Author Topic: Where have all the bids gone?  (Read 9730 times)

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Offline bytemaster

They can also short below price X but it is not valid unless the exchange rate drops.
to clarify by "not valid" I mean these shorts do not appear on the standard order book and can not be matched with buy orders for bitUSD.

I understand what you are saying.... so lets describe BitUSD better:

BitUSD is a market between those who want leverage and those who want stability.  The "price" in this market will depend upon the interest rate people are willing to borrow at to get the leverage they desire.

What you want to do is price fix the interest rate.   The result of price fixing the interest rate will be "gas lines" for those who would like to short as shorts pile up on the price.   Now the start of the line is constantly moving as the feeds are updated and every time a short updates their "price" they go to the back of the line. 

The huge demand to "short" will thus provide liquidity for those who want to go long USD.   Where as under the non-price-fixed scheme there is less liquidity.

I think this approach has some real potential to help in the bootstrapping phase. 
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 Agent86

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Ok, put you money where your mouth is... which way will the peg go?  From where I sit the peg is behaving perfectly given the low supply of liquidity providers.
Before answering, can I ask if you have a means to stop trading on short notice?  (such as delegates remove feeds)  - I don't want to make a problem worse.

Offline Agent86

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They can also short below price X but it is not valid unless the exchange rate drops.
to clarify by "not valid" I mean these shorts do not appear on the standard order book and can not be matched with buy orders for bitUSD.

Offline bytemaster

With "price fixing laws" all trades are still voluntary... they just don't happen.

There is a supply/demand dynamic at play here.  If you only allow people to short at price X and there are 2 people that both want to short at that price, who goes first?
People can short at price X or above.  They can also short below price X but it is not valid unless the exchange rate drops.  If two people both happen to short at the same price then the person who got their order in first gets first dibs but something like this already must be used.  Trades will still happen; some people want to increase their exposure to BTSX and others want dollar valued crypto.

I think you're also not appreciating the severity of the problem, this needs to be fixed or the peg will not hold and will be irreparably destroyed.

Ok, put you money where your mouth is... which way will the peg go?  From where I sit the peg is behaving perfectly given the low supply of liquidity providers.
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 bitmeat

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With "price fixing laws" all trades are still voluntary... they just don't happen.

There is a supply/demand dynamic at play here.  If you only allow people to short at price X and there are 2 people that both want to short at that price, who goes first?

Could the issuers pay the difference in discrepancy as interest over time? I don't think we need to rush this, but some sort of Unit of account would be good.

Offline Agent86

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With "price fixing laws" all trades are still voluntary... they just don't happen.

There is a supply/demand dynamic at play here.  If you only allow people to short at price X and there are 2 people that both want to short at that price, who goes first?
People can short at price X or above.  They can also short below price X but it is not valid unless the exchange rate drops.  If two people both happen to short at the same price then the person who got their order in first gets first dibs but something like this already must be used.  Trades will still happen; some people want to increase their exposure to BTSX and others want dollar valued crypto.

I think you're also not appreciating the severity of the problem, this needs to be fixed or the peg will not hold and will be irreparably destroyed.

Offline bytemaster

Once you can more easilly get actualy USD fiat or purchase goods and services with it, people will have more confidence in owning it. 

Right now, if you look at the BitUSD  "markets" on bter with a goal of converting to USD fiat, it doesn't inspire confidence IMHO.


Maybe I'll start a Pizza broker business that only takes bitUSD :).

Right now you can buy BitUSD cheap and sell it cheap.... :)  I think once the BitUSD:USD market on BTER gains more depth from arb people will discover what the premium is and that is what will drive confidence in BitUSD. 
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 GaltReport

Once you can more easilly get actualy USD fiat or purchase goods and services with it, people will have more confidence in owning it. 

Right now, if you look at the BitUSD  "markets" on bter with a goal of converting to USD fiat, it doesn't inspire confidence IMHO.


Maybe I'll start a Pizza broker business that only takes bitUSD :).

That would be interesting!!  Can't wait to see some of those types  of experiments.

