Author Topic: suggestion for an offical market value management infrastructure  (Read 8703 times)

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Online bitcrab

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Frankly speaking, Bitshares ecosystem, especially smart coin ecosystem is facing bottleneck, recently the whole cryptocurrencies is in bear market, BTS price also wander in low level, consequently, margin calling happen frequently and smartcoins like bitCNY is in big shortage. When I wrote this, in magicwallet  traders need to pay 1.12 fiat CNY to buy 1 bitCNY. AEX, the first central exchange that open bitCNY market, now issue CNC, a token similar to USDT, and adopt it as base currency because now they are not confident that bitCNY can work well and fulfill the exchange demand,if we cannot find solution to overcome these hurdles, “make Bitshares great again” will be hollow words.

The current margin call rule has some flaws, which give BTS shorters big chance to make benefit and bring BTS longer big risk, hopefully the flaws will be solved by a planned hardfork with “sell only required collateral while margin call” feature in 1-2 months, however, even the hard fork happen without delay, it still do not solve all the problems,  Bitshares need some infrastructure to do BTS market value management, to bring the ecosystem to a more stable an active level.

I now propose to do “official market value management” to add power to Bitshares, below is the planned steps:

1. Charge market fee for smarcoins like bitCNY and bitUSD.

2.Use the collected fee to buy BTS. 

3. Borrow bitCNY/bitUSD by putting the bought BTS into collateral with high collateral ratio and continue to buy in BTS.

With this procedure, more and more BTS will be locked as collateral and more and more smartcoins will be supplied, all this will create incentive and also the expectation for BTS price to go up, consequently this will speed up the grow up of the smart coin ecosystem and then the whole Bitshares ecosystem.

what a market fee for smartcoins is appropriate?  

the fee rate should be low enough to keep the user experience as almost same as before, and also should be high enough to provide enough fund for  market value management, considering all this, 0.05% should be a good level.

how to manage the whole operation procedure?

create a trading account for each smartcoin, for example create committee.cnymaker for bitCNY operation,  the account will be owned by committee-account and the active key will be set as say 3/5 multisig, normally the accounts in the multisig structure are from committee members.

operation will follow some predefined rules, taking bitCNY as example:

Rules for placing/canceling orders to buy BTS:

1. while bitCNY is priced lower than 1 fiat CNY in market, then stop placing new buy orders.
2. while bitCNY is priced higher than 1 fiat CNY in market, place order to buy BTS, with the price at least 1% lower than the top buy order in market.
3. if any exist buy order A is with a price more than 10% lower than the top buy order, cancel order A.

Rules for borrowing bitCNY:

While borrowing bitCNY, the collateral ratio should be set as no less than 3, while the collateral go down to less than 3, stop buying BTS and use the collected bitCNY to reduce debt until the collateral is higher than 3.

Now more decentralized exchange appear in the market, CYBEX,a decentralized exchange forked from BTS with adding many ICO friendly features, is planning to get big share in the market, Bitfinex also plan to develop EOSfinex on the coming EOS platform, if Bitshares cannot make big advance by making good use of its specific advantages, no one can guarantee a good future. I hope everyone can carefully check the proposal and suggest constructively, I hope we have chance to make such a change happen and make bitshares great again.

« Last Edit: March 08, 2018, 02:51:01 pm by bitcrab »

Offline ebit

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Re: suggestion for an offical market value management infrastructure
« Reply #1 on: March 08, 2018, 02:58:50 pm »
support ,we need new idea.The infrastructure can be used to collect eos btc too.
« Last Edit: March 08, 2018, 03:06:13 pm by ebit »

Offline Achilles

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Re: suggestion for an offical market value management infrastructure
« Reply #2 on: March 08, 2018, 03:45:13 pm »
Nice.
the basic value of shares is bonus. so why bitshares have no bonus for those who BTS Longer? Encourage people to buy bts and save bts rather than borrow too much smart coin and wait margin calling.

