Author Topic: FDIC for BitUSD  (Read 11603 times)

0 Members and 1 Guest are viewing this topic.

Ggozzo

  • Guest
Re: FDIC for BitUSD
« Reply #60 on: August 12, 2014, 07:29:59 pm »
Wouldn't debasement happen by issuing new BTSX not bitUSD? bitUSD is defined by BTSX real world worth/value. The intrinsic value of bitUSD is BTSX. Lowering the value of a BTSX will debase bitUSD, right?

Offline donkeypong

  • Hero Member
  • *****
  • Posts: 2329
    • View Profile
Re: FDIC for BitUSD
« Reply #61 on: August 12, 2014, 07:47:58 pm »
Wouldn't debasement happen by issuing new BTSX not bitUSD? bitUSD is defined by BTSX real world worth/value. The intrinsic value of bitUSD is BTSX. Lowering the value of a BTSX will debase bitUSD, right?

One (BitUSD) is fixed and the other (BTSX) floats. If BTSX floats lower, than its value decreases relative to the stable USD.

Offline Pocket Sand

  • Full Member
  • ***
  • Posts: 118
    • View Profile
Re: FDIC for BitUSD
« Reply #62 on: August 12, 2014, 07:58:48 pm »
Quote
The key points are:
1. There should never be more than 2 billion XTS for any reason or Bitshares will be thought of as broken.
2. The loan should be an IOU which is just enough to cover the shorts or the volatility event and bring it all back into equilibrium.
3. Delegates pay a price for this in that none of them get paid as 100% of fees get burned while users also pay a price because fees are temporarily higher than usual.

This way the incentives for everyone is for this not to happen. Also include the ability to execute option 1 as a fallback mechanism.
+5%

I am very against the idea of having our shares be diluted (debasement = euphemism for dilution) based on possible market manipulation. These kinds of manipulations are not easy to "factor" for especially in these early stages when it is extremely vulnerable to attacks. I am strongly against a system where BTSX could realistically increase past the initial 2 billion distribution.

Offline tonyk

  • Hero Member
  • *****
  • Posts: 3308
    • View Profile
Re: FDIC for BitUSD
« Reply #63 on: August 12, 2014, 08:07:05 pm »
Quote
The key points are:
1. There should never be more than 2 billion XTS for any reason or Bitshares will be thought of as broken.
2. The loan should be an IOU which is just enough to cover the shorts or the volatility event and bring it all back into equilibrium.
3. Delegates pay a price for this in that none of them get paid as 100% of fees get burned while users also pay a price because fees are temporarily higher than usual.

This way the incentives for everyone is for this not to happen. Also include the ability to execute option 1 as a fallback mechanism.
+5%

I am very against the idea of having our shares be diluted (debasement = euphemism for dilution) based on possible market manipulation. These kinds of manipulations are not easy to "factor" for especially in these early stages when it is extremely vulnerable to attacks. I am strongly against a system where BTSX could realistically increase past the initial 2 billion distribution.

It is not gonna happen every day (hopefully will never happen).
Think of it as explained here: https://bitsharestalk.org/index.php?topic=6887.msg91457#msg91457
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline bitmeat

  • Hero Member
  • *****
  • Posts: 1116
    • View Profile
Re: FDIC for BitUSD
« Reply #64 on: August 12, 2014, 10:27:32 pm »
Well in my design BTSX would get destroyed when converted to BitUSD instead of used as a margin. So create/destroy all you want, but the block chain is the market maker and all the BTSX holders will gain from the conversions back and forth.

Offline bytemaster

Re: FDIC for BitUSD
« Reply #65 on: August 13, 2014, 01:55:51 am »
Well in my design BTSX would get destroyed when converted to BitUSD instead of used as a margin. So create/destroy all you want, but the block chain is the market maker and all the BTSX holders will gain from the conversions back and forth.

If you have a trusted source of prices and a trustable way of getting that price information into a DAC (median delegate feed) then I suppose you can get rid of the entire Bid/Ask system all together and simply have the DAC create / destroy XTS as necessary for people to convert into and out of USD.   

