Author Topic: BitUSD is not an interest bearing bond.  (Read 4909 times)

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Offline santaclause102

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What about a mumble special about BitAsset mechanics with a handful of individuals BM selects plus a moderator? Doesnt have to be recorded and published, just to stimulate thinking.

Offline bytemaster

I don't agree with everything Agent86 says and usually I have strong aversion to his ideas. 

Agent86 is a smart guy and he argues his case well.  I fight his ideas until I come to understand where they come from.  He isn't the only one who contributes to my thinking.

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Offline hasher

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it drop because big holders decided to cash out for paper dollars, eur/usd is reaching record low fyi,
btsx will rise again, if larger part of btsx will be distributed among small holders, clones like bilshares will be banned by people and there will be market consensus, i see it in this way
« Last Edit: August 29, 2014, 09:21:53 am by hasher »

Offline santaclause102

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I want to give clarity about the difference between BitUSD and interest bearing bonds and how market based interest rates can be established.  I also want to emphasize what is needed to fix the BitUSD peg.

A couple comments from bytemaster have motivated this post:

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.

 
Bottom line, you cannot get rid of "interest rates" or "premiums" by resorting to price feeds or price fixing.

BitUSD is not supposed to have an associated interest rate.  It's just supposed to track the dollar.  People will buy a bitUSD that reliably tracks the dollar for the purpose of facilitating trade, not for getting interest.

The current BitUSD market implementation is flawed and the peg is not working.  The notion that the difference between USD and bitUSD price is an "interest rate" is inaccurate.  There is nothing stopping the bitUSD price from falling further without intervention.

The method to fix the peg is to use the price feed to limit the creation of new bitUSD by preventing shorts from shorting below the USD price.

Interest bearing bonds require a separate market and implementation from the core BitUSD market.  A BTSX holder can sell a collateralized promise to pay a certain amount of bitUSD at a certain date in the future.  There can then be a "bond market" for these promissory notes.  The present day value of these future promises to pay BitUSD will determine short term and long term interest rates.

The first step however is to get the bitUSD implementation to accurately track the dollar.  And for this we must use the price feeds as I've described.

There are points in this post that I totally agree with, I could not agree more with.(BLUE)

But most of it is something that hopefully will never happen. (RED)

All in all, I HOPE we break the pattern of BM agreeing with each suggestion A86 makes.
What's your suggestion then?

Offline liondani

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In the mean time BTSX crashes....  :(

let's analyze it:

BTSX drops because they are selling BTSX...
the problem is they don't sell it for bitUSD (if that was the case it would rise near the USD prize).
They sell outside the BTSX platform on centralized exchanges.

Why they don't sell for bitUSD on our platform?
1.Because they are not confident that the peg will hold due the difference between bitUSD vs USD getting bigger and bigger...
2.The conversation here help not so much to build the needed confidence at least for the outsiders.
3.Because they can not access our platform due several bugs and several updates each day (the most have not enough time to care about, except they are delegates...)
4.Because they "bet" btsx will rise again. (shorting bitUSD)


Thoughts?

It is quite unique way of thinking - 'they sell BTSX because they think it will rise again.'

Unfortunately, it is the perception that similar logic might be the logic taking over here... so naturally they sell. Not because they like centralized exchanges, but just because they sell where they can actually sell

lol, sorry
bitUSD drops further(short selling bitUSD)  because they thing BTSX will rise...


PS my brain cells are burned guys...  :)
« Last Edit: August 29, 2014, 08:33:14 am by liondani »

Offline tonyk

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In the mean time BTSX crashes....  :(

let's analyze it:

BTSX drops because they are selling BTSX...
the problem is they don't sell it for bitUSD (if that was the case it would rise near the USD prize).
They sell outside the BTSX platform on centralized exchanges.

Why they don't sell for bitUSD on our platform?
1.Because they are not confident that the peg will hold due the difference between bitUSD vs USD getting bigger and bigger...
2.The conversation here help not so much to build the needed confidence at least for the outsiders.
3.Because they can not access our platform due several bugs and several updates each day (the most have not enough time to care about, except they are delegates...)
4.Because they "bet" btsx will rise again. (shorting bitUSD)


Thoughts?

It is quite unique way of thinking - 'they sell BTSX because they think it will rise again.'

Unfortunately, it is the perception that similar logic might be the logic taking over here... so naturally they sell. Not because they like centralized exchanges, but just because they sell where they can actually sell
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline liondani

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In the mean time BTSX crashes....  :(

let's analyze it:

BTSX drops because they are selling BTSX...
the problem is they don't sell it for bitUSD (if that was the case it would rise near the USD prize).
They sell outside the BTSX platform on centralized exchanges.

