suggestion on bitCNY rules update after BSIP42

[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]

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.

Excellent, thanks!

[yamtt]

Mssr down to 100 is ideal

[bitcrab]

so in short term, seems what we can do is just to continue reducing MSSR.

how about reduce MSSR from 1.05 to 1.02 after some days?

[bitcrab]

In order to do B we need https://github.com/bitshares/bitshares-core/pull/1324 and hardfork or unintended margin calls will be(or not) triggered.

got it, thanks.

[oxarbitrage]

now 3&4 have been done.

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.

the community suffer shortage of bitCNY for long time, to realize 1&2 it will also cost much time to reach consensus, create specification and do the implementation.

I am considering to draft 2 BSIPs that need not hard fork, just need witnesses to adapt their feeding script, but can get the purpose of 1&2.

BSIP A: request witnesses to ensure the feed price be higher than the global settlement price, to avoid the global settlement to happen.

BSIP B: change MCR base on worker proposal based poll, a "change MCR to x" WP and a "No change to MCR"poll will be created and wait for voting, witnesses need to change the fed MCR accordingly.

Thoughts?

In order to do B we need https://github.com/bitshares/bitshares-core/pull/1324 and hardfork or unintended margin calls will be(or not) triggered.

[bitcrab]

now 3&4 have been done.

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.

the community suffer shortage of bitCNY for long time, to realize 1&2 it will also cost much time to reach consensus, create specification and do the implementation.

I am considering to draft 2 BSIPs that need not hard fork, just need witnesses to adapt their feeding script, but can get the purpose of 1&2.

BSIP A: request witnesses to ensure the feed price be higher than the global settlement price, to avoid the global settlement to happen.

BSIP B: change MCR base on worker proposal based poll, a "change MCR to x" WP and a "No change to MCR"poll will be created and wait for voting, witnesses need to change the fed MCR accordingly.

Thoughts?

[bitcrab]

中文贴在这里 https://bitsharestalk.org/index.php?topic=27506.0 中文请到该贴回复。

Chinese version is here https://bitsharestalk.org/index.php?topic=27506.0 please switch to there if you use Chinese.

[zhouxiaobao]

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。

[bitcrab]

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.

[clockwork]

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

[bitcrab]

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.

[clockwork]

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.