Author Topic: Some questions re Bit20  (Read 4484 times)

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Offline EstefanTT

Any thoughts on how to clear that silly 0.04 debt also welcomed .. i sold to some lucky souls slightly above the price feed, thinking that would erase the debt (yeah, no) .. as far as I can see there's only two options, buying more or shorting more.. the next order is 50%+ away from the settlement price and shorting more seems like an awful idea :)

To pay your debt you need BTWTY.

What you did is borrowing BTWTY. You only needed to click on "close position" if you changed your mind.
Then you have sold the BTWTY you have borrowed. That's a different story.

You ask me for an egg, I lend it to you. Then you sell the egg. Now, in order to give me back the egg, you have to buy another one.

Same think with BTWTY, You have sold the ones lent to you by Bitshares. You have now to buy the BTWTY to repay BitShares for the ones it lent you. If you increase your debt, you're not closing your position but increasing the BTWTY borrowed to Bitshares.

The best way to do it is to observe the BTWTY and BTS market and chose the right moment to buy back the BTWTYs. If you expect the BTS price to increase with the Stealth announcement and other development, you can wait and buy you BTWTY back when BTS reach 0.02$. You will have make money (BTS) on the overall operation.

It would appear I got margin called at some point in the last 3 days. Lost about $400.

Expensive lesson.

I'm sorry to hear. I guess it happens during the high volatility we had lately. I would guess lots of traders have been margin called on several markets during these times.
Bit20, the cryptocurrency index fund http://www.bittwenty.com
(BitShares French ConneXion - www.bitsharesfcx.com)

Offline karnal

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Any thoughts on how to clear that silly 0.04 debt also welcomed .. i sold to some lucky souls slightly above the price feed, thinking that would erase the debt (yeah, no) .. as far as I can see there's only two options, buying more or shorting more.. the next order is 50%+ away from the settlement price and shorting more seems like an awful idea :)

To pay your debt you need BTWTY.

What you did is borrowing BTWTY. You only needed to click on "close position" if you changed your mind.
Then you have sold the BTWTY you have borrowed. That's a different story.

You ask me for an egg, I lend it to you. Then you sell the egg. Now, in order to give me back the egg, you have to buy another one.

Same think with BTWTY, You have sold the ones lent to you by Bitshares. You have now to buy the BTWTY to repay BitShares for the ones it lent you. If you increase your debt, you're not closing your position but increasing the BTWTY borrowed to Bitshares.

The best way to do it is to observe the BTWTY and BTS market and chose the right moment to buy back the BTWTYs. If you expect the BTS price to increase with the Stealth announcement and other development, you can wait and buy you BTWTY back when BTS reach 0.02$. You will have make money (BTS) on the overall operation.

It would appear I got margin called at some point in the last 3 days. Lost about $400.

Expensive lesson.

Offline EstefanTT

If I understand correctly, BitShares superbulls should consider going short on Bit20 because they expect BTS to grow faster than the combined market cap of "other" coins.
The basic difference to shorting USD is .. that the shorter on bit20 also expects the combined marketcap of other coins to lose in value (relative to USD).

Is that about right?

In the long term is very unlikely, so it would be unwise to short BTWTY and come back in a year later to see how it went. It's probably better to short BitUSD or BitCNY. Althought, I think BTS will overperform BTWTY.

In the short term, there are opportunities to make money shorting BTWTY that doesn't exist with more stable BitAssets (USD, CNY, ..)

I feel that it's unclear so I just add this chart to this discussion, it will help a lot to understand.



You can see that shorting BTWTY after the 21th of December has been interesting for traders.  They have been able to buy back at lower price until the 3rd of February when prices started to increase again.

They also had a huge trading opportunity around the 1st of April.
Bit20, the cryptocurrency index fund http://www.bittwenty.com
(BitShares French ConneXion - www.bitsharesfcx.com)

Offline xeroc

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If I understand correctly, BitShares superbulls should consider going short on Bit20 because they expect BTS to grow faster than the combined market cap of "other" coins.
The basic difference to shorting USD is .. that the shorter on bit20 also expects the combined marketcap of other coins to lose in value (relative to USD).