However, if you do not have a price source (all exchanges are shut down by government) then it becomes a bit more difficult to know the "true" price upon which to execute your automatic process.

Also by having the network automatically create/destroy XTS "on demand" for conversion to/from BitUSD you are forcing the shareholders to take the full risk of being short.

That said I really like the idea for its simplicity and clarity.   It would not have been possible prior to DPOS, but now is potentially viable.
For the latest updates checkout my blog: http://bytemaster.bitshares.org
Anything said on these forums does not constitute an intent to create a legal obligation or contract between myself and anyone else.   These are merely my opinions and I reserve the right to change them at any time.

Offline bytemaster

Re: FDIC for BitUSD
« Reply #66 on: August 13, 2014, 02:07:19 am »
Well in my design BTSX would get destroyed when converted to BitUSD instead of used as a margin. So create/destroy all you want, but the block chain is the market maker and all the BTSX holders will gain from the conversions back and forth.

If you have a trusted source of prices and a trustable way of getting that price information into a DAC (median delegate feed) then I suppose you can get rid of the entire Bid/Ask system all together and simply have the DAC create / destroy XTS as necessary for people to convert into and out of USD.   

However, if you do not have a price source (all exchanges are shut down by government) then it becomes a bit more difficult to know the "true" price upon which to execute your automatic process.

Also by having the network automatically create/destroy XTS "on demand" for conversion to/from BitUSD you are forcing the shareholders to take the full risk of being short.

That said I really like the idea for its simplicity and clarity.   It would not have been possible prior to DPOS, but now is potentially viable.

So here is the challenge... suppose it is very clear that BTS X is in a bubble (say it goes up by 10x in a week).   At this point in time everyone converts into USD at the high price without there being any downward pressure on the price.   Then when the price corrects everyone who converted into USD gets issued more BTS X than they had before which of course causes the price to fall further due to the dilution. 

The feedback loop is very important here and is absent when you rely on feeds rather than markets to set the price. 

Bottom line is show wants to go short USD (create USD) while the BTSX network is in a bubble?  No one..... when you rely on price feeds alone you create unlimited short supply.
For the latest updates checkout my blog: http://bytemaster.bitshares.org
Anything said on these forums does not constitute an intent to create a legal obligation or contract between myself and anyone else.   These are merely my opinions and I reserve the right to change them at any time.

Offline tonyk

  • Hero Member
  • *****
  • Posts: 3308
    • View Profile
Re: FDIC for BitUSD
« Reply #67 on: August 13, 2014, 02:13:32 am »
Well in my design BTSX would get destroyed when converted to BitUSD instead of used as a margin. So create/destroy all you want, but the block chain is the market maker and all the BTSX holders will gain from the conversions back and forth.

I do not get which BTSX (U in your example) will be destroyed to produce virtualUSD (vUSD)?
Shareholders? Or is it gonna be some asset on top of them?

In either case I have a hard time accepting that U is actually backing the vUSD. Put in other words vUSD price is controlled only by the buying/selling activity on the centralized exchange where U is traded for USD.
« Last Edit: August 13, 2014, 02:50:01 am by tonyk »
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Ggozzo

  • Guest
Re: FDIC for BitUSD
« Reply #68 on: August 13, 2014, 02:49:39 am »
Quote
Bottom line is show wants to go short USD (create USD) while the BTSX network is in a bubble?  No one..... when you rely on price feeds alone you create unlimited short supply.

What? Shorting bitUSD is the same directional sentiment as BTSX rising in price. If you think the bubble is going to pop, then yes, people will not want to short bitUSD. Fortunately, nobody knows when the bubble will pop. And there will always be the people who bought in at the top. That is the nature of free markets, no one knows jack. It sounds like you think that someone is going to know the markets crests and troughs. They will only know in hindsight. I guarantee it.

Release a GUI test run with windows and apple binaries. This will be good for everyone.

Offline bytemaster

Re: FDIC for BitUSD
« Reply #69 on: August 13, 2014, 03:14:35 am »
Quote
Bottom line is show wants to go short USD (create USD) while the BTSX network is in a bubble?  No one..... when you rely on price feeds alone you create unlimited short supply.

