Author Topic: suggestion on bitCNY rules update after BSIP42  (Read 420 times)

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Offline bitcrab

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suggestion on bitCNY rules update after BSIP42
« on: December 06, 2018, 08:35:16 am »
we learnt a lot after BSIP42 implementation, now we need to consider more on how to update bitCNY, actually there are a lot discussion on this topic in the community, especially in Chinese community, here I'd like to propose some new solution summarizing all the opinions.

1. change the way to handle black swan, keep the borrowing operation alive.

global settlement is a too direct  and too hard way to handle black swan, it stop the smartcoin borrowing business, while it happen it always give big negative impact on smartcoin ecosystem, we can see that bitUSD devalued a lot after the global settlement, the community require a more soft  way that has more little negative impact on the smartcoin ecosystem.

abit has suggested 2 new ways to handle black swan, one is to settle the accounts independently: https://bitsharestalk.org/index.php?topic=27273.0, one point is that this way may cause one phenomena that "to be settled earlier is better than later".

the other is to set feed price floor to provide black swan from happening: https://bitsharestalk.org/index.php?topic=27449.0
the current bitCNY is similar to be handled in the second way.

either way we will choose, it is important not to stop the smartcoin borrowing operation.

2. replace BSIP42 with dynamic MCR solution

the key point of dynamic MCR is also to introduce negative feedback mechanism to adjust smartcoin supply, different with BSIP42, in dynamic MCR solution the feed price will return to reflect the market price, then this solution will not bring the troubles of "margin call orders not being eaten" or "exploiting debt position owners with force settlement".

considering that in BSIP witnesses take the key responsibility and authority, this introduce much uncertainty and put witnesses at the place that undertake much doubts of feed price manipulation, here I suggest a new way to implement dynamic MCR:

2.1.  other than settlement price, CER, MCR, MSSR, introduce a new parameter premium to be fed by witnesses。witnesses need not to design complex negative feedback algorithm, they just need to get the price data from the market and feed to system.

2.2 add committee controlled parameters as below to each smartcoin:

low premium limit: when the fed premium is lower than this parameter, the process to make MCR higher will be triggered, default value: -2%
high premium limit:when the fed premium is higher than this parameter, the process to make MCR lower will be triggered, default value: 1%
max MCR:MCR will not increase while it reach this value, default value: 1.75
min MCR:MCR will not decrease while it reach this value, default value: 1.4
MCR tuning step:the value that MCR can be added or subtracted in each administrative period(1 hour), default value:0.001

at each administrative time system will check the feed premium and decide how to adjust MCR, if the parameters are set as default values shown above and at the time MCR=1.75, and premium=2%, then MCR will be adjusted to 1.749.

in this way the traders can expect the adjustment time and step, the can reflect in time to avoid being hurt, no manipulation doubt can be put to witnesses.

3. adjust MSSR to 105%

4.change force settlement offset to 2%, this will ensure that the discount of bitCNY will be no higher than 2% even after MCR reach the max limit.

what will this solution bring?

1. good peg of bitCNY
2. less volatility of BTS price
3. more risk?
4. less free market?

easy to understand that this solution will lead to good peg of bitCNY, as BSIP42 has proved, negative feedback mechanism works well on making a good pegging.

as MCR will change according to the premium of bitCNY, when bitCNY is in shortage and has a big premium, system will increase MCR and make more bitCNY supply possible and vice versa, for example, if we implement the solution at the current market status, we can expect that the MCR will be tuned to min value(maybe 1.4) in about 2 weeks, this will increase bitCNY supply obviously and can prevent BTS price from falling rapidly.

so will this solution introduce more risk to the system?
I believe this will depend on whether the margin call orders will be eaten quickly, the main issue of BSIP42 is that is make the margin call order price higher than the market price and accumulate big quantity of margin call orders without being eaten. but in the dynamic MCR solution, as feed price reflect the market price, we believe the margin called orders will be eaten just after they comes out, if necessary MSSR can be keep unchanged to ensure this.

and, I don't agree that this rule will bring a manipulated market that has been free when there is no such solution, they are just markets with different rules,  if the rules are certain and base on strong consensus, it will not bring manipulation, it just bring better user experience.   

