Author Topic: plan to raise the bitCNY force settlement offset to 5%  (Read 6489 times)

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Offline abit

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Re: plan to raise the bitCNY force settlement offset to 5%
« Reply #30 on: November 14, 2017, 05:13:46 pm »
I like the training wheels analogy described by [member=448]Xeldal[/member] .

While I believe this issue should be addressed by the witnesses feeding a fairer price, apparently at this moment most of witnesses aren't doing the job well, as they have been failed to report for days. As I've said, we have 2 tools to affect/maintain the peg (adjusting price feed, or adjusting force settlement parameters), when one of them is hard to use, then it's good for us to try the other one.

Let's loose the training wheels a bit and see how the baby will grow. If she can not go by herself, we can always tighten the wheels again.

As a committee member, I've approved the proposal 1.10.5244: https://cryptofresh.com/p/1.10.5244
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Re: plan to raise the bitCNY force settlement offset to 5%
« Reply #31 on: November 14, 2017, 05:34:15 pm »
I am a big shorter, how can I scam the DEX users?

1. You sell bitCNY and promise that holders can settle their bitCNY for an equivalent amount of BTS within 24 hours.
2. After selling, you use your voting power to change the settlement offset, depriving bitCNY owners of 5% of their holdings.

But we've had that discussion before, and I guess neither one of us will change their position.

Instead we should try to find a fair solution.

The real problem is a disparity of markets. You are quoting an outside market (magicwallet), which pays more than 1 CNY for a bitCNY. On the DEX, we see (right now) a trading price of 1.76 BTS/bitCNY and a feed price of 1.84 BTS/CNY, from which we can calculate that on the DEX you can buy at .956 CNY/bitCNY.

In order to realign the markets, trading must occur.
For example, someone could buy cheap bitCNY on the DEX and sell it on magicwallet for a profit. Or (which is what shorters should be doing), buy cheap bitCNY on the DEX, and close their position with a profit while at the same time pushing the DEX price up towards the feed price.

Why is that not happening?

according to your logic, now I should sell BTS in DEX to lower the price as feeded?

the problem is:
1. after I doing this, I have no way to buy BTS back at the feeded price, I am at risk if the BTS price goes up.
2. as a big shorter it's not easy to avoid being settlement by reducing debt,  even I avoid, some other shorters will be settled, as committee we need to find a solution to make sure any shorters won't be settled unfairly!

You don't have to buy BTS back, you can reduce your collateral as well as your debt.

listen, there is no low or high bitCNY price, bitCNY price are stable, there's only high or low BTS price,

That doesn't even make sense. Prices are always relative to something. The price of bitassets is expected to be unstable, because there is no fixed peg - it's a Market-Pegged Asset, and the market needs some space to move. The mechanism of MPAs encourages trading that moves the price towards the peg, that's how it works. This trading is currently not happening, which is at least partially responsible for both the market disparity and the current "speculators" who buy cheap and force-settle.

http://docs.bitshares.eu/_downloads/bitshares-financial-platform.pdf - section 2.
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Offline yvv

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Re: plan to raise the bitCNY force settlement offset to 5%
« Reply #32 on: November 14, 2017, 05:34:46 pm »
Changing rules like shoes in favor of small group of actors is shit. And the worst thing is that such stupid move is not going to solve any problems. This is like healing a headache with rectal suppositories. At the end, your head and your ass is going to hurt.

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Re: plan to raise the bitCNY force settlement offset to 5%
« Reply #33 on: November 14, 2017, 05:46:21 pm »
most of witnesses aren't doing the job well, as they have been failed to report for days.

Hm... what if all witnesses stop feeding a price for bitCNY until the markets are aligned correctly? That would prevent forced settlement for the time being.
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Offline abit

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Re: plan to raise the bitCNY force settlement offset to 5%
« Reply #34 on: November 14, 2017, 06:55:24 pm »
The importance of force settlement is over rated. For an adopted market you could likely change it to 50% offset or remove it entirely and it would have no effect.