What? Shorting bitUSD is the same directional sentiment as BTSX rising in price. If you think the bubble is going to pop, then yes, people will not want to short bitUSD. Fortunately, nobody knows when the bubble will pop. And there will always be the people who bought in at the top. That is the nature of free markets, no one knows jack. It sounds like you think that someone is going to know the markets crests and troughs. They will only know in hindsight. I guarantee it.

Release a GUI test run with windows and apple binaries. This will be good for everyone.

Almost had a GUI out today... waiting on GUI team to fix a few last minute bugs.

I am not claiming that there won't be people shorting at the top... only that it is more likely that those selling at the top will be other USD longs rather than new USD shorts.  I am also saying that it is fine for these shorts to take a loss because it was their call, but it wouldn't be fine for the network to be the greatest fool due to algorithmic ignorance.
For the latest updates checkout my blog: http://bytemaster.bitshares.org
Anything said on these forums does not constitute an intent to create a legal obligation or contract between myself and anyone else.   These are merely my opinions and I reserve the right to change them at any time.

Offline tonyk

  • Hero Member
  • *****
  • Posts: 3308
    • View Profile
Re: FDIC for BitUSD
« Reply #70 on: August 13, 2014, 03:17:20 am »
Well in my design BTSX would get destroyed when converted to BitUSD instead of used as a margin. So create/destroy all you want, but the block chain is the market maker and all the BTSX holders will gain from the conversions back and forth.

I do not get which BTSX (U in your example) will be destroyed to produce virtualUSD (vUSD)?
Shareholders? Or is it gonna be some asset on top of them?

In either case I have a hard time accepting that U is actually backing the vUSD. Put in other words vUSD price is controlled only by the buying/selling activity on the centralized exchange where U is traded for USD.

When you are buying vUSD with U (or selling vUSD for U) you are not sending any price signals at all! At the same time when you are buying U for USD you are  changing the price of vUSD/U directly (and in the wrong direction btw). This wrong directional change is corrected in BTSX when you sell BTSX for bitUSD. In your system no such change occurs!
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline bitmeat

  • Hero Member
  • *****
  • Posts: 1116
    • View Profile
Re: FDIC for BitUSD
« Reply #71 on: August 13, 2014, 04:09:46 am »
If BTSX assets allowed scripting and/or ability to create/destroy supply dynamically I could use the system itself to try out a prototype of my idea, without having to reinvent the wheel. In fact having programmable financial instruments should be next top priority for BTSX. I would even argue that instead if shipping BitUSD solution, I would like to see some scripting/smart contracts which allow solutions like BitUSD to be created on the chain itself.

Ggozzo

  • Guest
Re: FDIC for BitUSD
« Reply #72 on: August 13, 2014, 04:18:35 am »
Quote
Bottom line is show wants to go short USD (create USD) while the BTSX network is in a bubble?  No one..... when you rely on price feeds alone you create unlimited short supply.

What? Shorting bitUSD is the same directional sentiment as BTSX rising in price. If you think the bubble is going to pop, then yes, people will not want to short bitUSD. Fortunately, nobody knows when the bubble will pop. And there will always be the people who bought in at the top. That is the nature of free markets, no one knows jack. It sounds like you think that someone is going to know the markets crests and troughs. They will only know in hindsight. I guarantee it.

Release a GUI test run with windows and apple binaries. This will be good for everyone.

Almost had a GUI out today... waiting on GUI team to fix a few last minute bugs.

I am not claiming that there won't be people shorting at the top... only that it is more likely that those selling at the top will be other USD longs rather than new USD shorts.  I am also saying that it is fine for these shorts to take a loss because it was their call, but it wouldn't be fine for the network to be the greatest fool due to algorithmic ignorance.

I hear you.

 +5% on GUI test.

