Author Topic: Another suggestion to improve bitAsset performance  (Read 455 times)

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Offline clockwork

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Another suggestion to improve bitAsset performance
« on: November 26, 2018, 08:51:43 am »
I would like the input of core Devs on this (especially abit and peter).

How about we allow collateral bidding on under-collateralized ( between 1 and X CR where X is below MCR) positions BEFORE we hit GS?

For the sake of simplicity let's assume feed price is 10BTS/bitUSD.

Lowest collateralised position is 140 BTS collateral for 10 bitUSD (so 1.4)


I can now perform a collateral bid for 10 bitUSD debt , offering 75 BTS.

That position is now closed for the original shorter at feed price, he gets 40 BTS back and I have opened a position for 10 bitUSD with 175BTS collateral.

If we allow "partial" position bidding, many smaller traders can eat away at bad positions.

If we also add a small penalty (possibly dependant on CR/MSSR) we can incentivise traders to bid and shorters to keep their CR high. (so in the example above, original shorter only got 30 BTS back and I only have to bid 65 BTS to take over the position)

I havent had time to completely think it through so please let me know if there is something fundamentally wrong with it.

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Re: Another suggestion to improve bitAsset performance
« Reply #1 on: November 26, 2018, 01:20:10 pm »
As discussed on telegram - the same can be achieved by a trader going short and selling into a margin call.

Or at least that *would* be possible if the feed price wasn't manipulated in such a way that margin calls don't happen.
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Offline xeroc

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Re: Another suggestion to improve bitAsset performance
« Reply #2 on: November 26, 2018, 01:25:42 pm »
As discussed on telegram - the same can be achieved by a trader going short and selling into a margin call.

Or at least that *would* be possible if the feed price wasn't manipulated in such a way that margin calls don't happen.
That's actually a very good point!
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Offline xeroc

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Re: Another suggestion to improve bitAsset performance
« Reply #3 on: November 26, 2018, 02:19:57 pm »
As discussed on telegram - the same can be achieved by a trader going short and selling into a margin call.

Or at least that *would* be possible if the feed price wasn't manipulated in such a way that margin calls don't happen.
Actually, there is a difference.

Currently, anyone with BTS can put an order above margin calls to prevent sell from matching a margin call - it instead is matched against the order book.
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Offline abit

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Re: Another suggestion to improve bitAsset performance
« Reply #4 on: November 26, 2018, 05:18:49 pm »
As discussed on telegram - the same can be achieved by a trader going short and selling into a margin call.

Or at least that *would* be possible if the feed price wasn't manipulated in such a way that margin calls don't happen.
Actually, there is a difference.

Currently, anyone with BTS can put an order above margin calls to prevent sell from matching a margin call - it instead is matched against the order book.
Economically, for sellers of bitAssets, it doesn't make sense to eat margin calls when there are limit orders buying with better price. So essentially we need to find a way to always match margin calls before limit orders, which is against the purpose of MSSR parameter (at least need to find a balance).

On the other hand, OP essentially made it easier to create debt positions, which will encourage borrowing to an extent, which probably may (or may not) accumulate more risks. Currently, to eat a margin call, you need to put sufficient collateral in the first place, after eaten you can add the bought asset to collateral, which effectively increases final collateral ratio.

When debt position owners don't close their position even when the price is very low, they either have no money to pay the debt, or just don't care about the collateral anymore. From this perspective, applying more penalty makes little difference.
« Last Edit: November 27, 2018, 10:42:26 am by abit »
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Offline matle85

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Re: Another suggestion to improve bitAsset performance
« Reply #5 on: November 26, 2018, 08:20:32 pm »
How about letting everyone buy the least collateralised positions at GS price when their position goes below 1.3?

That would mean margins would be bought pretty aggressively when they drop to that level and would encourage margin holders to do everything they can to stay above that level.

Offline clockwork

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Re: Another suggestion to improve bitAsset performance
« Reply #6 on: November 26, 2018, 08:31:35 pm »
As discussed on telegram - the same can be achieved by a trader going short and selling into a margin call.

Or at least that *would* be possible if the feed price wasn't manipulated in such a way that margin calls don't happen.
Actually, there is a difference.

Currently, anyone with BTS can put an order above margin calls to prevent sell from matching a margin call - it instead is matched against the order book.
Economically, for sellers of bitAssets, it doesn't make sense to eat margin calls when there are limit orders buying with better price. So essentially we need to find a way to always match margin calls before limit orders, which is against the purpose of MSSR parameter (at least need to find a balance).


On the other hand, OP essentially made it easier to create debt positions, which will encourage borrowing to an extent, which probably may (or may not) accurate more risks. Currently, to eat a margin call, you need to put sufficient collateral in the first place, after eaten you can add the bought asset to collateral, which effectively increases final collateral ratio.

When debt position owners don't close their position even when the price is very low, they either have no money to pay the debt, or just don't care about the collateral anymore. From this perspective, applying more penalty makes little difference.

