First of all,
thank you, Jerry, for taking the time to put down in written.
This clears up a few things for me, in particular, the uncertainty
about why you see things the way you see them.
Secondly, I think we can fix this, let me address your points below.
Sad to see these, however, I think I can understand why these actions comes out, I was also an opponent to BSIP42 at the very beginning of discussion, but step by step I was persuaded by others, especially by abit, so here I’ll also try to summary some key points of the solution and hope that can help to persuade.
Provided that the Eastern community is in discussion about this
for much much longer than the Western community, please give me
the benefit of the doubt. In a sense, I am now in the very same
situation that you have been in, namely as an opponent, while you
are trying to convince the community (and me) about why the approach
make sense. The concept behind BSIP42 is just so different that
most of the Western community need some time to understand and
I feel it is the obligation of the BTS voters and proxies to work
out a way forward together, as a community.
That said, I would like to request that we keep communications up
and try to find common ground where we agree and work forward from there.
First, let’s define the vision of smartcoin, in my view, it is 1. enough accurate pegging and 2. enough liquidity. based on these smartcoin will seek wildly adoption comparing to USDT.
I think this is already where people may have a different vision.
For me (and others) the core value proposition of bitassets was:
* always fully collateralized
* settlement available to obtain collateral at a "fair" price.
With respect to settlement, the community has already moved from a
settlement at parity 1:1 with the introduction of the settlement
offset to incentivize shorters to increase liquidity.
My feeling is that those optimization criteria (tight pegging & liquidity
vs. backing and settlement) may not work out together, at least not in
the short term.
to improve pegging and also liquidity, now there are 2 solutions:
1. BSIP42
2. To dynamically adjust MCR
The core ideas of these 2 solutions is negative feedback - while one smartcoin is in positive premium, loose the smartcoin creation condition， while one smartcoin is in negative premium， tighten the smartcoin creation condition.
Here, I think we can all agree. The "premium" needs to be fed back into the
bitasset somehow. My understanding is that the first approach is chosen
solely because the second approach is currently not available due to
backend limitations (that abit is fortunately already working on - afaik).
With that said, I do think applying BSIP42 in the short term is quite o.k.,
but long term, I would like to see MCR adjusted instead so that we can
move back to the price feed describing the "fair" price - or at least something
that is very close to it. Who knows, maybe we find out that we need to do both
in the future.
this naturally lead to one question: in bear market both solutions lead to higher black swan risks, a higher feed price lead to higher called price and also higher global settlement price, while solution2 also may lead to a close to 1 collateral ratio.
Ultimately, I believe both proposals are effectively the same when it comes to
overall collateral ratio. BSIP42 just changes the price for settlement and margin
calls.
Also, I do not understand the fear people have with respect to "black swan" (global
settlement). From the perspective of bitCNY/bitUSD, a black swan (caused by a short dip
in BTS price) does not actually affect bitUSD pricing. However, what does change is the
excess collateral that is taken from the shorters. With that said, instead of
removing global settlement, why not try to find another solution for treating global
settlements so that short positions are not punished for a single position not being
collateralized, sufficiently? With that in mind, please think about what it could mean
to remove the short protection ratio if the collateral ratio goes below 150% (or so).
Of course, if we want to keep bitassets "fully" collateralized, then we cannot allow
OVERALL collateral ratio to go below 100%. We may find a way to still allow this for
individual call positions, as long as the OVERALL collateralization is provided. Also,
there needs to be a penalty for those not keeping collateral at over 100%, otherwise,
those that provide excess collateral need to pay the bill, which is unfair.
Let’s do a idea test: if we disable black swan setting, what will happen:
My conclusion is: the actual CR has very low chance to fall below 1, even it fall below 1, it is easy for it to jump above 1.
Easy to understand: if one can borrow with actual CR < 1, he have a infinite leverage and can borrow smart coin and buy BTS endlessly, this is not sustainable as the rapidly increased smartcoin quantity will rapidly lower the smart coin premium, with the negative feedback mechanism the actual CR will rapidly return above 1, either by lowering price feed in soluton1 or increasing MCR in solution2.
If you have a call position with CR <1, and the MCR (solution 2) is raised, then
that call position will be margin called and needs to buy from the market. Are
you sure that will help liquidity, because I believe that will eat liquidity in
the markets.
In practice, we can expect that when actual CR fall close to 1, the “borrow and buy” activity will happen in big quantity that can resist the actual CR to fall continually, there is a very very little chance for black swan to happen even we keep the black swan setting with solution1 or solution2.
I agree with you that when there is a premium and it is "cheap" to borrow new bitassets,
that this will lead to a reduced premium.
“harsh collateral rule lead to high risk” is one essential experience we lernt in the past several years, increasing force settlement offset, target CR both follow an essential logic: try to be more friendly to debt position owners, request least to borrowers. In BSIP42 the new idea is to let the market decide what an actual collateral ratio is appropriate, this not only improve peg, but also help to convert the demand of smart coin to purchasing power to BTS. The latter make big sense for ecosystem grow up.
We both agree on bitassets having a supply side problem and that
we should allow shorters to easier borrow bitassets. According to
my optimization criteria, I still believe we must not allow bitassets
to become undercollateralized (overall - we may find a way to allow
individual positions to go CR < 1)
After BSIP applied to bitUSD the premium fell drastically, we hope we can keep this trend continue until to a close to 0 premium.
Well, arguable, that is expected behavior because we are "forcing" the marketing
to trade according to parity, we do not provide incentive for the market to
move to parity on its own. This difference is what does sit well with the Western
community.
bitUSD belong to the people all around the world, in China there are also many big bitUSD players. it will benefit the whole ecosystem to keep better peg and better liquidity, I hope the whole community can take action to protect the good pegging status of bitUSD, if we remove BSIP42 at this moment, bitUSD will return to high premium and disappoint potential users again, don’t make the previous efforts wasted.
If anyone would like to try some other solutions like solution2, please leave BSIP42 there and develop the new BSIP, go through the voting->testing->implementation process, if there’s strong enough consensus, it can cover BSIP42.
I agree with this approach - in particular I do want to see how well solution 2
may (or may not) work.
it’s not easy for the whole community to make bitUSD to go on a right way, I now have no choice but try my best to protect BSIP42 from being removed from bitUSD, spring-team now only support the witnesses that apply BSIP42 to bitUSD, if later this week xeroc unvote the witnesses that support BSIP42 on bitUSD, proxy bitcrab will unvote the witnesses that do not support BSIP42 on bitUSD.
I also hope voters that prefer bitUSD to have a better peg/liquidity to take similar actions. save bitUSD, please!
I agree that life as a proxy is not as easy as people may believe.
@Jerry, how about the both of us come to a compromise in that we allow the witnesses
to decide how to go forward and whether or not they want to run BSIP42 on bitUSD, or
not. I think, as a proxy, we shouldn't threaten them with the removal of our votes
just because they support(or not support) a BSIP that actually gives the freedom of
choice to them (the witnesses). With that said, I will retract my statement of removing
votes from BSIP2-bitUSD witnesses and would like to keep rational and
constructive discussion like this one going.
Topic: Announcement on BSIP42 relevant actions (Read 24369 times)
