Author Topic: Review of OMO  (Read 2016 times)

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Offline matle85

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Re: Review of OMO
« Reply #15 on: February 17, 2019, 09:16:27 pm »
That's a pretty good idea - let's use it for market making / liquidity.

It's a sensible evolution of the fund in my view.



I have a better idea. Forget about OMO and turn off market fees on bitassets.

With the use of DEXBot staggered orders all market fees would be turned into liquidity providing orders which continually increase in size through the compounding of profits from the back and forth of price.

This is the simplest, safest, most efficient way forward for open market operations.

Offline bitcrab

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Re: Review of OMO
« Reply #16 on: February 18, 2019, 04:24:16 am »
I have a better idea. Forget about OMO and turn off market fees on bitassets.

With the use of DEXBot staggered orders all market fees would be turned into liquidity providing orders which continually increase in size through the compounding of profits from the back and forth of price.

This is the simplest, safest, most efficient way forward for open market operations.

We cannot simply say that the purpose of OMO is market making.

take bitCNY as an example

buy BTS when bitCNY is in shortage and high premium.
sell BTS when bitCNY is in oversupply and obvious discount.

the rules do not lead to high trading volume.

bitCNY/BTS pair now has a fairly good depth, not in big demand on market making.

If we mainly concern market making, I prefer to turn off market fee of bitCNY, which can bring more incentive to trading.


Offline Xanoxt

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Re: Review of OMO
« Reply #17 on: February 18, 2019, 07:11:38 am »
We've had a thorough discussion of this in the chat yesterday, and here are some points:

C. First use the funds to revive GS markets.

A lot of people believe that the GS events happened due to market manipulations by OMO and BSIP42 exacerbating the situation, as modified feeds disincentivised buying out of margin call orders.

As for how to proceed further:
Liquidity providing via dexbot sounds like an interesting idea, but we need clear rules on how it is going to happen, and automated contingencies on what to do when market begins rapidly falling or rallying. On traditional exchanges, liquidity providing works like this: MM is obligated to keep preset amount of liquidity in the books, until certain volume obligations are met. Then it can remove one of the sides.

Before we even start, we need to agree on what percentage of the funds can OMO use daily, and do a daily check if it was profitable or not (which is okay).
In our case we need something like that to happen once the market begins moving, for example. Bot places 30 orders on both buy and sell sides, but starts removing them from one side in case 10 of them are taken on one side, without getting an order taken from the other side (or something like that).

During sideways market provision of liquidity might be profitable. During movements contingency rules would limit the amount of loss. In case of profits I suggest some of them are taken and put back into the reserve pool, with the rest going to OMO fund, and its percentages readjusted accordingly.

If the strategy for the OMO is explicitly talked about, and clear then I would support such decision but not before.

Offline bitcrab

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Re: Review of OMO
« Reply #18 on: February 18, 2019, 07:48:45 am »
The market fee income is so little that it cannot provide obvious help on bitUSD revive.

Offline Thul3

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Re: Review of OMO
« Reply #19 on: February 21, 2019, 08:04:57 am »
What is the main intention of that OMO fund ?
You wrote "supporting the smartcoin ecosystem"
When reading the rules its seems its mainly about getting the pegg back right ?


Quote
If we mainly concern market making, I prefer to turn off market fee of bitCNY, which can bring more incentive to trading.

Agree on that.
I guess OL showed nice effect changing the trading fee of BTS-OPEN.ETH to 0% .
« Last Edit: February 21, 2019, 10:32:12 am by Thul3 »

Offline Crypto Kong

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Re: Review of OMO
« Reply #20 on: February 24, 2019, 07:30:30 pm »
I am considering to restart the OMO fund operation.

I believe that the market fee income should be used in supporting the smartcoin ecosystem. we learned lessons in the past 10 months, so I think we need to update some essential setting of the fund.

first, it will not get BTS through worker proposal, it will only get the market fee of smartcoins for operation.

here are 2 policies for the operation of the updated OMO fund.

Plan A:
1.BTS buying orders can be placed only when there is margin called orders stayed.
2.BTS selling orders can be placed only when the smartcoin has at least 0.5% discount.
3.smartcoin borrowing is not allowed.

Plan B:
1.BTS buying orders can be placed only when there is margin called orders stayed.
2.BTS selling orders can be placed only when the smartcoin has at least 0.5% discount.
3.smartcoin borrowing is allowed, but the margin call price of the debt position should always be lower than the global settlement price, anytime the margin called price is above global settlement price, all the available liquidity should be used to reduce the margin called price.

Plan A is conservative, it just buy and sell BTS, do not borrow.
Plan B is a little audacious.

maybe we can begin with Plan A, Plan B is for subsequent discussion.

