Author Topic: Support BitUSD Price by Forced Covering at a Profit  (Read 4029 times)

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Offline bytemaster

Re: Support BitUSD Price by Forced Covering at a Profit
« Reply #75 on: September 02, 2014, 07:25:12 pm »
When the value of BTSX is falling, the peg is enforced by margin calls buying BitUSD as well as those looking to hedge against falling BTSX
When the value of BTSX is rising, the peg is enforced by shorts taking their profits and re-shorting.   

We don't want to prevent shorts from shorting at prices below market if there is someone willing to buy ABOVE market.  What does this mean?  It means that anytime there is demand for BitUSD then which ever short is willing to pay the highest price gets matched first.  The difference between the short's price and the ask price has always been captured as fees.

This means that USD holders now benefit from added "insurance" in the event of a crash and BTSX holders benefit as well. Meanwhile "shorts" can set a price and get their order executed rather than "skipped". 

I believe that these rules are both simple and easy to understand and that once the "glut" of BitUSD on the market catches up to the demand the peg will hold just fine and transaction volume will be increasing.

I think "forced covering at a profit" will be unnecessary.   
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Offline Riverhead

Re: Support BitUSD Price by Forced Covering at a Profit
« Reply #76 on: September 02, 2014, 07:27:35 pm »

I think "forced covering at a profit" will be unnecessary.   


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Offline eagleeye

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Re: Support BitUSD Price by Forced Covering at a Profit
« Reply #77 on: September 02, 2014, 07:29:50 pm »
When the value of BTSX is falling, the peg is enforced by margin calls buying BitUSD as well as those looking to hedge against falling BTSX
When the value of BTSX is rising, the peg is enforced by shorts taking their profits and re-shorting.   

We don't want to prevent shorts from shorting at prices below market if there is someone willing to buy ABOVE market.  What does this mean?  It means that anytime there is demand for BitUSD then which ever short is willing to pay the highest price gets matched first.  The difference between the short's price and the ask price has always been captured as fees.

This means that USD holders now benefit from added "insurance" in the event of a crash and BTSX holders benefit as well. Meanwhile "shorts" can set a price and get their order executed rather than "skipped". 

I believe that these rules are both simple and easy to understand and that once the "glut" of BitUSD on the market catches up to the demand the peg will hold just fine and transaction volume will be increasing.

I think "forced covering at a profit" will be unnecessary.   

You have convinced me bytemaster.