Force settlement is not a tool for speculators.  It is not a tool for balancing or arbitrage.  It is a safety, training wheels mechanism for if the market disappears, SmartAsset holders are assured of some value.  Has the market disappeared?  Is there suddenly a void on one side of the market and an overwhelming driving force on the other?  Is everyone trying to exit the market at once?  Is bitCNY in danger of collapse?  No?  ok, then why are we using force settlement?  A market disruption and volatile pricing for BTS and BTC has made accurate objective feeding difficult/impossible.  And instead of letting the markets and pricing to rebalance through normal trade we've given a new path straight through our core support.

A hard line in the sand so close to the feed during times of high volatility and market disruption drives speculators to attack the backbone supply for the market (borrowers) instead of an honest trade with other speculators in a normal market.

The price should be given some breathing room around the feed.  Where normal market swings will be picked up from 1 speculator to the other.  Not allowing speculators and other normal trading to pick up the slack first to balance and correct, where instead there is a governing fail-safe emergency mechanism for a guaranteed price, drives instead a drain on the core of the market (borrowers)

While I see settlement as useful in the formation of a new market, at some point it becomes destructive and an unnecessary burden for the creators / borrowers.  This balance should be managed and assessed.  Is bCNY able to stand on it's own?  Can we allow it 5% around the feed without it falling over?

HELLO THERE! BitCNY is falling below the feed because it is OVER SUPPLIED. This is very simple: there are more sellers than buyers. Forced settlement is the ONLY thing which keeps it from falling further. You want it to fall 50% below? Great, go ahead and set 50% offset and keep shorting, but let me know in advance when this happen such that I have time to get rid of this shit asset.

ok, let's firstly focus on whether the bitCNY is over supplied.

below is snapshot from magicwallet, we can see that currently one need to pay at least 1.028CNY to get 1bitCNY,  it is clearly that bitCNY is in shortage, serious shortage.


anyway if you do not like bitCNY even if it worth more than 1CNY, just sell it immediatelly, it is very possible that the offset will increase 3 days later.
This is the deposit page which shows the prices that people want to sell bitCNY for fiat (ask price). The withdrawal page makes more sense as it shows the price that people want to pay with fiat for bitCNY (bid price). As of writing, withdrawal fee rates provided by big providers are around -1%, which means people are willing to pay 1.01 fiat CNY for 1 bitCNY.

The real problem is a disparity of markets. You are quoting an outside market (magicwallet), which pays more than 1 CNY for a bitCNY. On the DEX, we see (right now) a trading price of 1.76 BTS/bitCNY and a feed price of 1.84 BTS/CNY, from which we can calculate that on the DEX you can buy at .956 CNY/bitCNY.
Other people are not calculating this way.

While you can buy bitCNY with BTS in the DEX with a "better" price, it's inconvenient to convert bitCNY to same or more BTS via other routes to make a profit, so there are opportunity costs involved, people tend to not do that in a up trend.

Magic Wallet(website https://www.magicw.net/, web wallet https://m.magicw.net/) provides a decentralized on/off ramp for bitCNY : fiat CNY, which is now widely used among the Chinese BitShares community. Everyone with an amount of bitCNY can list bitCNY for sale for fiat CNY, and vise versa. They set fee rates by themselves. the Magic Wallet operating team serves as an escrow, currently without escrow fee. So, Magic Wallet is a free market place, offers listed there are showing real market price, people are playing with real money, IMHO it can be used as a feed source, witnesses can adjust price feeds based on it, actually it should have more weight since it's a direct market (of course need to make sure it's not manipulated). The fact is, people are bidding with 1.01 bitCNY per fiat CNY, and bidding with 0.58 bitCNY per BTS, it's fair to say one BTS worths 0.5858 CNY, so the feed price 0.55 CNY per BTS is obviously off.

Quote
In order to realign the markets, trading must occur.
For example, someone could buy cheap bitCNY on the DEX and sell it on magicwallet for a profit. Or (which is what shorters should be doing), buy cheap bitCNY on the DEX, and close their position with a profit while at the same time pushing the DEX price up towards the feed price.

