I also care about providing liquidity between bitusd, bitcny, biteur and bitsilver and bitgold not only pairs between bts: bitsilver and bitgold because bts is volatile and sometimes the transition from bitfiat to bts to bitmetals can be proved profitable but other times not..so someone who uses the DEX to save do not want to go through this volatility..
What can we do to provide bitfiat:bitmetals liquidity? Do we need to change some parameters?
So you want traders to be able to borrow bitGold from the market, and use bitUSD as collateral (a CfD, contract for difference)
In this way bitGold trades against bitUSD.
If bitUSD can be used as collateral in such a CfD, then the bitUSD itself must be collateralized with bts. BTS must be the collateral-of-last-resort(?)
So trader A thinks that the price of gold in dollars is going to go down. He wants to take a leveraged bet that he is right. He wants to be short gold and long USD.
So in order to borrow 1oz of gold (~$1200), he needs 110% collateral of $1200, which = $1320bitUSD to collateralise this trade.
Let's assume trader A is the first to use BitShares so he cannot find a trade partner to buy bitUSD from.
So he must short it into existence himself.
Trader A borrows bitUSD from the blockchain using bts as collateral, in the usual way.
Trader A needs to borrow $1320bitUSD.
He needs to collateralise this loan with 175% bts.
So trader A needs $2,310 worth of bts so create this bitUSD.
At this stage, trader A owes debts of $2,310 bts, and long $1320bitUSD
Trader A then uses his $1,320bitUSD as collateral to create 1oz of bitGOLD.
At this stage, trader A is now long 1oz Gold ($1200), and in debt bts (collateral worth $2,310, or around 44,000bts today.)
Trader A then sells his created bitGold to the market, (because he thinks gold will do down in price). He trades with Trader B, and Trader A receives $1200bitUSD.
Trader A is now long $1200bitUSD, and has debts of $2,310 worth of bts to the blockchain.
Trader A doesn't care about the price of bts.
What can he do?
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So in order to meet the demand for a bitGOLD:bitUSD trading pair, short traders will need to be laying out 192.5% collateral in bts.
But people who want so trade bitGold:bitUSD, don't care about hte price of bts.
How can this trading pair function without involving price exposure to bts?
This isn't such a problem if one day bts is so liquid and stable that there is only negligible volatility.
But it's a LONG LONG way off that.
So can this bitGold:bitUSD pair exist without bts?
If this can be done.... then what is the point of bts in the first place...