Is that about right?

Offline EstefanTT

Any thoughts on how to clear that silly 0.04 debt also welcomed .. i sold to some lucky souls slightly above the price feed, thinking that would erase the debt (yeah, no) .. as far as I can see there's only two options, buying more or shorting more.. the next order is 50%+ away from the settlement price and shorting more seems like an awful idea :)

To pay your debt you need BTWTY.

What you did is borrowing BTWTY. You only needed to click on "close position" if you changed your mind.
Then you have sold the BTWTY you have borrowed. That's a different story.

You ask me for an egg, I lend it to you. Then you sell the egg. Now, in order to give me back the egg, you have to buy another one.

Same think with BTWTY, You have sold the ones lent to you by Bitshares. You have now to buy the BTWTY to repay BitShares for the ones it lent you. If you increase your debt, you're not closing your position but increasing the BTWTY borrowed to Bitshares.

The best way to do it is to observe the BTWTY and BTS market and chose the right moment to buy back the BTWTYs. If you expect the BTS price to increase with the Stealth announcement and other development, you can wait and buy you BTWTY back when BTS reach 0.02$. You will have make money (BTS) on the overall operation.
 
Bit20, the cryptocurrency index fund http://www.bittwenty.com
(BitShares French ConneXion - www.bitsharesfcx.com)

Offline EstefanTT

Are there bit20's on outside exchanges?

Not at the moment. I feel that any exchange will laugh before even considering it. The BTWTY market cap is only a few thousand $.
Bit20, the cryptocurrency index fund http://www.bittwenty.com
(BitShares French ConneXion - www.bitsharesfcx.com)

Offline EstefanTT

Quote from: yvv
The primary market is bit20 vs collateral asset, which is BTS. We need liquidity for this pair in order for MPA procedure to work.

ELI5 on why BTS was chosen instead of USD?

The BTWTY:BTS market is more interesting to create the first wave of liquidity because it's more volatile. BTS AND BTWTY are volatile, thus opportunities to make money will arise more frequently. There will be also more opportunities for shorters.

BitUSD:BTWTY market is only moving when BTWTY moves.
Bit20, the cryptocurrency index fund http://www.bittwenty.com
(BitShares French ConneXion - www.bitsharesfcx.com)

Offline EstefanTT

Right, yeah.

But my point is that it seems extremely unlikely that anyone interested in crypto (that would be by definition and until/if this sort of thing is maintream, 100% of users) would take a short position with BTWTY.

If you believe in crypto, then it seems like a wise bet to make that the top 20 of all cryptos (and a dynamically list of 20 top cryptos as that) will never devalue much against fiat.

In other words, close to zero incentive to short.

Why would someone ever sell or short an Amazon or Google share? These things are going up on the long run, right ?
Because in the short term, the will act just like any share, they will rise and drop. So you can make money when they drop.
BTWTY follow this pattern and when it is about to drop it's a good moment to short.
There is another thing to consider. If you short when BTWTY goes down AND BTS does up, you win double money !!!! You can't do that with stables BitAsset because you only win on BTS price increase.

Have a look on April 2 (http://cryptofresh.com/a/BTWTY_BTS), BTWTY went from 2,400,000 BTS to 1,000,000 BTS, that was a great opportunity to make money shorting BTWTY. On this day we had around 5000$ volume exchanged. Plenty of shorters have made money on their operations. The BTWTY:BTS market will be highly volatile, thus opportunities to make money buying or selling ( & short selling) will arise.

Bit20, the cryptocurrency index fund http://www.bittwenty.com
(BitShares French ConneXion - www.bitsharesfcx.com)

Offline EstefanTT

Quote
- There is no vertical "Settlement Price" on any BTWTY market I bothered to check, except for :BTS ..  seeing as BTS is itself part of the basket, would it not make more sense for the primary (more advertised) markets to be USD and CNY ? And either way, the price feed should work for all of them.

The primary market is bit20 vs collateral asset, which is BTS. We need liquidity for this pair in order for MPA procedure to work.

