Author Topic: suggest to disable forcesettlement for bitCNY  (Read 15795 times)

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Offline pc

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From all the previous discussion around BSIP-42, my understanding was that this situation indicates an oversupply of bitCNY.

Shorters can now buy bitCNY on the market and reduce their own debt positions, which should reduce supply, drive the market price down and improve their collateral ratio, thereby reducing the likelyhood that they will be settled.

No need to change the rules yet again IMO.
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Offline binggo

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voted, i agree to disable force settlement temporarily to protect the BTS holder

All is temporarily,so

Offline crazybit

voted, i agree to disable force settlement temporarily to protect the BTS holder

Offline bitcrab

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I simply haven't understood yet how the exploitation works.

Just to clarify for me, example from your picture:
Code: [Select]
latest price (LP) = 0.675035
settlement price (SP) = 0.670566
force settlement offset multiplier (FSOM) = 0.95
Now assume I hold 100 bitCNY
  • I can sell on free market and get 100 * 1 / LP=148.14 BTS
  • I can force settle, now assume it would happen instantly then I get 100 * 1 / SP=149.12*FSOM=141.67 BTS
As the holder of the bitCNY this only gives me profit if LP * FSOM > SP. But, as long as LP > SP, the holder of the margin position would have a loss compared to latest price, i.e. someone could pay to hurt you (unlikely to happen though). This does not take the force settle delay into account.

I think I understand the situation now, and I would agree this should be adressed. But not by disabling force settlement, but by ensuring that LP * FSOM <= SP is maintained.

Just in general: The flag "DISABLE FORCE SETTLING" should be able to do exactly that, maybe a core dev could confirm. Not that I advertise this solution.

you misunderstood the price.

in GUI settlement price = feed price/FSOM

so when you settle with 100 bitCNY, you will get 100/SP = 149.13 BTS

this force the debt position owners to sell the BTS under market price, it's exploitation,right?

each time feed price fall below market price*FSOM, this exploitation may happen,

when I wrote this things are even worse: latest price = 0.69, feed price = 0.643683, settlement price = 0.67587, 2.09% lower than market price.
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Offline sschiessl

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Chance for speculator to exploit debt position owners is implicit arbitrage and will be healthy for the market. How can it be exploited? The Force Settlement Offset is 5%, which should make it hard enough. Please elaborate

Force settlement is a feature that must remain available IMO, it is a worst-case scenario measure. It will certainly never be used in a liquid market, the UI prominently shows the user if the market is the better choice.
But if there is any incident that the market crashes, the force settlement option must be available and I would not want to wait for anyone to activate it then.

I own a debt position with CR=3, now you force me to sell the collateral to you with a under market price, this is not exploiting, are you joking?

I simply haven't understood yet how the exploitation works.

Just to clarify for me, example from your picture:
Code: [Select]
latest price (LP) = 0.675035
settlement price (SP) = 0.670566
force settlement offset multiplier (FSOM) = 0.95
Now assume I hold 100 bitCNY
  • I can sell on free market and get 100 * 1 / LP=148.14 BTS
  • I can force settle, now assume it would happen instantly then I get 100 * 1 / SP=149.12*FSOM=141.67 BTS
As the holder of the bitCNY this only gives me profit if LP * FSOM > SP. But, as long as LP > SP, the holder of the margin position would have a loss compared to latest price, i.e. someone could pay to hurt you (unlikely to happen though). This does not take the force settle delay into account.

I think I understand the situation now, and I would agree this should be adressed. But not by disabling force settlement, but by ensuring that LP * FSOM <= SP is maintained.

Just in general: The flag "DISABLE FORCE SETTLING" should be able to do exactly that, maybe a core dev could confirm. Not that I advertise this solution.
« Last Edit: November 07, 2018, 08:23:17 am by sschiessl »

Offline johnson

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if it is impossible to disable force settlement, I think there's only one choice to fix the bug: request that the feed price not lower than market price*96% for CNY, not lower than market price for USD.
You always know, disable settlement is impossible. No one will support it.
So, the best way is increaseing the feed price, and feed price should higher than market price * 96%.

Offline johnson

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if it is impossible to disable force settlement, I think there's only one choice to fix the bug: request that the feed price not lower than market price*96% for CNY, not lower than market price for USD.