Offline Fox

Re: suggestion for an offical market value management infrastructure
« Reply #3 on: March 08, 2018, 03:59:45 pm »
Broadly speaking, I support the concept of a Committee controlled market bot. Owner set to Committee is required. I have some reservations about Active set to M/N accounts.

Consider the following implementation concepts (for each SmartCoin):
1. committee.smartcoin: Owner, Active set to Committee
2. Each Committee member runs (to-be developed) code locally that:
3. --Calculates which Committee Member is the 'Market Maker Proposer' (highest votes, next highest if Proposal delay exceeds threshold below)
4. --Observes SmarCoin market:
5. ----Market Maker Proposer (MMP) evaluates SmartCoin market conditions for Triggers (OP examples):
6. ----MMP broadcasts Proposed Transaction containing market actions based on Triggers
7. ----Observes Proposed Transactions:
8. ------Evaluates Triggers
9. --------If TRUE: Signs Proposed Transaction
10. The automated decentralized bot should execute the intended market actions using a dynamic set of Committee authorities.
 
The above rough concept is similar to a Block Producer (Witness) providing Price Feed data by observing and having authority to sign their findings. However, the decentralized bot above requires observations from multiple sources to form the authority to perform the market actions.
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Offline lovegan007

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Re: suggestion for an offical market value management infrastructure
« Reply #4 on: March 08, 2018, 04:02:48 pm »
好好好,管它是什么,只要能涨,什么样的都行。

Offline ripplexiaoshan

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Re: suggestion for an offical market value management infrastructure
« Reply #5 on: March 08, 2018, 04:04:30 pm »
It's definitely doable. Using fees to buy back BTS is a positive feedback,which will increase the price of BTS.
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Offline abit

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Re: suggestion for an offical market value management infrastructure
« Reply #6 on: March 08, 2018, 05:29:38 pm »
Generally speaking, charging fees on bitCNY and etc is doable.

However, I don't think those fees would be enough to do effective "market value management".

Say, on average 10M CNY volume a day, and a fee rate at 0.05%, means 5K CNY of income per day. In order to have a working "market value management", I guess we need billions of CNY.

Another possible con:
* charging fees introduces friction, thus may reduce activity, thus may harm reputation of BitShares and price of BTS token.

By the way, why not increase basic network fees? The fees were reduced when BTS is 6CNY each, now BTS is around 1CNY each.
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Offline paliboy

Re: suggestion for an offical market value management infrastructure
« Reply #7 on: March 08, 2018, 07:06:43 pm »
In general I support this proposal. However, I agree with abit that it probably create some friction and won't have a big impact. On the other hand, it could buy us time in hard times.

Offline pc

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Re: suggestion for an offical market value management infrastructure
« Reply #8 on: March 08, 2018, 07:14:09 pm »
Interesting proposal. Thanks @bitcrab .

Might make sense to code such a mechanism into the blockchain. The committee are unpaid, Running such infrastructure could easily cost more than what we'd earn in fees.
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Offline Bangzi

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Re: suggestion for an offical market value management infrastructure
« Reply #9 on: March 08, 2018, 07:26:17 pm »
1. I would like to suggest the market fee for bitCNY/bitUSD is 0.1%. This rate is reasonable and some exchanges even charge 0.2%. Traders will not care the fee is 0.05% or 0.1%.

2. Part of the market fee generated can used to reward traders who borrow BitCNY/bitUSD with BTS. The purpose of this is to incentive them to buy more BTS, borrow more BitCNY/BitUSD and then share market fee from BitCNY/bitUSD. A good example is BridgeCoin, one of the gateway for Bitshares allow its investors to stake BCO and share profit generated. Another example is STEEM, STEEM holders can delegate their STEEM Power to upvote bot and share profits.
« Last Edit: March 08, 2018, 07:34:31 pm by Bangzi »
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Offline Victor118

Re: suggestion for an offical market value management infrastructure
« Reply #10 on: March 09, 2018, 12:13:26 am »
Very important topic! (Sorry for my english)
Authorizing the use of BTC as collateral could increase potential shorters, some exchanges like Aex could be interested in this feature and offer it to their users !?

