Author Topic: plan to raise the bitCNY force settlement offset to 5%  (Read 8216 times)

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Offline bitcrab

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plan to raise the bitCNY force settlement offset to 5%
« on: November 13, 2017, 04:41:42 pm »
firstly let's review what happened in the passed several days:

poloniex, the exchange with highest BTS trading volume,  has some issue and stopped processing BTS withdrawl.

BTC/BCH war lead to big fluctuation of BTC price and also the blockchain traffic jam.

thanks to China goverment, now people from China feel trouble to buy cryptocurrencies by CNY.

all these lead to a big gap between the BTS price in bitCNY and the settlement price, and this lead to endless settle orders, speculators come and exploit shorters.

Settlements purpose is to provide a last resort guarenteed exit.  In a healthy market it is not needed. 

settlers need to pay for this convenience while forcing this inconvenience on to the shorters. this is the settlement compensation ratio, and now it is set to 1% for almost all the smartcoins.

now bitCNY ecosystem has developed to an extent, which makes settlement of little sense, there's no scenario that bitCNY holders need to submit settlement to claim the value of bitCNY. on the other side, when sometimes the market is in inefficient or disrupt status, the settlement provide the opportunity for speculators to exploit the shorters and also hurt the ecosystem. this is not we want from settlement.

bitCNY is in shortage, these 2 days because of the settlement exploit it is in more serious shortage, however, now exchanges such as aex.com and xbricks.io are beginning to open bitCNY market, we can expect that the demand for bitCNY will rise rapidly to above 1 billion level. to meet this demand we definitely need to prevent the shorters from being hurt unfairly and avoid the happening of settlement exploition.

surely price feeding is a key factor  and should be improved, but in such a fragile market, feed disparity is bound to happen. we cannot expect the price feeding always be adapted in time to fit the latest market status.

what I suggest to solve this problem is to raise the settlement compensation offset to 5%, only for bitCNY, leave other smartcoins unchanged.

as now settlement contribute little to a healthy bitCNY economy, raise the offset to 5% do not hurt the peg of bitCNY and will encourage shorters to provide more bitCNY to meet the demand.

I plan to create such a committee proposal soon as the settlement exploition is still on going and no one knows when it can come to an end.

any ideas, please discuss here.










 

Offline yvv

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Re: plan to raise the bitCNY force settlement offset to 5%
« Reply #1 on: November 13, 2017, 05:30:20 pm »
Quote
what I suggest to solve this problem is to raise the settlement compensation offset to 5%, only for bitCNY

Do you want it to drop below the feed price even more? Good luck with that.

Offline Xeldal

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Re: plan to raise the bitCNY force settlement offset to 5%
« Reply #2 on: November 13, 2017, 05:31:42 pm »
I agree increasing the settlement offset percentage here is a prudent response. 

I'll paste here what I said in telegram chat regarding this.

Quote
Settlements purpose is to provide a last resort guarenteed exit.  In a healthy market settlement shouldn't be needed.  At the edges of the healthy market you should expect to pay a fee[offset] for this convenience where you are forcing this inconvenience on to the shorters.   In a small wild market, I'd expect the fee[offset] to be large.  As the market grows the fee could move closer to feed. 

At the moment a low diversity market with few connecting branches causes a disperity in feed and localized pricing when disrupted.  With a settlement fee[offset] too low, this allows the opportunity to exploit not balance.  Settlement should be set just outside the markets general deviations, to provide a backstop or guarentee not an avenue for arbitrage.  If the settlement is being used in large quantity for this purpose, to me it says the fee is too small.