There are times (like the last few days) where certain traders would gladly pay a little bit extra to be able to buy FROM the margin orders in order to reduce GS price as long as they didn't have to buy all the orders up to the margin.

As far as penalty is concerned, it's more of an incentive for the people to place those bids rather than penalize the shorters.

As I mentioned in group chats, in a perfectly liquid market with perfectly matched DEX/Feed price, the scenario above makes little sense as it is exactly the same as the normal mechanism.

But in certain situations like the last few days combined with lesser liquidity etc. I believe it is an additional tool for us that could be used by some people to help avoid "dangerous" situations.

At worst, simply noone uses it but can be useful at times. Just another weapon in our arsenal against GS

Offline Crypto Kong

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Re: Another suggestion to improve bitAsset performance
« Reply #7 on: November 26, 2018, 09:02:52 pm »
I think this is an excellent idea, it may not be the whole solution but it would certainly help contribute to it. We are most probably not going to find one single solution to avoiding global settlements and clearing margin calls but rather find a number of things that all contribute to improving the situation. This would also not decrease the supply of smartcoins.

Another thought... Would it be possible to create a debt market, where people could put their bad debts up for sale?
« Last Edit: November 26, 2018, 09:07:27 pm by Crypto Kong »

Offline sschiessl

Re: Another suggestion to improve bitAsset performance
« Reply #8 on: November 26, 2018, 09:29:43 pm »
The auctioning of bad positions is essentially your debt market. I think this is still a different angle than buying it from the market. Add incentive by penalizing the bad position with mssr. I like the idea.

Like clockwork said, it creates a way to prevent GS, and we had none couple days ago. Also I can own a debt position without relying on market to sell the long.

Offline abit

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Re: Another suggestion to improve bitAsset performance
« Reply #9 on: November 27, 2018, 10:57:09 am »
I believe there are debt owners don't want their positions to be acquired forcefully if their margin calls are hanging far away from market trading price due to price disparity (premium) or adjusted feed. That said, this feature can't please everyone.

By the way, it's been discussed that when there are margin calls hanging, force settlements (as takers) should execute immediately against the margin calls (at MSSP) instead of waiting for 24 hours. Thinking about it more, when there are outstanding force settlements, if a margin call appears, it can match the force settlements immediately.

Need to take target_CR into consideration as well.
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Offline clockwork

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Re: Another suggestion to improve bitAsset performance
« Reply #10 on: November 27, 2018, 11:00:04 am »
I believe there are debt owners don't want their positions to be acquired forcefully if their margin calls are hanging far away from market trading price due to price disparity (premium) or adjusted feed. That said, this feature can't please everyone.

By the way, it's been discussed that when there are margin calls hanging, force settlements (as takers) should execute immediately against the margin calls (at MSSP) instead of waiting for 24 hours. Thinking about it more, when there are outstanding force settlements, if a margin call appears, it can match the force settlements immediately.

Need to take target_CR into consideration as well.

In that case they should keep their CR high and not get called

I like the removal of 24h delay too (which is very close to the same thing)

Offline bitcrab

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Re: Another suggestion to improve bitAsset performance
« Reply #11 on: November 28, 2018, 03:36:39 am »
margin call orders price is higher than market price -  this is the consequence of BSIP42.

we need to consider the next step when bitCNY revive or even bitUSD revive.

in my view, one choice is to replace BSIP42 with the dynamic MCR solution, and feed price will be the real market price.

if feed price be the market price, I believe the margin call orders will always be eaten, only in very seldom scenario the margin call orders will stay there without being eaten.

is it really necessary to introduce more methods to solve the issues that will disappear and increase more complexity?

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Offline clockwork

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Re: Another suggestion to improve bitAsset performance
« Reply #12 on: November 28, 2018, 08:28:42 am »
margin call orders price is higher than market price -  this is the consequence of BSIP42.

we need to consider the next step when bitCNY revive or even bitUSD revive.

in my view, one choice is to replace BSIP42 with the dynamic MCR solution, and feed price will be the real market price.

if feed price be the market price, I believe the margin call orders will always be eaten, only in very seldom scenario the margin call orders will stay there without being eaten.

is it really necessary to introduce more methods to solve the issues that will disappear and increase more complexity?

This is more a case of an emergency measure that will allow debt holders to lower GS price without:
 a) waiting 24h for force settlement
 b) having to buy all orders up to the margin (like you once did back in the day)

At worst it will not be used. Still think it should be an emergency option.

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Re: Another suggestion to improve bitAsset performance
« Reply #13 on: November 29, 2018, 01:16:07 pm »
I agree with Alex here.

Its weird for me that we still want to protect those shorters that clearly fail to maintain their margins and I alow like matle85's proposal of lettings others buy up call positions that are in red margin call (130% or less) and only pay global settlement price. The rest is penalty to the shorter.
Sure, shorters won't like that, but I bet more people dislike global settlement being risked because of some lazy.

edit: removing/reducing the settlement delay makes sense to me. The whole purpose of the delay was to prevent market manipuation and I don't see that happening in a liquid market like bitCNY.

This could be a good expireiment and now is a good time to give it a try.
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