheonike »

Offline 天籁

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Re: Incentivize SmartCoin collateralization
« Reply #19 on: January 21, 2017, 02:00:40 am »
Why are users involved in creating smartcoins in the first place? Why shouldn't the blockchain produce them? Does it matter if all the collateral is put up by a user? What if creating a smartcoin was as simple as just buying it from the chain.  If I want 50 bitusd I send the equivalent value in BTS to the chain. The blockchain lockes 200% plus the 101% collateral given to it. The 1% is a fee for this instant conversion.  Same thing in reverse. I send the blockchain the 50 bitusd, it sends me 99% of the value in BTS and unlocks the other 200% it was holding. The 1% fee can be burned or used as dividend payment to bond holders.

This way shorting can work normally and not involve creating supply. The collateral used doesn't made any smartcoins. It is just used to measure position in terms of the smartcoin being shorted. Trader's can short for what they really want to do which is speculate.

NO. This is just blockchain buying and selling passively, blockchain will lose all the token.

Offline Stan

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Re: Incentivize SmartCoin collateralization
« Reply #20 on: January 21, 2017, 02:34:46 am »
Why are users involved in creating smartcoins in the first place? Why shouldn't the blockchain produce them? Does it matter if all the collateral is put up by a user? What if creating a smartcoin was as simple as just buying it from the chain.  If I want 50 bitusd I send the equivalent value in BTS to the chain. The blockchain lockes 200% plus the 101% collateral given to it. The 1% is a fee for this instant conversion.  Same thing in reverse. I send the blockchain the 50 bitusd, it sends me 99% of the value in BTS and unlocks the other 200% it was holding. The 1% fee can be burned or used as dividend payment to bond holders.

This way shorting can work normally and not involve creating supply. The collateral used doesn't made any smartcoins. It is just used to measure position in terms of the smartcoin being shorted. Trader's can short for what they really want to do which is speculate.


I'd like to see more discussion on the pros and cons of this approach.
Anything said on these forums does not constitute an intent to create a legal obligation or contract of any kind.   These are merely my opinions which I reserve the right to change at any time.

Offline yvv

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Re: Incentivize SmartCoin collateralization
« Reply #21 on: January 21, 2017, 08:47:23 am »
Why are users involved in creating smartcoins in the first place? Why shouldn't the blockchain produce them? Does it matter if all the collateral is put up by a user? What if creating a smartcoin was as simple as just buying it from the chain.  If I want 50 bitusd I send the equivalent value in BTS to the chain. The blockchain lockes 200% plus the 101% collateral given to it. The 1% is a fee for this instant conversion.  Same thing in reverse. I send the blockchain the 50 bitusd, it sends me 99% of the value in BTS and unlocks the other 200% it was holding. The 1% fee can be burned or used as dividend payment to bond holders.

This way shorting can work normally and not involve creating supply. The collateral used doesn't made any smartcoins. It is just used to measure position in terms of the smartcoin being shorted. Trader's can short for what they really want to do which is speculate.

Shorting is not buying, it is selling bitUSD which you don't own.

Offline Pheonike

Re: Incentivize SmartCoin collateralization
« Reply #22 on: January 21, 2017, 08:00:10 pm »
Why are users involved in creating smartcoins in the first place? Why shouldn't the blockchain produce them? Does it matter if all the collateral is put up by a user? What if creating a smartcoin was as simple as just buying it from the chain.  If I want 50 bitusd I send the equivalent value in BTS to the chain. The blockchain lockes 200% plus the 101% collateral given to it. The 1% is a fee for this instant conversion.  Same thing in reverse. I send the blockchain the 50 bitusd, it sends me 99% of the value in BTS and unlocks the other 200% it was holding. The 1% fee can be burned or used as dividend payment to bond holders.

This way shorting can work normally and not involve creating supply. The collateral used doesn't made any smartcoins. It is just used to measure position in terms of the smartcoin being shorted. Trader's can short for what they really want to do which is speculate.

How does blockchain loose tokens? They only exist on the blockchain.

NO. This is just blockchain buying and selling passively, blockchain will lose all the token.
« Last Edit: January 21, 2017, 08:02:15 pm by Pheonike »

Offline Chronos

Re: Incentivize SmartCoin collateralization
« Reply #23 on: January 21, 2017, 11:31:28 pm »
The current system guarantees a predictable supply growth rate of BTS. If the blockchain issued smartcoins, BTS supply could be vulnerable to hyperinflation.