Why is that not happening?

according to your logic, now I should sell BTS in DEX to lower the price as feeded?

the problem is:
1. after I doing this, I have no way to buy BTS back at the feeded price, I am at risk if the BTS price goes up.
2. as a big shorter it's not easy to avoid being settlement by reducing debt,  even I avoid, some other shorters will be settled, as committee we need to find a solution to make sure any shorters won't be settled unfairly!

You don't have to buy BTS back, you can reduce your collateral as well as your debt.

listen, there is no low or high bitCNY price, bitCNY price are stable, there's only high or low BTS price,

That doesn't even make sense. Prices are always relative to something. The price of bitassets is expected to be unstable, because there is no fixed peg - it's a Market-Pegged Asset, and the market needs some space to move. The mechanism of MPAs encourages trading that moves the price towards the peg, that's how it works. This trading is currently not happening, which is at least partially responsible for both the market disparity and the current "speculators" who buy cheap and force-settle.

http://docs.bitshares.eu/_downloads/bitshares-financial-platform.pdf - section 2.

Your argument about "peg" assumes that the feed price is correct, but it doesn't make sense when it's not.
« Last Edit: November 14, 2017, 07:07:19 pm by abit »
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Offline a2jimenez

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Re: plan to raise the bitCNY force settlement offset to 5%
« Reply #35 on: November 14, 2017, 07:05:13 pm »
Hi guys -

New to bitshares but really like it and have been investing for the last month or so. For what it's worth, I don't think the problem is framed correctly:

1) The fairness in the system should go both ways: for those wanting to buy any of the "Bit" assets and the sellers.
2) Not fully familiar with the process of calculating the "settlement price" but it doesn't look to me that the current methodology addresses the issue that bitcrab is raising: technical or fundamental issues in a market will impact a particular financial instrument and current rules become unworkable for the system.
3) What the price feed methodology is trying to find is the right (fair) price. One of my responsibilities in my job is to oversee some FX trading activity and we never find ourselves getting quotes in real time from banks that match perfectly...particularly in volatile markets.
4) Given that, we will always have discrepancies in those feeds and the settlement price methodology can only do so much to reflect the "market price" (which is a moving target and will differ from one area to another, or market to another).

I am sure someone mentioned this idea before but why don't we include an adjustment to the average of the feeds that incorporate volatility of the market? if we calculate standard deviation from current feed prices for CNY, it will be

Average   1.796894286   
STDEV   0.050622697
STDEV % of Mean: 2.817%

As a comparison, using the same methodology to BitUSD:
11.83008333   
0.194776492
1.646%

Some version of this will reflect dynamically the state of a particular financial instrument without having someone "define" what that % is. It only recognizes that the fair price will fall within a band given we are just taking a snapshot from a relative small sample.

Offline yvv

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Re: plan to raise the bitCNY force settlement offset to 5%
« Reply #36 on: November 14, 2017, 07:15:55 pm »
Magicwallet is one particular market for bitCNY, which is biased different way than the DEX. Trying to solve its problems by messing up with whole echosystem is wrong. The fact that magicwallet users pay more CNY for bitCNY means that more users deposit funds into bitshares than withdraw through your wallet. You can't change this by messing up with offset. To bring the bitCNY price on par with CNY in your wallet, you need somebody to withdraw their funds through magicwallet, then deposit them back through other gateway. This is the arbitrage problem, not the shorting problem.

« Last Edit: November 14, 2017, 07:29:50 pm by yvv »

Offline abit

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Re: plan to raise the bitCNY force settlement offset to 5%
« Reply #37 on: November 14, 2017, 07:39:28 pm »
The fact that magicwallet users pay more CNY for bitCNY means that more users deposit funds into bitshares than withdraw through your wallet.
To bring the bitCNY price on par with CNY in your wallet, you need somebody to withdraw their funds through magicwallet, then deposit them back through other gateway.
Looks like you're saying "the market is acting wrong". That's a bit funny. IMHO the market won't lie. The fact is at this moment (this is important because we've seen opposite fee rates when BTS price is higher) you can't find people who willing to sell you bitCNY for less fiat CNY, you simply unable to "deposit them back". That's free market. Magic wallet is just a tool to make it more convenient to trade. There are also other gateways, for example https://hellobts.com/ and https://bit.btsabc.org/ and OTC markets, but the price/fee rate is similar.
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Offline guan1990

Re: plan to raise the bitCNY force settlement offset to 5%
« Reply #38 on: November 14, 2017, 07:47:44 pm »
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.


