Author Topic: Bitshares: Margin Trading and Swap contracts on the DEX discussion  (Read 631 times)

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Offline George_Bitspark

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I just wrote some initial ideas on how we can add Margin Trading via P2P swap contracts and an active lending market to the DEX which in my is the biggest single change we can do to add multiples more liquidity, volume and price pressure on BTS. Feedback welcome

Check it here
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Offline abit

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Re: Bitshares: Margin Trading and Swap contracts on the DEX discussion
« Reply #1 on: October 14, 2018, 06:24:50 pm »
I just wrote some initial ideas on how we can add Margin Trading via P2P swap contracts and an active lending market to the DEX which in my is the biggest single change we can do to add multiples more liquidity, volume and price pressure on BTS. Feedback welcome

Check it here
Good idea, but lack of specifications.

If you really want this to be implemented in BitShares, please create a BSIP document via pull request here: https://github.com/bitshares/bsips/pulls

By the way, https://github.com/bitshares/bsips/issues/6 is related.
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Offline George_Bitspark

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Re: Bitshares: Margin Trading and Swap contracts on the DEX discussion
« Reply #2 on: October 14, 2018, 06:35:59 pm »
I just wrote some initial ideas on how we can add Margin Trading via P2P swap contracts and an active lending market to the DEX which in my is the biggest single change we can do to add multiples more liquidity, volume and price pressure on BTS. Feedback welcome

Check it here
Good idea, but lack of specifications.

If you really want this to be implemented in BitShares, please create a BSIP document via pull request here: https://github.com/bitshares/bsips/pulls

By the way, https://github.com/bitshares/bsips/issues/6 is related.

Thanks, at this stage its not meant to be a BSIP- first we need to facilitate community feedback on what would be required, then can look at creating a formal BSIP as it indeed requires more specification.
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Offline Crypto Kong

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Re: Bitshares: Margin Trading and Swap contracts on the DEX discussion
« Reply #3 on: October 14, 2018, 08:25:21 pm »
Fantastic idea, if it can be implemented it should be. This would drive up demand for BTS and smart coins. 👍

Offline bitcrab

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Re: Bitshares: Margin Trading and Swap contracts on the DEX discussion
« Reply #4 on: October 15, 2018, 03:16:33 am »
great idea.

my concern:

what kind of assets can be used as collateral? only BTS or some UIA such as OPEN.BTC, GDEX.EOS also available? anyway in the  cryptocurrency market BTC,ETH, EOS, etc occupy the most share.

margin trading need good liquidity of the collateral, now even BTS/bitUSD is not in satisfactory depth. so I am also considering other forms of bond market:

A borrow 100$ of bitUSD from B, with X interests and Y terms and put 110$ worth of GDEX.EOS to collateral, A can get the collateral back by paying the debt and interests, when the expire time arrive and A does not pay back the debt and interest, the collateral will be sent to B.

this kind of borrowing is widely used in China OTC market, it do not rely on the collateral liquidity in an exchange.

 



« Last Edit: October 15, 2018, 05:09:08 am by bitcrab »

Offline Digital Lucifer

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Re: Bitshares: Margin Trading and Swap contracts on the DEX discussion
« Reply #5 on: October 15, 2018, 04:52:52 am »
Would that require additional switch on UIA/Token management/creation ? e.g. "Allow borrow", "Set interest %", etc...

On the legal side, it would allow users/gateways to actually provide service of "Money Lending", which is without proper licencing not allowed in most countries of the world.
- Who would be taking responsibility ? Blockchain ? *(if not ignore next question)* If does, how blockchain earns from UIA as part of the process ?

Or it would be done on core level, and instead of UIA we will re-issue BTC, ETH, and others as new form of half smart-assets half UIA assets ?



Apologies if my questions not have much sense, I'm trying to clarify it for myself.

