Author Topic: suggestion for an committee controlled open market operation fund  (Read 5185 times)

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Online bitcrab

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A worker proposal will be created soon with below setting:
Code: [Select]
            "owner": "1.2.0",
            "work_begin_date": "2018-04-01T00:00:00",
            "work_end_date": "2035-12-31T00:00:00",
            "daily_pay": "20000000000",
            "name": "committee controlled open market operation fund",
            "url": "https://bitsharestalk.org/index.php?topic=26107.0",
            "initializer": [
              1,{
                "pay_vesting_period_days": 0
              }

we now have 2 committee controlled open market operation accounts: committee-cnytrader for CNY relevant operation and committee-trade for USD relevant operation.

the worker proposal mentioned above has a daily pay of 200k BTS, which will be transferred to the 2 operation accounts for subsequent use, with the collected bitCNY and bitUSD market fees.

below are some suggested principles for the open market operation, surely the principle will be refined in the future. 

1.the purpose of the fund is to adjust the supply of smartcoins, so operators need to decide depend on the market condition, borrow smartcoins and buy BTS while the smartoin is in shortage, sell BTS and reduce debt position while the smartcoin is over supplied.

2. operators need to take good care while operate with debt positions, as an initial rough principle, when BTS price is under 2CNY:
while collateral ratio > 4, borrowing more smartcoin is allowed.
while 4>collateral ratio>3, smartcoin income can be used to buy more BTS, but borrowing more smartcoin is not allowed.
while 3>collateral ratio, smartcoin income need to be used to reduce debt position, buying more BTS is not allowed.

3.when more than 10M BTS are accumulated in one operator account, the account need to be locked by setting both active key and owner key to committee-account, a new operation account will be created for subsequent operation.

hope the worker proposal be approved then we can get great power to cultivate the smartcoin ecosystem and also the whole BTS ecosystem.

This is an upgraded version of the last post "suggestion for an official market value management infrastructure"
https://bitsharestalk.org/index.php?topic=26072.0

After reviewing the last post, I now feel it's better to call them "open market operation" than "market value management", here the operator is like central bank, it trade in the market to adjust the supply of smartcoins and BTS.

Now smartcoins like bitCNY have big demand, but are always in serious shortage, this limit the adoption of smartcoins and also the development of trading in DEX.

So currently the main policy of the open market operation is to buy more BTS, and create more smartcoins, mainly bitCNY  by borrowing.

As the income from market fee is limited, normally 10k-30k, so I suggest to add fund from reserve pool with a worker proposal.

Now Bitshares has daily budget of about 310k, among them about 240k are go into refund400k work proposal and return to the reserve pool.

I suggest to create a new worker proposal “committee controlled  open market operation fund” to replace refund400k, each day about 240k BTS will be collected, with a higher than 4 collateral ratio, more than 50k bitCNY can be borrowed and be used to buy BTS.

We need to make good use of the 1 billion BTS in reserve pool,

I understand that borrowing smartcoin based on collateralizing public BTS bring risk to the system, however the risk is tolerable.

The operation account is a multisig account of committee members under public supervising, not possible to set too lower collateral ratio. When BTS price is under 2CNY, it will be safe enough to set the collateral ratio higher than 4, right?

Committee-account has continuous smart coin income to reduce the risk.

Even the worst thing happen, the result is that the collateralized BTS be sold at a price 10% lower than the market price, no further hurt to the system.

On the other hand, if we just leave the 1 billion BTS sleep in the reserve pool, surely we avoid all the risks, but at the same time we give up the chance to supply more smart coins, create more purchasing power and income and make BTS great.

I believe  a community with courage and vision will select to go ahead with tolerable risks.

I'll collect feedback and build details on this suggestion
« Last Edit: March 20, 2018, 09:12:33 am by bitcrab »

Offline sschiessl

Re: suggestion for an committee controlled open market operation fund
« Reply #1 on: March 13, 2018, 03:46:18 pm »
I was wondering if you saw my suggestion in the old post, and what you think about it?