The fact that you seem to think keeping a margin call price below global settlement price is safe shows me that you have learned nothing. As price goes up so does the global settlement price, therefore by your own new rules you will end up being called again should a bull market turn into a bear market as it is quite obvious you will keep the ratio just below GS price, increasing your call price as price rises. You even state it in the above quote "anytime the margin called price is above global settlement price". How would that happen unless you were tightly following GS price?

Like I said before in the thread before you started OMO, call price (for USD) needs to be around 2 cents. We would be hundreds of thousands of dollars better off had you paid any attention to my comment. It's about time you started listening to others around you.

The use of DEXBot takes the decision making away from people like you who seem to struggle with quite simple market dynamics. Our markets cannot be fixed easily, there is a lot that needs to be improved but increased liquidity and more stable markets is a good start. DEXBot does this by resisting price change, any filled sell orders turn automatically into buy support and vice versa.

If you don't want to run DEXBot, go ruin bitCNY with your reckless margin trading. We will make our own decisions for bitUSD.
« Last Edit: February 24, 2019, 07:34:40 pm by Crypto Kong »

Offline Crypto Kong

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Re: Review of OMO
« Reply #21 on: February 24, 2019, 07:40:53 pm »
We've had a thorough discussion of this in the chat yesterday, and here are some points:

C. First use the funds to revive GS markets.

A lot of people believe that the GS events happened due to market manipulations by OMO and BSIP42 exacerbating the situation, as modified feeds disincentivised buying out of margin call orders.

As for how to proceed further:
Liquidity providing via dexbot sounds like an interesting idea, but we need clear rules on how it is going to happen, and automated contingencies on what to do when market begins rapidly falling or rallying. On traditional exchanges, liquidity providing works like this: MM is obligated to keep preset amount of liquidity in the books, until certain volume obligations are met. Then it can remove one of the sides.

Before we even start, we need to agree on what percentage of the funds can OMO use daily, and do a daily check if it was profitable or not (which is okay).
In our case we need something like that to happen once the market begins moving, for example. Bot places 30 orders on both buy and sell sides, but starts removing them from one side in case 10 of them are taken on one side, without getting an order taken from the other side (or something like that).

During sideways market provision of liquidity might be profitable. During movements contingency rules would limit the amount of loss. In case of profits I suggest some of them are taken and put back into the reserve pool, with the rest going to OMO fund, and its percentages readjusted accordingly.

If the strategy for the OMO is explicitly talked about, and clear then I would support such decision but not before.

The DEXBot staggered orders strategy basically places buy and sell orders in a given range lets say $0.03-$1.00 at say 2% increments, these orders would stay on the books as long as the operation continued. Every time a sell order is filled it is replaced with a buy order 2% lower. Profits get compounded which increases order sizes, making the strategy more profitable. Which basically means that the longer the strategy runs the more liquidity will be provided on both sides of the book via increased order sizes. If price wants to pump (or dump) it has to fight through added resistance of the DEXBot orders, once it fills those orders they are replaced with ones on the other side. Resistance turns into support. This helps to stabalise the market by resisting price change. More liquidity, more stability.

The longer the operation runs the more liquid and stable the market becomes, once we have solid foundations in place we can then start talking about advancing market operations to more sophisticated strategies such as perhaps increasing smart coin supply. Until we have solid foundations, there is little point.

The only real consideration for setting up a staggered orders strategy is the range in which you want it to work, the last thing you want is price leaving the range you are set up in as then there are no orders providing liquidity around the price, no accumulation and increasing of order sizes and no resistance to price change. With it being a long term strategy, it is pretty simple to select a range that price stays within.
« Last Edit: February 24, 2019, 09:02:29 pm by Crypto Kong »

Offline Crypto Kong

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Re: Review of OMO
« Reply #22 on: February 25, 2019, 11:24:47 am »
I will also add that stabalising the price of BTS would make everything else we wish to tackle with regards to improving our markets far easier. Less people would get called with a more stable collateral, smartcoins would keep their peg better, more people would feel confident increasing smartcoin supply with a more stable collateral.

Also worth mentioning that the more assets we pair BTS with such as gold and silver, the less influence BTC will have on price. We need to deepen order books on other market pairings, not related to crypto.

BitCNY may well be more liquid and in some peoples opinion not need market making program but we still need to resist price change to create stability, in as many markets as possible.

We have some very intelligent people in this community but I cant help but think a lot of you are over complicating things, looking for a technical answer to all our problems. Lets get back to basics and make a real effort to stabalise the price of BTS and lay some decent foundations to build upon.

With a volatile, unpredictable base asset we are gonna be constantly fighting an uphill battle.
« Last Edit: February 25, 2019, 11:28:29 am by Crypto Kong »