I also suggest that witnesses can implement updated BSIP42 before community can reach consensus on above described solution and implement it.https://bitsharestalk.org/index.php?topic=27492.0
« Last Edit: December 06, 2018, 09:49:44 am by bitcrab »

Offline matle85

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Re: suggestion on bitCNY rules update after BSIP42
« Reply #1 on: December 06, 2018, 09:58:08 am »
Hi Bitcrab, thank you for the valuable post on this important discussion point.

Key thing is definitely to learn from BSIP42. My preference is for (2) with the final details to be worked out and agreed - my view is that as long as this is all clearly and cleanly laid out there can be know confusion.

The most important thing to me is that margins are eaten in the bear market so that the stablecoins can protect themselves. For other people the most important thing is maintaining the peg as they have businesses operations where volatility has a real negative impact.

I am sure that we can come together and define appropriate, clear parameters that protect the stablecoins from global settlement in the future  :)

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Re: suggestion on bitCNY rules update after BSIP42
« Reply #2 on: December 06, 2018, 11:11:13 am »
you don't need to make things complex, don't need to mix all together especially bsip42.
personally I support 1,3,4, but not 2

Offline bitcrab

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Re: suggestion on bitCNY rules update after BSIP42
« Reply #3 on: December 06, 2018, 11:32:22 am »
you don't need to make things complex, don't need to mix all together especially bsip42.
personally I support 1,3,4, but not 2

I make things complex because the world and the financial logic is complex.

if we can get better peg while at the same time do not introduce obvious more risk, why not?

if the margin call orders can always be eaten quickly, setting MCR=1.4 do not introduce obvious more risk than setting MCR=1.75, however it can bring much more bitCNY supply to support the ecosystem.

no reason to ignore this.

another fact is that BTS smartcoin system is not as same as the common traditional margin call system -  in smartcoin system the currency is based on debt, it's not a good idea to always keep the debt in minimum, debt need to be extended while necessary as it is the debt that support the currency supply.

surely this solution will bring less volatility of BTS price, some traders do not like to see this, but more important, the solution will help the ecosystem to grow as a whole.

we need bitCNY to peg well, only then it will be possible to introduce bitCNY to more application scenarios.
« Last Edit: December 06, 2018, 11:36:10 am by bitcrab »

Online alt

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Re: suggestion on bitCNY rules update after BSIP42
« Reply #4 on: December 06, 2018, 11:48:17 am »
you don't need to make things complex, don't need to mix all together especially bsip42.
personally I support 1,3,4, but not 2

I make things complex because the world and the financial logic is complex.

if we can get better peg while at the same time do not introduce obvious more risk, why not?

if the margin call orders can always be eaten quickly, setting MCR=1.4 do not introduce obvious more risk than setting MCR=1.75, however it can bring much more bitCNY supply to support the ecosystem.

no reason to ignore this.

another fact is that BTS smartcoin system is not as same as the common traditional margin call system -  in smartcoin system the currency is based on debt, it's not a good idea to always keep the debt in minimum, debt need to be extended while necessary as it is the debt that support the currency supply.

surely this solution will bring less volatility of BTS price, some traders do not like to see this, but more important, the solution will help the ecosystem to grow as a whole.

we need bitCNY to peg well, only then it will be possible to introduce bitCNY to more application scenarios.
if you mix it all, it's more difficult to get consensus.

to help the ecosystem to grow, we can't relies on high risk market action.
again, to judge the risk, you shouldn't mix two thing togother: one is borrow CNY, the other is use CNY.
in fact there are no risk if you just borrow CNY without spent it.
the real risk depends on how you spend it.
if mainy CNY debt owner spent CNY to buy BTS, it's a high risk action, while if they trade CNY for fiat CNY, it's a low risk action.
we need to encourage more fund to help the ecosystem grow, not manipulation economy.
teaching them get profit from low risk market action, buy bitCNY with fiat CNY at price less then 1.0, sell at price high than 1.0.