Why they don't sell for bitUSD on our platform?
1.Because they are not confident that the peg will hold due the difference between bitUSD vs USD getting bigger and bigger...
2.The conversation here help not so much to build the needed confidence at least for the outsiders.
3.Because they can not access our platform due several bugs and several updates each day (the most have not enough time to care about, except they are delegates...)
4.Because they "bet" btsx will rise again. (shorting bitUSD)

Thoughts?

Offline tonyk

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As it should when nonsense ideas are about to go live.!!!!!



[edit] go buy some.chances are bm will eventual come to his senses.
« Last Edit: August 29, 2014, 04:50:31 am by TheOnion »
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline liondani

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In the mean time BTSX crashes....  :(

Offline tonyk

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The price feed (as suggested by Agent86) means that BitUSD could only be sold at exactly the BTSX/USD rate defined by the median price feed?

only *shorted* (can still be sold), at a rate defined by median or moving average when there is no feed

So, the suggestion by Agent and what BM has apparently agreed *2 to only affects a shorters price?  A normal *1 buyer/seller can choose any price?

1* People who short are NORMAL sellers. Heck they are more normal because they are ready to bear bigger consequences for their predictions. Putting twice the money where their mouth is, so to speak.

2* Hell, it is always been the case!  The chance of, whatever 'A86' posts on this forum, to become reality is orders of magnitude bigger than what ever BM posts. It must be the more dominant part of his brain  then... where is transaction ID, btw?




Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline GaltReport

The price feed (as suggested by Agent86) means that BitUSD could only be sold at exactly the BTSX/USD rate defined by the median price feed?

only *shorted* (can still be sold), at a rate defined by median or moving average when there is no feed

So, the suggestion by Agent and what BM has apparently agreed to only affects a shorters price?  A normal buyer/seller can choose any price?

Offline tonyk

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I want to give clarity about the difference between BitUSD and interest bearing bonds and how market based interest rates can be established.  I also want to emphasize what is needed to fix the BitUSD peg.

A couple comments from bytemaster have motivated this post:

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.

 
Bottom line, you cannot get rid of "interest rates" or "premiums" by resorting to price feeds or price fixing.

BitUSD is not supposed to have an associated interest rate.  It's just supposed to track the dollar.  People will buy a bitUSD that reliably tracks the dollar for the purpose of facilitating trade, not for getting interest.

The current BitUSD market implementation is flawed and the peg is not working.  The notion that the difference between USD and bitUSD price is an "interest rate" is inaccurate.  There is nothing stopping the bitUSD price from falling further without intervention.

The method to fix the peg is to use the price feed to limit the creation of new bitUSD by preventing shorts from shorting below the USD price.

Interest bearing bonds require a separate market and implementation from the core BitUSD market.  A BTSX holder can sell a collateralized promise to pay a certain amount of bitUSD at a certain date in the future.  There can then be a "bond market" for these promissory notes.  The present day value of these future promises to pay BitUSD will determine short term and long term interest rates.

The first step however is to get the bitUSD implementation to accurately track the dollar.  And for this we must use the price feeds as I've described.

There are points in this post that I totally agree with, I could not agree more with.(BLUE)

But most of it is something that hopefully will never happen. (RED)

All in all, I HOPE we break the pattern of BM agreeing with each suggestion A86 makes.
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline toast

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The price feed (as suggested by Agent86) means that BitUSD could only be sold at exactly the BTSX/USD rate defined by the median price feed?

only *shorted* (can still be sold), at a rate defined by median or moving average when there is no feed
Do not use this post as information for making any important decisions. The only agreements I ever make are informal and non-binding. Take the same precautions as when dealing with a compromised account, scammer, sockpuppet, etc.

Offline santaclause102

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The price feed (as suggested by Agent86) means that BitUSD could only be sold at exactly the BTSX/USD rate defined by the median price feed?

Offline Agent86

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I think implementing the price feed will stabilize the price at $1 pretty quickly as long as it is done reasonably soon. 
I appreciate the necessity to maintain an accurate peg, both quickly and to term.  I am failing to make the connection between the influence the price feed has on the creation/issuance of the bond you reference. 
-Respectfully
The bond market is something completely new and separate.  It's just something useful to do in addition to creating BitUSD.  BitUSD that tracks accurately would need to be created before you can create a bond market on top of it.