Offline sgsbtstwo

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Re: suggestion for an offical market value management infrastructure
« Reply #11 on: March 09, 2018, 12:46:29 am »
agree  with  abit.

the  bitcny tx  fee  is too  small  to  make difference.

it  is  helpful but  not enough.

maybe we can add  btc or eth as  collateral
to generate stable coin.

Online bitcrab

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Re: suggestion for an offical market value management infrastructure
« Reply #12 on: March 09, 2018, 03:01:17 am »
Broadly speaking, I support the concept of a Committee controlled market bot. Owner set to Committee is required. I have some reservations about Active set to M/N accounts.

Consider the following implementation concepts (for each SmartCoin):
1. committee.smartcoin: Owner, Active set to Committee
2. Each Committee member runs (to-be developed) code locally that:
3. --Calculates which Committee Member is the 'Market Maker Proposer' (highest votes, next highest if Proposal delay exceeds threshold below)
4. --Observes SmarCoin market:
5. ----Market Maker Proposer (MMP) evaluates SmartCoin market conditions for Triggers (OP examples):
6. ----MMP broadcasts Proposed Transaction containing market actions based on Triggers
7. ----Observes Proposed Transactions:
8. ------Evaluates Triggers
9. --------If TRUE: Signs Proposed Transaction
10. The automated decentralized bot should execute the intended market actions using a dynamic set of Committee authorities.
 
The above rough concept is similar to a Block Producer (Witness) providing Price Feed data by observing and having authority to sign their findings. However, the decentralized bot above requires observations from multiple sources to form the authority to perform the market actions.

interesting concept, however, I believe it will cost some time for development and test before getting reliable bot, we cannot wait while seeing the BTS price go down, we can start from manual operation and migrate to bot while it is available.

actually there is already a committee controlled account committee-trade which has a 3/4 multisig active key, this account do a lot trading in the past and works well.

if we need some enhanced setting for security, I think one choice is to block the committee-cnymaker account when too much(>10M?) BTS accumulate in it by setting both owner key and active key to null-account. and then create a new account to trade continully.




Online bitcrab

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Re: suggestion for an offical market value management infrastructure
« Reply #13 on: March 09, 2018, 03:19:12 am »
Generally speaking, charging fees on bitCNY and etc is doable.

However, I don't think those fees would be enough to do effective "market value management".

Say, on average 10M CNY volume a day, and a fee rate at 0.05%, means 5K CNY of income per day. In order to have a working "market value management", I guess we need billions of CNY.

Another possible con:
* charging fees introduces friction, thus may reduce activity, thus may harm reputation of BitShares and price of BTS token.

By the way, why not increase basic network fees? The fees were reduced when BTS is 6CNY each, now BTS is around 1CNY each.

0.05% is really low, if most members from the community agree, I have no problem to set the fee rate to 0.1%.

we need billions of bitCNY supply, but I don't think we need so much just for market value management, after the operation begin, it will not only create purchasing power for BTS, but also change the expectation of traders, leverage effect here, I believe even 10k bitCNY/day will make sense.

I think we can do this first, if necessary, we can also modify the fee schedule later, or even seek more ways to optimize the liquidity.

I don't think such a fee rate friction will reduce the trading activity greatly, central exchanges like poloniex, Bitfinex have higher fee rate but still have big trading volume.


« Last Edit: March 09, 2018, 03:35:53 am by bitcrab »

Offline Brekyrself

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Re: suggestion for an offical market value management infrastructure
« Reply #14 on: March 09, 2018, 04:30:40 am »
This proposal would cover all current BitAssets or just CNY & USD?