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Re: suggestion on bitCNY rules update after BSIP42
« Reply #5 on: December 06, 2018, 12:00:54 pm »
       巨蟹先生,目前只有你还在为BTS奔波了,感情上我很想支持你,但真理只有一个。
        bts的喂价跟着现价走的制度,本身就造成了容易溢价而不容易贬值。因为一旦现价下跌,系统是强迫债仓卖出的,而现价上涨,是自愿买入,不是强迫买入的。强迫卖出,自愿买入,下跌时强迫卖,上涨时自愿买,所以长期溢价,折价较少。bisp42减少了强迫卖出,喂价不跟着现价跌了,所以好了。
       而若允许mcr下调,mcr会容易下调,不容易上涨。因为现价一跌,就爆仓,就溢价,mcr就要下调;而现价涨了,却较难贬值,mcr就较难上涨。所以,这个方案最终可能mcr就定在1.2不动了,很危险。
       

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Re: suggestion on bitCNY rules update after BSIP42
« Reply #6 on: December 06, 2018, 12:06:57 pm »
      巨蟹先生, 即使要调mcr也不是一天两天的事。现在bisp42投票即将反超,我们应当抓紧确定执行bisp42的具体规则!否则又是连环压缩市场!请见证人统一负反馈规则!
结合修正案,建议:
1、喂价不低于主要交易市场的市场价的最高价。
2、当喂价高于市场价时,bitcny波动范围在-2%~1%以内不调整喂价。
3、溢价计算采用最高溢价计算法。既采用主要交易所计算出的最高溢价做为最终溢价。
4、喂价不低于黑天鹅保护价。
5、cny折价容忍范围在极端行情下,可由见证人讨论投票后适当增大。

请见证人讨论成熟喂价反馈规则后,由见证人投票统一执行,不得私自更改。bisp42只是指明负反馈方向,若具体规则执行中出现问题,请见证人及时讨论修改!

Online gghi

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Re: suggestion on bitCNY rules update after BSIP42
« Reply #7 on: December 06, 2018, 12:25:43 pm »
       血的教训告诉我们,市场下跌,必须允许CNY贬值,才可以救市场。严格锚定不贬值是会让CNY流动枯竭的。

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Re: suggestion on bitCNY rules update after BSIP42
« Reply #8 on: December 06, 2018, 12:30:50 pm »
Lower feeding prices, so-called digestion of explosive warehouse receipts, release of risk is the wrong guiding ideology. The consequence is that all the mortgagees are injured or even destroyed, and CNY flows are exhausted! uuuuuuuuuu Don't be afraid of CNY devaluation, don't worry about CNY devaluation, any currency has devaluation, especially in the economic contraction, currency devaluation is wise.
The accumulation of BTS risk is due to the low MCR and the high leverage of players, resulting in the accumulation of a large number of risks during the upstream period of the market. Only by tackling the problem of risk accumulation at the root can we gradually improve MCR and reduce players'leverage.

    喂价下调,所谓的消化爆仓单,释放风险就是错误的指导思想。后果就是所有的抵押人受伤,甚至灭亡,CNY流动枯竭!不要怕CNY贬值,不要担心CNY贬值,任何货币都有贬值的时候,尤其是在经济萎缩的时候,货币贬值是明智的。
       BTS风险的积累是因为MCR低了,玩家杠杆高了,导致市场上行期间积累了大量的风险。从根源上治理风险积累问题才行,逐步提高MCR,降低玩家杠杆

Online zhouxiaobao

Re: suggestion on bitCNY rules update after BSIP42
« Reply #9 on: December 06, 2018, 12:38:52 pm »
巨蟹先生,给喂价定一个mssr的上限还是不能消除溢价,还是建议取消这个限制。黑天鹅本身就是一个错误的设置,给喂价设一个黑天鹅保护就行了。真的到了启动黑天鹅保护的地步,bitcny贬值一点也不是什么不可接受的问题啊。

Offline clockwork

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Re: suggestion on bitCNY rules update after BSIP42
« Reply #10 on: December 06, 2018, 01:27:35 pm »
It seems we kind of agree on the general direction so my suggestion would be to implement things in an incremental way.