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Offline George_Bitspark

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Re: Bitshares: Margin Trading and Swap contracts on the DEX discussion
« Reply #6 on: October 15, 2018, 06:53:33 am »
great idea.

my concern:

what kind of assets can be used as collateral? only BTS or some UIA such as OPEN.BTC, GDEX.EOS also available? anyway in the  cryptocurrency market BTC,ETH, EOS, etc occupy the most share.

margin trading need good liquidity of the collateral, now even BTS/bitUSD is not in satisfactory depth. so I am also considering other forms of bond market:

A borrow 100$ of bitUSD from B, with X interests and Y terms and put 110$ worth of GDEX.EOS to collateral, A can get the collateral back by paying the debt and interests, when the expire time arrive and A does not pay back the debt and interest, the collateral will be sent to B.

this kind of borrowing is widely used in China OTC market, it do not rely on the collateral liquidity in an exchange.

Any asset could be lended or borrowed from any other asset on the DEX and this would determine what collateral to make (e.g. if its BTS/bitUSD then only these two currencies can be used as collateral, but if its bitUSD/GDEX.BTC then only those currencies). Most of the time exchanges like Bitfinex and Poloniex set the markets they want available for lending, some have liquidity some do not but I think its best if we keep it open for the market to decide what assets should have lending orderbooks and which ones not. If no liquidity for the desired leverage then margin traders could only borrow the maximum amount of liquidity available on the Ask orderbook market.

The example above you gave is very similar to how this proposed system works yep.
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Offline George_Bitspark

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Re: Bitshares: Margin Trading and Swap contracts on the DEX discussion
« Reply #7 on: October 15, 2018, 06:57:25 am »
Would that require additional switch on UIA/Token management/creation ? e.g. "Allow borrow", "Set interest %", etc...

On the legal side, it would allow users/gateways to actually provide service of "Money Lending", which is without proper licencing not allowed in most countries of the world.
- Who would be taking responsibility ? Blockchain ? *(if not ignore next question)* If does, how blockchain earns from UIA as part of the process ?

Or it would be done on core level, and instead of UIA we will re-issue BTC, ETH, and others as new form of half smart-assets half UIA assets ?



Apologies if my questions not have much sense, I'm trying to clarify it for myself.

Chee®s

1. In terms of UIA creation and adding a 'can it be borrowed' switch yeh thats a good idea I hadnt thought of. Ideally any on the DEX could be used in this P2P lending market unless otherwise noted.

2. It does not make gateways liable for lending as this is a P2P swap market, the gateway is not involved in any part of this process its two users interacting on the DEX. Also Bitshares assets are not 'money' and would not fall under any clauses anyway.

3. In terms of who takes responsibility, the blockchain ensures trustlessness on execution of everything. Any interests go to the lender directly. It should work with any assets on the Bitshares DEX. If you want to lend or margin trade ZEPH for BTS then as long as there is a lending orderbook for that it can be done.
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Offline abit

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Re: Bitshares: Margin Trading and Swap contracts on the DEX discussion
« Reply #8 on: October 15, 2018, 10:25:26 am »
Before a specification is out, I'm not going to spend much time on this discussion. New ideas come out every day, but few are practicable.

The most difficult part is how to guarantee the lenders can always get back their assets before a black swan event, with good enough performance. All external markets have external tools E.G. insurance to try to achieve this. BM has proposed a similar idea long before (read: bond market) but abandoned IMHO due to performance issues and other limitations.
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Offline bitcrab

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Re: Bitshares: Margin Trading and Swap contracts on the DEX discussion
« Reply #9 on: October 15, 2018, 12:42:17 pm »
The most difficult part is how to guarantee the lenders can always get back their assets before a black swan event, with good enough performance. All external markets have external tools E.G. insurance to try to achieve this. BM has proposed a similar idea long before (read: bond market) but abandoned IMHO due to performance issues and other limitations.

why need to guarantee this?