Offline Riverhead

Once you can more easilly get actualy USD fiat or purchase goods and services with it, people will have more confidence in owning it. 

Right now, if you look at the BitUSD  "markets" on bter with a goal of converting to USD fiat, it doesn't inspire confidence IMHO.


Maybe I'll start a Pizza broker business that only takes bitUSD :).

Offline bytemaster

With "price fixing laws" all trades are still voluntary... they just don't happen.

There is a supply/demand dynamic at play here.  If you only allow people to short at price X and there are 2 people that both want to short at that price, who goes first?

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 Agent86

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The price needs to offer people incentive to go long USD and thus the peg will currently be biased and thus BitUSD is currently 14% cheaper than USD.   To me 14% seems like a reasonable premium to entice people into BitUSD.
The only incentive people need to buy bitUSD is the additional benefits of bitUSD over USD (easy international transfers etc.)   They should be willing to pay the full price for these benefits.

So if you want to trade BitUSD vs USD you just have to ask yourself which way will the spread be moving and trade accordingly.

If we were to use "price fixing" as you suggest then you would just dry up the supply of BitUSD and nothing would happen.  I already hate the 10% limits on either side of the feed which were interfering the other day.
The point of BitUSD is not about trading profits.  The point is to create an asset that is useful by virtue of how closely it tracks real USD.   The supply doesn't dry up because bitUSD that tracks USD and has benefits of crypto is valuable to some people.

The term "price fixing" has a lot of negative connotations that have nothing to do with what I am proposing and it's not appropriate.  On some level the whole point is to "fix" the price of bitUSD to USD without centralized counterparty risk.  Under my proposal all trades are still entered into voluntarily by people taking opposite sides of the transaction.

Offline GaltReport

I see 500 dollars on either side usd/bitUSD 1:1 with a 10% difference,

https://bter.com/trade/bitusd_usd

That's good. Please let me know when you see many thousands in that range.

Offline CLains

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I see 500 dollars on either side usd/bitUSD 1:1 with a 10% difference,

https://bter.com/trade/bitusd_usd

Offline bytemaster

Right now BitUSD is highly correlated to USD price with an offset... that is already useful.  As long as you factor in that offset in your strategy you are good.  Over time the offset will narrow.
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 santaclause102

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I think people are still learning the best strategies....  I made some money over night with the following strategy.

1) Buy BitUSD when prices BTSX is high and BitUSD is cheap vs USD
2) Sell BitUSD at the "peg price"  (I make money on corrections automatically)
3) Places shorts low to catch a market correction. (when the market overshoots on the down side I get solid short positions)
4) Cover shorts with USD that was bought cheap.

Anyone who wants to trade on the BTSX volatility can make a killing right now. 

So for the BTSX bull who is also a trader the slight discount on BitUSD vs USD is irrelevant and mostly a constant offset that will gradually move closer and closer to the peg over time as liquidity is added.
bytemaster, you are wrong.  The current market mechanic is flawed.

Using the price feed to set a floor price for valid bitUSD shorts is imperative.  The good news is that this will make bitUSD really work and it will actually track the value of the dollar nicely!  Please act quickly.

Agent, I am going to disagree with you on this one.  The price needs to offer people incentive to go long USD and thus the peg will currently be biased and thus BitUSD is currently 14% cheaper than USD.   To me 14% seems like a reasonable premium to entice people into BitUSD.  It means many people want to leverage up and are so sure of their position they are willing to do it at 14% above market.   The next time we get to bubble highs you will see this spread approach 0 or go negative as demand for a hedge increases. 

So if you want to trade BitUSD vs USD you just have to ask yourself which way will the spread be moving and trade accordingly.

If we were to use "price fixing" as you suggest then you would just dry up the supply of BitUSD and nothing would happen.  I already hate the 10% limits on either side of the feed which were interfering the other day.
Under those conditions 1 BitUSD is always worth 1 USD long term. But if BitUSD fluctuates that much (around the USD) then is is stable enough? I'd say yes if people hold BitUSD medium term at least.