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suggestion on bitCNY rules update after BSIP42

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bitcrab:
A new BSIP is drafted to define the process for adjusting MSSR and/or MCR: https://github.com/bitshares/bsips/issues/140

bitcrab:
BSIP58: Global Settlement Protection Through Price Feeding is in review:
https://github.com/bitshares/bsips/issues/135

bitcrab:
suppose now:

feed price is the real market price.
feed price black swan protection implemented, feed price is ensured to be above GS price to protect GS from happening.

then while the BTS price is from high to low, bitCNY premium is from low to high, the whole market condition can be divided into 4 phases:

1.bitCNY discount > force settlement offset (current value 2%)
because of the force settlement, even bitCNY enter into phase it will soon get out.

2.bitCNY discount < force settlement offset & bitCNY premium < (MSSR-1) 
in this phase, the margin call orders will be eaten immediately after it is generated, risk will not be accumulated and bitCNY peg well, this is the ideal phase.

3.bitCNY premium > (MSSR-1)
in this phase the margin call orders will stay there without being eaten, GS price will not drop while the feed price drop, risk accumulate.

4.market price drop below the GS price
as black swan protection measure implemented, GS will not happen, feed price will stop to drop following the market price, if BTS price continue to drop, bitCNY will devalue.

in smartcoin system, debt and supply are the 2 sides of the same thing, increasing supply also means increasing debt, paying debt also means reducing supply.

so it make little sense to manage the risk just base on "ensuring the margin call orders being eaten", we need to consider more to optimize the system.

in the "dynamic MCR"way, system allow debt position be in lower collateral ratio without being margin called, to provide more supply. this way try to make the smartcoin in phase 2.

while "dynamic MCR" is not available until the necessary bug fix and hard fork six months later, reducing MSSR can also help to improve the bitCNY supply.

currently MSSR=1.05 and bitCNY is with a premium of about 10%, margin called orders stay there without being eaten, if MSSR is reduced to, say 1.02, we can expect bitCNY holders will have less will to eat the margin call orders, speculators will be encouraged to borrow more bitCNY.

it is not too bad that we have margin call orders there without being eaten, in another world, it is to reduce CR to increase bitCNY supply without changing MCR.

both measures lead to risk accumulation and increase the possibility of black swan...wait, isn't black swan totally avoided by the feed price protection?

Yes, there will be no black swan, there will be only "black swan protection phase", we should also try to avoided smartcoin to enter this phase, and try to enter with an as low as possible GS price to make the smartcoin easy to revive.

but here one key index is smartcoin premium, if the premium is too high, we should select to take the measures to trigger more supply with bearing the risk of entering black swan protection phase.

black swan protection phase is much better than black swan.

pc:

--- Quote from: bitcrab on December 29, 2018, 04:11:03 pm ---the committee has changed the force settlement offset of bitCNY from 5% to 2%, this will ensure that the possible discount of bitCNY will be less than 2%.

BSIP41 has been implemented, MSSR of bitCNY has been changed from 1.1 to 1.05.

--- End quote ---

Excellent, thanks!

yamtt:
Mssr down to 100 is ideal

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