Offline Thom

Re: Bitshares: Margin Trading and Swap contracts on the DEX discussion
« Reply #10 on: October 15, 2018, 03:29:24 pm »
The most difficult part is how to guarantee the lenders can always get back their assets before a black swan event, with good enough performance. All external markets have external tools E.G. insurance to try to achieve this. BM has proposed a similar idea long before (read: bond market) but abandoned IMHO due to performance issues and other limitations.

why need to guarantee this?

Perhaps it's not required, but surely you see how having it provides an added measure of safety to the lender, which should stimulate even more lending.
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Offline matle85

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Re: Bitshares: Margin Trading and Swap contracts on the DEX discussion
« Reply #11 on: October 25, 2018, 06:18:53 am »
This sounds like a great idea that could bring a lot of traders to the DEX and adds a lot of value to it as a trading platform, I like the idea of being to lock up any asset and think it will improve liquidity.

If I think BTS is cheap at the minute but don't necessarily want to sell my remaining BTC to buy more, locking it up to borrow might be a sensible middle route.

Similarly guaranteed interest returns should encourage more people to be making bitUSD/bitCNY, especially if there is demand and interest rates are attractive. I think it would bring more fiat in as well - bank rates are terrible at the minute, bitUSD with interest paid via a lending facility has to be a better option.

My only concern would be if we get tangled in something that complicates the DEX's status as they try to say we are acting as a money lender and are therefore subject to X, y and z laws.

Offline Thom

Re: Bitshares: Margin Trading and Swap contracts on the DEX discussion
« Reply #12 on: October 29, 2018, 05:52:36 pm »
My only concern would be if we get tangled in something that complicates the DEX's status as they try to say we are acting as a money lender and are therefore subject to X, y and z laws.

I am similarly concerned. "They" will use any excuse whether legit or not to shut crypto down. This doesn't fail the Howie test tho, as it is peer to peer lending, proceeds of that are for individuals, not a collective.
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Re: Bitshares: Margin Trading and Swap contracts on the DEX discussion
« Reply #13 on: October 30, 2018, 02:01:39 pm »
RE: P2P lending, if you were to create a smartcoin backed by [BTS|bitAsset] with an internal [BTS|bitasset] price reference then apply a sine wave oscillation to the price feed, then both the shorter and holder would have confidence in the limited volatility range associated with the debt and global settlement risk would be disassociated from external price movements, allowing both parties to focus solely on the terms of oscillation.
« Last Edit: October 30, 2018, 02:11:43 pm by Customminer »
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Re: Bitshares: Margin Trading and Swap contracts on the DEX discussion
« Reply #14 on: November 01, 2018, 02:26:58 pm »
I just wrote some initial ideas on how we can add Margin Trading via P2P swap contracts and an active lending market to the DEX which in my is the biggest single change we can do to add multiples more liquidity, volume and price pressure on BTS. Feedback welcome

Check it here
Good idea, but lack of specifications.

If you really want this to be implemented in BitShares, please create a BSIP document via pull request here: https://github.com/bitshares/bsips/pulls

By the way, https://github.com/bitshares/bsips/issues/6 is related.

Thanks, at this stage its not meant to be a BSIP- first we need to facilitate community feedback on what would be required, then can look at creating a formal BSIP as it indeed requires more specification.

Definitely a good idea, George! Are you going to BSIP it?
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Offline jindiaoke

Re: Bitshares: Margin Trading and Swap contracts on the DEX discussion
« Reply #15 on: December 05, 2018, 06:52:56 am »
I just wrote some initial ideas on how we can add Margin Trading via P2P swap contracts and an active lending market to the DEX which in my is the biggest single change we can do to add multiples more liquidity, volume and price pressure on BTS. Feedback welcome

Check it here
This can attract a lot of new users. Can be developed as a key direction. My advice is to borrow money from btc.

Offline George_Bitspark

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Re: Bitshares: Margin Trading and Swap contracts on the DEX discussion
« Reply #16 on: December 05, 2018, 09:36:02 am »
Have discussed with team at OpenLedger to see if we can bring this to fruition in a BSIP.
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