Offline 天籁

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Re: Incentivize SmartCoin collateralization
« Reply #24 on: January 22, 2017, 02:24:19 am »
Why are users involved in creating smartcoins in the first place? Why shouldn't the blockchain produce them? Does it matter if all the collateral is put up by a user? What if creating a smartcoin was as simple as just buying it from the chain.  If I want 50 bitusd I send the equivalent value in BTS to the chain. The blockchain lockes 200% plus the 101% collateral given to it. The 1% is a fee for this instant conversion.  Same thing in reverse. I send the blockchain the 50 bitusd, it sends me 99% of the value in BTS and unlocks the other 200% it was holding. The 1% fee can be burned or used as dividend payment to bond holders.

This way shorting can work normally and not involve creating supply. The collateral used doesn't made any smartcoins. It is just used to measure position in terms of the smartcoin being shorted. Trader's can short for what they really want to do which is speculate.

How does blockchain loose tokens? They only exist on the blockchain.

NO. This is just blockchain buying and selling passively, blockchain will lose all the token.

Whales sell BTS to blockchain for bitUSD at high price & sell bitUSD to blockchain for BTS at low price through controling market.
« Last Edit: January 22, 2017, 02:26:23 am by 天籁 »

Offline pc

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Re: Incentivize SmartCoin collateralization
« Reply #25 on: January 23, 2017, 04:41:29 pm »
Why are users involved in creating smartcoins in the first place? Why shouldn't the blockchain produce them? Does it matter if all the collateral is put up by a user? What if creating a smartcoin was as simple as just buying it from the chain.  If I want 50 bitusd I send the equivalent value in BTS to the chain. The blockchain lockes 200% plus the 101% collateral given to it. The 1% is a fee for this instant conversion.  Same thing in reverse. I send the blockchain the 50 bitusd, it sends me 99% of the value in BTS and unlocks the other 200% it was holding. The 1% fee can be burned or used as dividend payment to bond holders.

This way shorting can work normally and not involve creating supply. The collateral used doesn't made any smartcoins. It is just used to measure position in terms of the smartcoin being shorted. Trader's can short for what they really want to do which is speculate.


I'd like to see more discussion on the pros and cons of this approach.

Con: Going short is dangerous. Therefore short positions must be managed actively. The blockchain can only do that in a deterministic, predictable way, which makes it vulnerable to manipulation.
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Offline Pheonike

Re: Incentivize SmartCoin collateralization
« Reply #26 on: January 23, 2017, 09:12:36 pm »
What if they trade was one-way. You can only buy the coins from the blockchain. The 100% collateral from the buyer and 100% collateral from the blockchain were then burned. The only was to convert bitsud back to bts is to sell it on the exchange. Doing this increases the value of bts and increase the supply of bitusd.
« Last Edit: January 23, 2017, 09:33:47 pm by Pheonike »

Offline Chronos

Re: Incentivize SmartCoin collateralization
« Reply #27 on: January 24, 2017, 12:20:02 am »
What if they trade was one-way. You can only buy the coins from the blockchain. The 100% collateral from the buyer and 100% collateral from the blockchain were then burned. The only was to convert bitsud back to bts is to sell it on the exchange. Doing this increases the value of bts and increase the supply of bitusd.
But what happens if the value of BitUSD falls below $1?

Offline Pheonike

Re: Incentivize SmartCoin collateralization
« Reply #28 on: January 24, 2017, 01:25:32 am »
Then the blockchain stops selling bitusd. Just like there is a limited supply of bts produced each day, there will be a limited supply of bitusd available for purchase.

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Offline kani

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Re: Incentivize SmartCoin collateralization
« Reply #29 on: January 24, 2017, 02:51:59 pm »
Hey guys,

Popping back in to bump the original idea for this thread: Pay dividends to those who collateralize a SmartCoin by raking a small market fee from DEX activity in that SmartCoin.

I like that other ideas have been presented here, but I do not think they are the right ones.
  • Zero fees for orders which sit inside spread is not enticing enough.  The fees are too low for that to matter — if you can make an extra 0.2 BTS by placing orders further in orderbook, is of no benefit.
  • Blockchain selling Smartcoins.  Too big of a change with significant risk to Market-Pegged mechanics.  Borrowing SmartCoins with collateral is not without risk, and is best handled by market actors.  The blockchain cannot assume this risk.

The original idea presented here is a comparatively small change which incentives the right behavior:
  • Creation of additional SmartCoins
  • Higher returns for higher market activity
For a trustless solution this would require a change to blockchain protocol, as dividends should be automatic and made by the blockchain.

The biggest concern I have about this approach is that it will encourage shorters to chase minimum MCR to get the most SmartCoin for their BTS.  Can others comment on the impact of this?  Is this good or bad?

Remember the tagline:
“Your share in the Decentralized Exchange”

This idea brings that statement closer to reality.  For it rewards those who collateralize BTS for SmartCoins with proceeds generated by DEX activity.
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