So you are now breaking the peg for bitcny which was so important to you at all cost?

I know this is not a perfect solution to solve the current issue and may break the peg, is there any better way? how about to increase the force settlement offset?



increase the feed price

Offline bitcrab

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if it is impossible to disable force settlement, I think there's only one choice to fix the bug: request that the feed price not lower than market price*96% for CNY, not lower than market price for USD.

So you are now breaking the peg for bitcny which was so important to you at all cost?

I know this is not a perfect solution to solve the current issue and may break the peg, is there any better way? how about to increase the force settlement offset?
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Offline Thul3

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if it is impossible to disable force settlement, I think there's only one choice to fix the bug: request that the feed price not lower than market price*96% for CNY, not lower than market price for USD.

So you are now breaking the peg for bitcny which was so important to you at all cost?
« Last Edit: November 06, 2018, 03:27:01 pm by Thul3 »

Offline binggo

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Quote
We have the choice, If use the highest price as the last feed price, we can keep the forcesettlement and the dynamically feed price.
Quote
Couldn't an external actor target this sole 'highest price' to force an inflation of the feed price to attack collateral holders?

the highest price is not the"highest", it come from the no bsip 42  feed price and bsip 42 feed price,  most of the time the feed price will be no the bsip 42 feed price, when the price of bts fall fast  which caused by the margin call, the feed  price may be bsip 42 feed price.
« Last Edit: November 06, 2018, 02:46:44 pm by binggo »

Offline bitcrab

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if it is impossible to disable force settlement, I think there's only one choice to fix the bug: request that the feed price not lower than market price*96% for CNY, not lower than market price for USD.
« Last Edit: November 06, 2018, 02:44:57 pm by bitcrab »
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Offline R

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You are turning a free market into a centrally planned economy

what you called free market is a forrest where beasts can kill and eat people.

Then don't wander off into the forest if you're not prepared to face beasts? You could always stick to trading UIA or perhaps experiment with non-external-referenced bitassets if you're wary of the risk associated with shorting bitassets.

Quote
We have the choice, If use the highest price as the last feed price, we can keep the forcesettlement and the dynamically feed price.

Couldn't an external actor target this sole 'highest price' to force an inflation of the feed price to attack collateral holders?

Offline xeroc

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we can't disable force settlement without new code either.
The only short-term solution that I can think of is to get back to non-BSIP42 and tune the short squeeze protection ratio. maybe that helps
mitigate the situation until the MCR fix is implemented.

Offline binggo

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I own a debt position with CR=3, now you force me to sell the collateral to you with a under market price, this is not exploiting, are you joking?
Well, that is a consequence of BSIP42 and not of settlements per se.
Multiple solutions to that have been proposed already among which are:
- let the price feed reflect the actual pricing again and do negative feedback through MCR
- introduce a distinct price for settlements (though I believe that would allow exploting BSIP42)

The proposal to remove one of the strongest reasons for bitassets to have a "floor"-price isn't easy for me to understand.

the force settlement is already a problem for long time, that's why the bitCNY offset is set to 5%. BSIP42 just make the problem apparent.

maybe the MCR solution can make things better, but I think it will cost at least several months for it to come, in this period we just let the debt position owner be put into the risk of being exploited?


We have the choice, If use the highest price as the last feed price, we can keep the forcesettlement and the dynamically feed price.

just think about it!

Offline bitcrab

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I own a debt position with CR=3, now you force me to sell the collateral to you with a under market price, this is not exploiting, are you joking?
Well, that is a consequence of BSIP42 and not of settlements per se.
Multiple solutions to that have been proposed already among which are:
- let the price feed reflect the actual pricing again and do negative feedback through MCR
- introduce a distinct price for settlements (though I believe that would allow exploting BSIP42)

The proposal to remove one of the strongest reasons for bitassets to have a "floor"-price isn't easy for me to understand.

the force settlement is already a problem for long time, that's why the bitCNY offset is set to 5%. BSIP42 just make the problem apparent.

maybe the MCR solution can make things better, but I think it will cost at least several months for it to come, in this period we just let the debt position owner be put into the risk of being exploited?
Email:bitcrab@qq.com