Will bitUSD be the vehicle or a vehicle to enter into the other bitAssets? Or are all of the assets to be pegged to BTSX? If bitUSD is the primary gateway for the other assets, like bitGold, then you will constantly have a demand to sell bitUSD. From above the problem was that no one would want to sell bitUSD when a bubble bursts. Well if bitGold or the assets are rising, then You would need to sell bitUSD to get them, no? This is assuming that the markets of some of the assets will not move In tandem with btsx/bitUSD and will most times be inversely related to the BTSX/bitUSD fluctuations. I'm not saying all or always.
« Last Edit: August 13, 2014, 04:20:32 am by skyscraperfarms »

Offline bitmeat

  • Hero Member
  • *****
  • Posts: 1116
    • View Profile
Re: FDIC for BitUSD
« Reply #73 on: August 13, 2014, 04:19:39 am »



If you have a trusted source of prices and a trustable way of getting that price information into a DAC (median delegate feed) then I suppose you can get rid of the entire Bid/Ask system all together and simply have the DAC create / destroy XTS as necessary for people to convert into and out of USD.   

However, if you do not have a price source (all exchanges are shut down by government) then it becomes a bit more difficult to know the "true" price upon which to execute your automatic process.

Also by having the network automatically create/destroy XTS "on demand" for conversion to/from BitUSD you are forcing the shareholders to take the full risk of being short.

That said I really like the idea for its simplicity and clarity.   It would not have been possible prior to DPOS, but now is potentially viable.

Ok, my design also relies on BTC <-> BTSX conversion directly on the chain using smart oracles. So you have real valuation in BTC at all times even if feeds disappear.

As far as the feeds go the block chain ensures liquidity but still allows for trading within the spread. If feeds are shutdown that is a problem regardless of which method you choose.

The simple idea is that you will always be reimbursed in BTC the equivalent of whatever your BitUSD is worth. In other words BTSX will capture all the fluctuations, but there is also incentive to hold it, since all the trades reward the BTSX holders.

Would be even better if dividends from fees are awarded in BitUSD, BitGOLD, etc. and given to the holders of BTSX. I think for simplicity and blockchain optimization you chose to give out dividends by burning BTSX.

Offline bytemaster

Re: FDIC for BitUSD
« Reply #74 on: August 13, 2014, 12:49:03 pm »
Quote
Bottom line is show wants to go short USD (create USD) while the BTSX network is in a bubble?  No one..... when you rely on price feeds alone you create unlimited short supply.

What? Shorting bitUSD is the same directional sentiment as BTSX rising in price. If you think the bubble is going to pop, then yes, people will not want to short bitUSD. Fortunately, nobody knows when the bubble will pop. And there will always be the people who bought in at the top. That is the nature of free markets, no one knows jack. It sounds like you think that someone is going to know the markets crests and troughs. They will only know in hindsight. I guarantee it.

Release a GUI test run with windows and apple binaries. This will be good for everyone.

Almost had a GUI out today... waiting on GUI team to fix a few last minute bugs.

I am not claiming that there won't be people shorting at the top... only that it is more likely that those selling at the top will be other USD longs rather than new USD shorts.  I am also saying that it is fine for these shorts to take a loss because it was their call, but it wouldn't be fine for the network to be the greatest fool due to algorithmic ignorance.

I hear you.

 +5% on GUI test.

Will bitUSD be the vehicle or a vehicle to enter into the other bitAssets? Or are all of the assets to be pegged to BTSX? If bitUSD is the primary gateway for the other assets, like bitGold, then you will constantly have a demand to sell bitUSD. From above the problem was that no one would want to sell bitUSD when a bubble bursts. Well if bitGold or the assets are rising, then You would need to sell bitUSD to get them, no? This is assuming that the markets of some of the assets will not move In tandem with btsx/bitUSD and will most times be inversely related to the BTSX/bitUSD fluctuations. I'm not saying all or always.

You can trade BitGold vs BitUSD directly without going through BTSX
For the latest updates checkout my blog: http://bytemaster.bitshares.org
Anything said on these forums does not constitute an intent to create a legal obligation or contract between myself and anyone else.   These are merely my opinions and I reserve the right to change them at any time.