Maybe you didn’t  see 2 crazy witnesses set the feeding price  at  astonishing  0.5089 CNY  while price at  poloniex is 0.54 CNY  at the same time.For the whole time ,they gave  much lower feeding price than  poloniex .
I strongly recommend you  a coin  price app tool  aicoin(website :aicoin.com,not acoin.io ) to you.

BTSs in  Poloniex are ‘fake' because they cannot  circulate in the market.A worse news is that the BTS transaction volume of Poloniex  consists of more than 70%  of the market.The old feeding price mechanism cannot represent the price of  true  circulating BTSs.But this situation is not  admited  or found by all the witnesses.The gap between BTS  feeding price and  price of wallet BTS exchanges&BTS circulation exchanges such as zb.com  is too big now.Things should be changed.

This scenario  is  not new. Since Feb. 9 to late May,Chinese major exchanges were forced by the gov. to forbid withdrawing bitcoins,which caused the price in these Chinese exchanges  much lower than  non-Chinese exchanges.As a result,the  proportion of Chinese exchange bitcoin price was removed from some  BTC price index.    You can see  here https://tradeblock.com/blog/xbx-index-update-removing-okcoin

In  short,we should admit that the feeding price should be more close to wallet  exchanges or exchanges that BTSs can be withrawed,and BTSs in poloniex are 'fake'.The proportion of   feeding price  of poloniex should be removed or at least not at  major postion .It is not consensus maybe because some witnesses want  to  manipulate price.or they don’t see it.

Offline yvv

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Re: plan to raise the bitCNY force settlement offset to 5%
« Reply #39 on: November 14, 2017, 08:05:00 pm »
The fact that magicwallet users pay more CNY for bitCNY means that more users deposit funds into bitshares than withdraw through your wallet.
To bring the bitCNY price on par with CNY in your wallet, you need somebody to withdraw their funds through magicwallet, then deposit them back through other gateway.
Looks like you're saying "the market is acting wrong".

No, this is exactly how the market is supposed to work. If you have a mismatch between the deposit volume and withdrawal volume at your gateway, the price get skewed. You need arbitragers to correct it. Total supply of bitCNY has nothing to do with this, you can buy plenty at discount on DEX, it is your gateway which has deficit.


Offline yvv

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Re: plan to raise the bitCNY force settlement offset to 5%
« Reply #40 on: November 14, 2017, 08:15:37 pm »
So, situation is even worse than it follows from OP. It turns out that topic starter runs a gateway which is not very efficient, and tries to solve his problem at a cost of bitCNY holders.
 

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Re: plan to raise the bitCNY force settlement offset to 5%
« Reply #41 on: November 14, 2017, 08:15:54 pm »
The fact that magicwallet users pay more CNY for bitCNY means that more users deposit funds into bitshares than withdraw through your wallet.
To bring the bitCNY price on par with CNY in your wallet, you need somebody to withdraw their funds through magicwallet, then deposit them back through other gateway.
Looks like you're saying "the market is acting wrong".

