Author Topic: suggestion on new OMO fund  (Read 167 times)

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Offline bitcrab

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suggestion on new OMO fund
« on: August 15, 2019, 11:11:59 am »
More than 1 year ago, I have suggest a open market operation worker proposal and get it voted up, a fund get BTS from worker proposals has been built and operated for months, unfortunately, in the great bear market the fund experienced big failure, big amount of BTS were sold in low prices comparing to bought price due to margin call, the OMO failed to play the role of market stabilizer.

In early this year, I also have suggested to restart the OMO fund but get little support, However, currently, I feel even more necessary to restart the OMO operation, I understand that the failure in previous OMO will make me difficult to get sufficient support on doing so, anyway, I'd like to start a serious discussion on the possibility of restarting the OMO fund and reach consensus on the key setting of the new OMO fund, it's OK for me to be excluded out of the operation team. the important thing is to make the new OMO work well and can really help the ecosystem to grow.

why we need the New OMO fund? what's the mission of the New OMO fund?

In China in the past months, we can feel that investors kept on leaving BTS, as BTS behaved bad in market.

China community has suggested to repurchase and burn BTS, this process is ongoing, this reflected how eager the community want BTS price to go up, however, I don't think it's a good idea to burn the bought BTS, why don't we manage a debt position with the bought BTS and supply more smartcoin to the market?

Why don't we show to public that it's possible to manage a debt position well, especially with continuous income?

Recently cn-vote took an action to vote refund400k, this action make several big workers voted down and lose the income, either this action is good or bad, I understand why there is always high voice in China community to cancel some workers, BTS ecosystem is so weak at this moment and the selling pressure from workers always play a big role in pressing down the BTS price, we need to find ways to make BTS ecosystem more robust. 

Comparing to burning BTS, another way to support the ecosystem is to put more BTS into debt position and release more smartcoins to the public.


what shall we learn from previous OMO fund?

I admit that as the key organizer of the previous OMO fund I have some unfeasible idea at that moment, I have hoped that OMO can provide a strong sustain to BTS price, but the market told that no one can counter with extreme market trend, even you have hundreds of millions of BTS.

another key factor is that, at that moment, smartcoin rules is not robust enough to resist shorting attack. that's why I tried my best to push GS protection and MSSR&MCR reduction after the disaster.

now smartcoin is more rubust than before to resist shorting attack, although the GS protection still depend on witnesses' work.

what a strategy is suitable?

the fund will manage debt positions and focus on BTS/smartcoin trading.

at this moment, the fund need to focus on BTS/bitUSD trading.

two price are defined to differenciate the current market status.

price A: BTS is underestimated if price<A
price B: BTS is overestimated   if price>B

1.the debt position margin call price should be always less than GS price, otherwise, the incoming fund can only be used to increase the CR.
2.margin call price should always < A.
3.while price < A, it's not allowed to sell BTS.
4.while price > B, it's not allowed to buy BTS.

to get A & B at this moment.

first suppose that 0.2175CNY is the long term bottom price.

for underestimated price I'd like to define like this:

0.2175*MCR = 0.348 CNY, or 0.05 USD

which means, if the price is underestimated, if you borrow with setting your margin call price < GS price, you have no worry for margin calling.

top price in the last 9 months is 0.5377CNY

overestimated price = 0.5377/1.05 = 0.512CNY, or 0.073USD.

A=0.05USD, B=0.073USD

A&B can be adjusted in long run.

how to organize the operation team? will the operation team be paid?

I suggest to operate with a 2/3 or 3/5 multisig account, the members should be the ones who are trusted by the committee.

every quarter the fund will be calculated net worth based on BTS. 50% of the profit will be paid to the operation team.


threads of previous OMO fund:
https://bitsharestalk.org/index.php?topic=26072.0
https://bitsharestalk.org/index.php?topic=26107.0
https://bitsharestalk.org/index.php?topic=27790.0

relevant threads:
https://bitsharestalk.org/index.php?topic=27835.0
https://bitsharestalk.org/index.php?topic=28706.0
will update soon...
« Last Edit: August 16, 2019, 09:06:19 am by bitcrab »
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Offline Customminer

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Re: suggestion on new OMO fund
« Reply #1 on: Today at 02:58:33 pm »
Quote
Another key factor is that, at that moment, smartcoin rules is not robust enough to resist shorting attack.

Only bitassets which are pegged to external price references cannot resist 'shorting attacks'. Smartcoins like the Norns (https://norns.hertz.network/) are completely resistant to BTS' external price fluctuations. An OMO for them would be far less risky than one for BTS:CNY/USD, imo.
« Last Edit: Today at 03:07:48 pm by Customminer »