To start:
Settlement offset as low as possible (would like it to even be 1% on par with all other bitassets)
Some kind of GS protection

and personally I think our first attempt to improve things should be to allow for variable MSSR according to circumstances.

Offline bitcrab

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Re: suggestion on bitCNY rules update after BSIP42
« Reply #11 on: December 06, 2018, 03:16:35 pm »
It seems we kind of agree on the general direction so my suggestion would be to implement things in an incremental way.

To start:
Settlement offset as low as possible (would like it to even be 1% on par with all other bitassets)
Some kind of GS protection

and personally I think our first attempt to improve things should be to allow for variable MSSR according to circumstances.

in most of the cases margin call orders are filled at the market price in CNY market, so it make almost no difference either to set MSSR to 10% or 5%, maybe only when in very serious bear market 5% or 10% make some difference.

Offline clockwork

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Re: suggestion on bitCNY rules update after BSIP42
« Reply #12 on: December 06, 2018, 03:25:06 pm »
It seems we kind of agree on the general direction so my suggestion would be to implement things in an incremental way.

To start:
Settlement offset as low as possible (would like it to even be 1% on par with all other bitassets)
Some kind of GS protection

and personally I think our first attempt to improve things should be to allow for variable MSSR according to circumstances.
in most of the cases margin call orders are filled at the market price in CNY market, so it make almost no difference either to set MSSR to 10% or 5%, maybe only when in very serious bear market 5% or 10% make some difference.

not just about getting filled...it will clear ( or clear less depending on which way you adjust) the order book and change the dex price thus countering premium or discount...it's about modifying supply/demand
« Last Edit: December 07, 2018, 08:06:55 am by clockwork »

Offline bitcrab

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Re: suggestion on bitCNY rules update after BSIP42
« Reply #13 on: December 07, 2018, 02:52:44 am »
if you mix it all, it's more difficult to get consensus.

to help the ecosystem to grow, we can't relies on high risk market action.
again, to judge the risk, you shouldn't mix two thing togother: one is borrow CNY, the other is use CNY.
in fact there are no risk if you just borrow CNY without spent it.
the real risk depends on how you spend it.
if mainy CNY debt owner spent CNY to buy BTS, it's a high risk action, while if they trade CNY for fiat CNY, it's a low risk action.
we need to encourage more fund to help the ecosystem grow, not manipulation economy.
teaching them get profit from low risk market action, buy bitCNY with fiat CNY at price less then 1.0, sell at price high than 1.0.

2 is the core of the whole solution, 1 can be implemented independently and make big sense, however 3,4 will make little sense if 2 is removed.

actually the negative feedback mechanism does not encourage to buy BTS with borrowing bitCNY.

if BTS price in DEX is higher than in CEX, bitCNY will have discount and MCR will increase according to the logic.

in the dynamic MCR solution, the key point for controlling risk is to ensure that the margin call orders be eaten quickly, I believe this will happen as feed price will be the market price and MSSR will be kept high enough (at least 105% I think)

we cannot demand what the user do, we can just ensure that the high risk operation will not bring high risk to the system.

it's very difficult to ask people to enter the ecosystem with buying bitCNY at current time, as there is a 6%+ premium, if witnesses just feed market price, there will be even higher premium. how to keep enough supply of bitCNY with controllable risk is a big topic that the community have to face, it's not manipulation, it's just designing rules, maybe bsip42 really behaved not well because of some flaws, but the dynamic MCR solution remove these flaws.
« Last Edit: December 07, 2018, 03:43:22 am by bitcrab »

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Re: suggestion on bitCNY rules update after BSIP42
« Reply #14 on: December 07, 2018, 07:55:46 am »
其实用动态mssr也能解决问题。喂价上调10个点以内,mssr取10个点,喂价上调10-20个点以内,mssr取20个点……以此类推。下调mcr就怕调不上去了。