No, this is exactly how the market is supposed to work. If you have a mismatch between the deposit volume and withdrawal volume at your gateway, the price get skewed. You need arbitragers to correct it. Total supply of bitCNY has nothing to do with this, you can buy plenty at discount on DEX, it is your gateway which has deficit.
"you can buy plenty at discount on DEX" but only with BTS, you don't have that much BTS and nowhere to get that much with fiat (and even BTC). The on/off ramp is designed for the peg, where you can buy bitCNY with fiat CNY.
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Offline yvv

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Re: plan to raise the bitCNY force settlement offset to 5%
« Reply #42 on: November 14, 2017, 08:36:49 pm »
The fact that magicwallet users pay more CNY for bitCNY means that more users deposit funds into bitshares than withdraw through your wallet.
To bring the bitCNY price on par with CNY in your wallet, you need somebody to withdraw their funds through magicwallet, then deposit them back through other gateway.
Looks like you're saying "the market is acting wrong".

No, this is exactly how the market is supposed to work. If you have a mismatch between the deposit volume and withdrawal volume at your gateway, the price get skewed. You need arbitragers to correct it. Total supply of bitCNY has nothing to do with this, you can buy plenty at discount on DEX, it is your gateway which has deficit.
"you can buy plenty at discount on DEX" but only with BTS, you don't have that much BTS and nowhere to get that much with fiat (and even BTC). The on/off ramp is designed for the peg, where you can buy bitCNY with fiat CNY.

So what? To short bitCNY you need even more BTS than to buy it. How is messing up offset supposed to fix the peg at your ramp? This is ridiculous  misthinking.

Offline abit

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Re: plan to raise the bitCNY force settlement offset to 5%
« Reply #43 on: November 14, 2017, 09:47:26 pm »
So, situation is even worse than it follows from OP. It turns out that topic starter runs a gateway which is not very efficient, and tries to solve his problem at a cost of bitCNY holders.
Magic wallet is not just a gateway running by someone, it's a free market like the Dex. Everyone can offer to exchange fiat CNY with bitCNY and vice versa with Magic Wallet (the software). Traders compete with each other. If one trader's price is not fair, people will go with others. It should be the most efficient. If it become inefficient, it means the pegging mechanism is flawed.

The fact that magicwallet users pay more CNY for bitCNY means that more users deposit funds into bitshares than withdraw through your wallet.
To bring the bitCNY price on par with CNY in your wallet, you need somebody to withdraw their funds through magicwallet, then deposit them back through other gateway.
Looks like you're saying "the market is acting wrong".

No, this is exactly how the market is supposed to work. If you have a mismatch between the deposit volume and withdrawal volume at your gateway, the price get skewed. You need arbitragers to correct it. Total supply of bitCNY has nothing to do with this, you can buy plenty at discount on DEX, it is your gateway which has deficit.
"you can buy plenty at discount on DEX" but only with BTS, you don't have that much BTS and nowhere to get that much with fiat (and even BTC). The on/off ramp is designed for the peg, where you can buy bitCNY with fiat CNY.

So what? To short bitCNY you need even more BTS than to buy it. How is messing up offset supposed to fix the peg at your ramp? This is ridiculous  misthinking.

I don't know why you keep saying it's "my ramp" or someone's ramp. It's actually a decentralized p2p ramp.

A successfully pegged bitCNY means everyone can exchange fiat CNY with bitCNY at around 1:1 and vise versa with anyone else without need to worry about profit or loss. Ideally for a ramp the exchange price should be more than 1:1 on one direction but less than 1:1 on the other direction. Currently both directions are operating above 1:1 (Note: in a free market but not a simple ramp that the owner sets arbitrary fee rate), which means the peg is slightly off, which means the feed price is wrong, which means bitCNY holders are now taking advantage of bitCNY producers (shorters), which is unfair. To get mass adoption, we need to eliminate this unfairness, either by correcting the price feed, or by adjusting the force settlement offset.
« Last Edit: November 14, 2017, 09:49:41 pm by abit »
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Offline yvv

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Re: plan to raise the bitCNY force settlement offset to 5%
« Reply #44 on: November 14, 2017, 10:00:34 pm »
The peg at your ramp (or whoever runs it) is off because deposit and withdrawal volumes are different. This has nothing to do with price feed or fairness. And anyway, you should not address the problems of your ramp by screwing up a committee token. Issue your own token and do whatever you want with it.
« Last Edit: November 14, 2017, 10:06:02 pm by yvv »