I would support raising the fee[offset].  The goal should be to have as low a fee as possible. Efforts should be made to improve the markets liquidity and robustness to meet that goal.  Not the other way around.  Feeds of course are a factor in this and should be improved, but with so few connections in such a small fragile market, feed disparity is bound to happen and no "real price" can be objectivly stated or expected.  Adjust the fee to compensate for the market disparity.

edit: fee = offset

Offline planetlife

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Re: plan to raise the bitCNY force settlement offset to 5%
« Reply #3 on: November 13, 2017, 05:47:23 pm »
谨慎支持,但还是太过刚性了点;数学是最美的语言,后期升级可考虑依靠等差数列模式来提高高倍率抵押者补偿溢价,譬如2倍以下不补偿或1%,2到3倍3%,3到4倍5%,...   当系统遇到市场内外不平衡的状况时,系统自适应收敛流动性即可从容应对,系统不但弹性空间大,鲁棒性也得到改善;相对改喂价机制,我更赞成系统内参数的调优优化,作为一个应急措施,5%溢价补贴抵押者,5%基本上可以覆盖投机者的利润空间了,可以接受。
--------
BTS: ptschina hi
PTS中国

Offline pc

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Re: plan to raise the bitCNY force settlement offset to 5%
« Reply #4 on: November 13, 2017, 05:52:50 pm »
We've had a lengthy discussion on the subject before, and back then we were arguing about 1%, not 5.

I think the settlement offset is a blatant violation of the settlement guarantee. Raising the offset means ripping off the holders of bitCNY, which will further serve to destroy the credibility of bitAssets as a concept.

It is especially unfair to those who have already requested forced settlement, because they cannot undo their settlement requests. They will simply receive another 4% less than what they were supposed to receive.

Once again the largest shorters of bitCNY are abusing their power to scam the users of our DEX.
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Offline renkcub

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Re: plan to raise the bitCNY force settlement offset to 5%
« Reply #5 on: November 13, 2017, 07:10:44 pm »
Why not just increase Settlement delay? Should solve the issue.

Offline JonnyB

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Re: plan to raise the bitCNY force settlement offset to 5%
« Reply #6 on: November 13, 2017, 07:12:48 pm »
force settlement offset should not be adjusted below 1%.
Witnesses should be feeding in correct CNY prices instead.
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Offline Xeldal

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Re: plan to raise the bitCNY force settlement offset to 5%
« Reply #7 on: November 13, 2017, 08:07:31 pm »
force settlement offset should not be adjusted below 1%.
Witnesses should be feeding in correct CNY prices instead.

There is no such thing as 1 correct price.  In a world market you have wide variance from location to location especially with high volatility and trading pathway disruption.   The mean price in US might be 10% lower or higher than the mean in China.  If the feed is simply between the two you still have a 5% difference on either side.  With a 1% settlement offset this gives heavy incentive to use/abuse the settlement for a purpose it was not designed for.  Forced settlement price should sit just outside this market disparity.  We should not be guaranteeing settlement at a price inside this global price disparity.  As it stands we are encouraging people to settle.

Some type of smart settlement adjustment metric might incorporate a volatility index that looks at change in price over a period of time as well as price feed deviation from the mean.  If a majority of witnesses are reporting feeds significantly different from each other this could effect the settlement offset.   Alternatively if price is stable and witnesses are all reporting in a tight group the settlement offset can come down to meet it.

Offline JonnyB

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Re: plan to raise the bitCNY force settlement offset to 5%
« Reply #8 on: November 13, 2017, 09:48:58 pm »
force settlement offset should not be adjusted below 1%.
Witnesses should be feeding in correct CNY prices instead.

There is no such thing as 1 correct price.  In a world market you have wide variance from location to location especially with high volatility and trading pathway disruption.   The mean price in US might be 10% lower or higher than the mean in China.  If the feed is simply between the two you still have a 5% difference on either side.  With a 1% settlement offset this gives heavy incentive to use/abuse the settlement for a purpose it was not designed for.  Forced settlement price should sit just outside this market disparity.  We should not be guaranteeing settlement at a price inside this global price disparity.  As it stands we are encouraging people to settle.