Offline xeroc

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Re: suggestion for an committee controlled open market operation fund
« Reply #2 on: March 13, 2018, 05:23:42 pm »
I'll take the current market conditions into considerations when next talking about the BBF worker proposal. So far, it used to buy bitUSD off the market and did not go short on bitUSD yet.
The reasons was mainly due to liabilities against the actual workers that have a right for their pay and going short adds a risk .. as well as for accounting which needs to be transparent and easy to follow ...
I'll re-iterate with the BBF over the previous decision to stick with "buying" ..
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Online Bangzi

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Re: suggestion for an committee controlled open market operation fund
« Reply #3 on: March 13, 2018, 05:45:33 pm »
Please Vote for My Witness: Bangzi
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Offline oldman

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Re: suggestion for an committee controlled open market operation fund
« Reply #4 on: March 13, 2018, 07:22:41 pm »
I agree with and support bitcrab's proposal, including replacing refund400k and using the 240k BTS to create 50k bitCNY on a daily basis. Much better use of the BTS than returning to the reserve pool and moreover will let the community monitor progress and impact of the open market operations with a relatively small but gradually increasing number of BTS. Please implement as soon as possible, this is exactly what Bitshares needs!

Offline Thul3

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Re: suggestion for an committee controlled open market operation fund
« Reply #5 on: March 13, 2018, 07:28:53 pm »
Quote
Now smartcoins like bitCNY have big demand, but are always in serious shortage, this limit the adoption of smartcoins and also the development of trading in DEX.

BitUSD has also a shortage else the prices of other coins on DEX wouldn't be 10% under market value against bitUSD when market is going downwards.
The max. loss of 10% is also not right because if the amount of collateral is big there is not enough liquidity to buy such a big amount instantly which could lead to bigger loss if prices keep moving down.

I'm for more liquidty in bitUSD and bitCNY which is badly needed however it needs an update in collateral system first to be able to handle big collateral amounts in a proper way
« Last Edit: March 13, 2018, 07:30:40 pm by Thul3 »

Offline Brekyrself

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Re: suggestion for an committee controlled open market operation fund
« Reply #6 on: March 13, 2018, 07:56:30 pm »
Sounds like a fair enough experiment, however I feel these are to jump start the market and should not be permanent.

-Is there a set liquidity goal where the worker will not be required any longer?
-Plan of action to maintain that 4x collateral ratio in big price down trends? Committee will need to act quick, perhaps daily adjustments required?
-Phase out plan to settle all the outstanding debt if liquidity reaches x goal?

Offline ebit

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Re: suggestion for an committee controlled open market operation fund
« Reply #7 on: March 13, 2018, 11:25:00 pm »
support.
why?
binance chain  will  fuck  bitshares chain.

in  my opinion  , community could create ioucny iouusd with
 backed  1 billion bts.
« Last Edit: March 14, 2018, 12:10:17 am by ebit »

Online bitcrab

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Re: suggestion for an committee controlled open market operation fund
« Reply #8 on: March 14, 2018, 03:01:13 am »
Sounds like a fair enough experiment, however I feel these are to jump start the market and should not be permanent.

-Is there a set liquidity goal where the worker will not be required any longer?
-Plan of action to maintain that 4x collateral ratio in big price down trends? Committee will need to act quick, perhaps daily adjustments required?
-Phase out plan to settle all the outstanding debt if liquidity reaches x goal?

in my opinion it is not defined permanent, but possibly it will last long time.
a metric to decide how to operate is whether bitCNY/bitUSD is over supplied or is in shortage, and the fund need to have enough BTS/smartcoin to give apparent impact to the market while necessary.
I can not tell "how much BTS/smartcoin" does this fund need?" but I think the answer will be clear half or one year later.
I prefer to not let the committee-account to operate each trade/borrowing, let smaller team - committee-cnytrader and committee-trade to do the trade and borrowing activity, committee-account can be responsible for the distribution of the BTS get from the worker proposal.
if sometime in the future a clear trend begin that smartcoin continuely behaves as over supplied, then the the fund will begin to sell BTS and reduce debt position. however, I don't think we should set "close debt position" as a final goal.