Quote
- The concept is cool, but here's something I've been having trouble understanding: Who in their right mind would short BITWY into existence? (well, I did, and now owe 0.04 due to a fundamental misunderstanding of the dex mechanics)

Those who seek for profit from price volatility are welcomed to short it.

Quote
- Related to the above, and assuming one is in the camp that believes bit20 is headed for an extragalactic moon, why isn't everyone shorting USD and using it to buy BTWTY?

Because it is illiquid at present state.

Thanks for the answers IVV, I haven't checked the forum in a while and completely missed this thread.
Bit20, the cryptocurrency index fund http://www.bittwenty.com
(BitShares French ConneXion - www.bitsharesfcx.com)

Offline rgcrypto

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Are there bit20's on outside exchanges?

Offline tbone

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Right, yeah.

But my point is that it seems extremely unlikely that anyone interested in crypto (that would be by definition and until/if this sort of thing is maintream, 100% of users) would take a short position with BTWTY.

If you believe in crypto, then it seems like a wise bet to make that the top 20 of all cryptos (and a dynamically list of 20 top cryptos as that) will never devalue much against fiat.

In other words, close to zero incentive to short.

A real market maker will hedge his position on external markets.  So when he shorts BTWTY, he will buy corresponding amounts of the constituent assets on an exchange like Poloniex.  By doing so, he doesn't care which direction the market goes.   His profit comes from the spread.  In other words, he buys at the bid and sells at the ask and earns the difference.  We need more sophisticated market makers like this and should incentivize them.

Offline karnal

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Right, yeah.

But my point is that it seems extremely unlikely that anyone interested in crypto (that would be by definition and until/if this sort of thing is maintream, 100% of users) would take a short position with BTWTY.

If you believe in crypto, then it seems like a wise bet to make that the top 20 of all cryptos (and a dynamically list of 20 top cryptos as that) will never devalue much against fiat.

In other words, close to zero incentive to short.

Offline yvv

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Quote from: yvv
Quote from: karnal
- Related to the above, and assuming one is in the camp that believes bit20 is headed for an extragalactic moon, why isn't everyone shorting USD and using it to buy BTWTY?

Because it is illiquid at present state.

USD you mean?

I mean BTWTY lacks liquidity. There is not enough supply. You have to buy it at huge premium and then wait a long time before you can settle it at same price you bought.

Offline karnal

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Quote from: yvv
The primary market is bit20 vs collateral asset, which is BTS. We need liquidity for this pair in order for MPA procedure to work.

ELI5 on why BTS was chosen instead of USD?

Also, regarding the no settlement price on USD / CNY / BTC / etc, surely this is not related? I'm not too familiar / have forgotten some of the fundamentals, must the witnesses who provide the BTWTY price feed also provide for USD / CNY / BTC / etc, or can the engine internally perform the conversions ?

Either way, wouldn't it be a good idea to have the price feed for a few more other than BTS?

Quote from: yvv
Those who seek for profit from price volatility are welcomed to short it.

Realistically speaking though, since for now and likely for a long time to come, mostly only crypto enthusiasts appear to use the stuff, how likely is it that enough people will be betting that not one, not two, not five, not even ten, but the twenty top cryptos will devalue enough to bother shorting it?

(I'm genuinely curious)

Quote from: yvv
Quote from: karnal
- Related to the above, and assuming one is in the camp that believes bit20 is headed for an extragalactic moon, why isn't everyone shorting USD and using it to buy BTWTY?

Because it is illiquid at present state.

USD you mean?

Offline karnal

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Any thoughts on how to clear that silly 0.04 debt also welcomed .. i sold to some lucky souls slightly above the price feed, thinking that would erase the debt (yeah, no) .. as far as I can see there's only two options, buying more or shorting more.. the next order is 50%+ away from the settlement price and shorting more seems like an awful idea :)

To pay your debt you need BTWTY.

Yeah that's what I realized after the fact, now the only choices appear to be piling debt on top of debt or buying at an absurd price.

Well done karnalius!