Some type of smart settlement adjustment metric might incorporate a volatility index that looks at change in price over a period of time as well as price feed deviation from the mean.  If a majority of witnesses are reporting feeds significantly different from each other this could effect the settlement offset.   Alternatively if price is stable and witnesses are all reporting in a tight group the settlement offset can come down to meet it.

Witnesses should be combining BTS prices from different exchanges giving more weight to those with big volume to create an accurate feed price. The forced settlement is the only thing that makes the peg certain if such major goal posts get moved then our stablecoins aren't safe.
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Offline yvv

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Re: plan to raise the bitCNY force settlement offset to 5%
« Reply #9 on: November 13, 2017, 10:34:09 pm »
Quote
There is no such thing as 1 correct price.

There is no such thing, but we have to derive one out of variety of prices, because we need a single price for reference to make bitAssets work.

Offline bitcrab

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Re: plan to raise the bitCNY force settlement offset to 5%
« Reply #10 on: November 14, 2017, 02:17:08 am »
We've had a lengthy discussion on the subject before, and back then we were arguing about 1%, not 5.

I think the settlement offset is a blatant violation of the settlement guarantee. Raising the offset means ripping off the holders of bitCNY, which will further serve to destroy the credibility of bitAssets as a concept.

It is especially unfair to those who have already requested forced settlement, because they cannot undo their settlement requests. They will simply receive another 4% less than what they were supposed to receive.

Once again the largest shorters of bitCNY are abusing their power to scam the users of our DEX.

surely the apply of this plan need some time, and before that we'll announce this change to public, it has no effect on the already placed settle orders, and the potential settlers will be noticed about this.

for the smartcoin like bitRUBLE, its ecosystem is undeveloped yet, settlement may play an important role for claiming values of smartcoins, but for bitCNY which has a mature ecosystem, settlement is not needed, and the key point is to increase supply.

I have discussed with aex and xbrick people, they do not worry the credibility of bitCNY, but they worry a lot on the supply of bitCNY, they doubt it cannot fulfill the market demand.

I am a big shorter, how can I scam the DEX users? please let me know. shorters are always under the risk of margin call, small shorters can easily increase the collateral ratio to avoid such risk, but it is always difficult for big shorters to do that, big shorters need to be more careful.


Offline bitcrab

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Re: plan to raise the bitCNY force settlement offset to 5%
« Reply #11 on: November 14, 2017, 02:24:01 am »
Witnesses should be combining BTS prices from different exchanges giving more weight to those with big volume to create an accurate feed price. The forced settlement is the only thing that makes the peg certain if such major goal posts get moved then our stablecoins aren't safe.

no, the core design for pegging is margin call, not settlement, settlement can help pegging when there is no developed ecosystem, but it also provide opportunity   to hurt the ecosystem.

and the plan does not remove the settlement, it just increase the offset, we can watch how bitCNY behaves after this change, if some unexpected event happen, for example, bitCNY price drop to 0.95CNY, committee surely have chance to change the offset back.
« Last Edit: November 14, 2017, 02:31:30 am by bitcrab »

Offline bitcrab

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Re: plan to raise the bitCNY force settlement offset to 5%
« Reply #12 on: November 14, 2017, 03:07:38 am »
committee proposal created, hope it can get enough support.
review will begin 3 days later, actually this is a little urgent so a comparatively short period is set, however, we still have enough time to reminder the potential settlers.

https://cryptofresh.com/p/1.10.5244

Offline JonnyB

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Re: plan to raise the bitCNY force settlement offset to 5%
« Reply #13 on: November 14, 2017, 03:39:36 am »
Get the witnesses to adjust their price feeds 5% lower.

witnesses should be able to react, they get paid $50k a week to do this.

i will not support 5% force settle offset when its a simple case of witnesses not providing the correct feed.

« Last Edit: November 14, 2017, 03:46:52 am by JonnyBitcoin »
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Online 天籁

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Re: plan to raise the bitCNY force settlement offset to 5%
« Reply #14 on: November 14, 2017, 09:10:05 am »
+5%