« Last Edit: March 14, 2018, 03:03:10 am by bitcrab »

Online bitcrab

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Re: suggestion for an committee controlled open market operation fund
« Reply #9 on: March 14, 2018, 03:25:53 am »
I'll take the current market conditions into considerations when next talking about the BBF worker proposal. So far, it used to buy bitUSD off the market and did not go short on bitUSD yet.
The reasons was mainly due to liabilities against the actual workers that have a right for their pay and going short adds a risk .. as well as for accounting which needs to be transparent and easy to follow ...
I'll re-iterate with the BBF over the previous decision to stick with "buying" ..

something depend on the purpose and operate logic of the worker proposals, the "committee controlled open market operation fund" WP is to give impact to smartcoin supply like a central bank, so definitely it can add more smartcoin supply to the market only by borrowing, buying smartcoin in the market will not help to increase the smartcoin supply.

« Last Edit: March 14, 2018, 05:03:40 am by bitcrab »

Online ripplexiaoshan

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Re: suggestion for an committee controlled open market operation fund
« Reply #10 on: March 14, 2018, 03:46:33 am »
Over 1 billion BTS are sleeping, it is really a big waste, we need to make good use of it. 

Generally I agree with bitcrab's proposal, especially in such market situation.

However, I would also suggest that all actions need to be fully discussed and conducted publicly, just like what the Federal Reserve does.

Also, the fund in the inflation pool is different from the fees pool, it is better to be used to create the buy wall to avoid further price drop, instead of simply buying up the price. When the price of BTS goes up, we may even sell to close the debt position.  Anyway, 4 times of collateral is not 100% percent safe in extreme market situation. 
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Offline gihar

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Re: suggestion for an committee controlled open market operation fund
« Reply #11 on: March 14, 2018, 07:47:44 am »
Frankly speaking this suggestion should be formulated shorter like this: "Let's pump bts using reserve pool funds!"
IMHO, the pumping is definitely NOT that thing that Bitshares need "to make Bitshares great again". If somebode wants to pump let him do it with his own funds and not with the reserve pool. This  suggestion smels like market manipulation in it's worse kind.

Online bitcrab

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Re: suggestion for an committee controlled open market operation fund
« Reply #12 on: March 14, 2018, 08:11:54 am »
Frankly speaking this suggestion should be formulated shorter like this: "Let's pump bts using reserve pool funds!"
IMHO, the pumping is definitely NOT that thing that Bitshares need "to make Bitshares great again". If somebode wants to pump let him do it with his own funds and not with the reserve pool. This  suggestion smels like market manipulation in it's worse kind.

I don't think this suggestion is "pumping BTS", I think I have expressed clearly that the point is to "adjust smartcoin and BTS supply according to market condition".

I think BTS will be great if the problem of smartcoin shortage can be resolved with the help of these open market operations.

I think and also hope this suggestion can help BTS price to go up, but this is not the logic base to do open market operations.

Offline gihar

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Re: suggestion for an committee controlled open market operation fund
« Reply #13 on: March 14, 2018, 10:45:25 am »
I don't think this suggestion is "pumping BTS", I think I have expressed clearly that the point is to "adjust smartcoin and BTS supply according to market condition".

You are going to "adjust smartcoin and BTS supply according to market condition". This means that you will try to make actions like Central Banks in most of countries do (they make money emission). And I am sure this actions will be directed to move BTS price up. That's why I say it's "pump". You are going to implement something like "monetary policy" of "Central Bank of Bitshares " and going to decide when buy additional quantity of BTS and when sell it.

But:

1. When Central Banks realize their monetary policy they have calculations and clear vision about the final result. There is no any calculation in your suggestion. You just say "let's try and then we'll see result".

2. Constant changes in the market condition is the nature of every markets, especially in cryptomarkets. This makes it extremely difficult (if at all possible) for any regulations to archive their goals in the longterm.

Offline tiancaomei088

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Re: suggestion for an committee controlled open market operation fund
« Reply #14 on: March 14, 2018, 12:19:27 pm »
I believe this is a good idea. But it will take a lot of risks.

There are some detail suggestion,
How about we define the 'over supply' and 'under supply' by comparing the current price with feed price?
  if the currenct price is less than feed price, such as 5%, the fund starts borrowing and buyingn untile 4x.
  if more than feed price such as 6%, the fund starts selling bts and refund.