Author Topic: BitUSD Market Maker - Proposal for Discussion  (Read 17794 times)

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Offline CoinHoarder

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Re: BitUSD Market Maker - Proposal for Discussion
« Reply #45 on: August 29, 2014, 07:30:18 pm »
please just make the change that prevents any short that is below the median price feed from being matched...

Any reason not to make the change?

Because then the bitasset ecosystem is not truly decentralized. Isn't that what bitassets are all about in the first place? Accurately determining the price of an asset in a completely decentralized manner?

Give the system time to mature. Many people cannot even access their funds and thus the market because of software bugs. It is a broken experiment thus far that was setup for failure. Give time for the bugs to be fixed, market depth and liquidity to increase, THEN judge whether the experiment was successful or not.
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Offline toast

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Re: BitUSD Market Maker - Proposal for Discussion
« Reply #46 on: August 29, 2014, 07:32:09 pm »
the right thing is to implement ONLY the short restriction via median feed, wait for peg to stabilize, then let delegates experiment with disabling feed and only using moving average to restrict shorts, or experiment with market maker if things start going downhill
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Offline Agent86

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Re: BitUSD Market Maker - Proposal for Discussion
« Reply #47 on: August 29, 2014, 07:43:48 pm »
please just make the change that prevents any short that is below the median price feed from being matched...

Any reason not to make the change?

Because then the bitasset ecosystem is not truly decentralized. Isn't that what bitassets are all about in the first place? Accurately determining the price of an asset in a completely decentralized manner?

Give the system time to mature. Many people cannot even access their funds and thus the market because of software bugs. It is a broken experiment thus far that was setup for failure. Give time for the bugs to be fixed, market depth and liquidity to increase, THEN judge whether the experiment was successful or not.
The decentralized feed doesn't change the fact that bitUSD is still decentralized and useful and it doesn't defeat the purpose.  Giving it more time won't help and will decrease confidence.  I'm confident it won't work for reasons that go beyond looking at the price action.  I proposed the feeds because I thought we would need a backstop and I don't know why we switched to moving averages or why everyone hates the feed just on principle.  There's nothing wrong with using a feed and it doesn't violate any important principles.

Offline bytemaster

Re: BitUSD Market Maker - Proposal for Discussion
« Reply #48 on: August 29, 2014, 07:49:21 pm »
If we can avoid the feed then we can claim BTSX is allowing price discovery.  With the feed, price discover still occurs off chain.

The looser the feeds role the more accurate the market is.  Allowing delegates to "switch" to a moving average or similar algorithm is also viable.  In this case we remove the average from the validation rules, but can still use it in practice on a "test" basis. 

I think an alternative to the "market maker" which could leave the network exposed, is to force "covering at a profit" when someone wants to exit.  This adds no risk to the network.

For example, suppose we had the following situation:

Initial Price 1 USD == 1 BTSX  and  1 USD == 1 BitUSD
Someone Shorts at 1 BitUSD per BTSX.
The value of 1 BitUSD falls to .90 BTSX   (the short has a 10% profit)
Someone wants to sell 1 BitUSD at .90 and there are no takers...
The short is forced to exit their position at a profit.

How the short has 1.1 BTSX and they can "short again" at the feed price.   

The result is that liquidity is provided by the shorts who are already profitable without any risk to the network.

 
« Last Edit: August 29, 2014, 07:59:46 pm by bytemaster »
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Offline liondani

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Re: BitUSD Market Maker - Proposal for Discussion
« Reply #49 on: August 29, 2014, 07:54:09 pm »
not to many rules/changes please  ,  keep it "simple"  as possible ...

Offline bytemaster

Re: BitUSD Market Maker - Proposal for Discussion
« Reply #50 on: August 29, 2014, 08:00:07 pm »
not to many rules/changes please  ,  keep it "simple"  as possible ...

I agree... SIMPLE is key here.   
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Offline yiminh

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Re: BitUSD Market Maker - Proposal for Discussion
« Reply #51 on: August 29, 2014, 08:32:40 pm »
let's stop the market, longs and shorts agree on a  fair price, sell/cover all, wipe the slate clean, change the rules, get rid of the bugs, then open the market, start over:)

Offline yiminh

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Re: BitUSD Market Maker - Proposal for Discussion
« Reply #52 on: August 29, 2014, 08:54:16 pm »
have you ever played blackjack? when bets are down, cards are dealt, dealer can't say: OOps, there is a slight rule change, 22 beats 21:)

Offline yiminh

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Re: BitUSD Market Maker - Proposal for Discussion
« Reply #53 on: August 29, 2014, 09:01:36 pm »
concensus is based on fairness, no fairness, no concensus

Offline bytemaster

Re: BitUSD Market Maker - Proposal for Discussion
« Reply #54 on: August 29, 2014, 09:11:31 pm »
concensus is based on fairness, no fairness, no concensus

Yes.   Fairness is very important.  In this case the goal of BTSX is to engineer a market peg that is as trustless as possible.  The "rules" are if you buy BitUSD then it should eventually be worth $1 and if you short BitUSD you should take your gains and losses accordingly.   

Every "rule change" being proposed is designed to enforce the consensus on BitUSD and reward people who trade accordingly.   

If you are trading BitUSD betting it will go to 0.... then you are betting we will be unable to enforce the rules via markets or price changes.


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Offline CoinHoarder

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Re: BitUSD Market Maker - Proposal for Discussion
« Reply #55 on: August 29, 2014, 09:17:49 pm »
please just make the change that prevents any short that is below the median price feed from being matched...

Any reason not to make the change?

Because then the bitasset ecosystem is not truly decentralized. Isn't that what bitassets are all about in the first place? Accurately determining the price of an asset in a completely decentralized manner?

Give the system time to mature. Many people cannot even access their funds and thus the market because of software bugs. It is a broken experiment thus far that was setup for failure. Give time for the bugs to be fixed, market depth and liquidity to increase, THEN judge whether the experiment was successful or not.
The decentralized feed doesn't change the fact that bitUSD is still decentralized and useful and it doesn't defeat the purpose.  Giving it more time won't help and will decrease confidence.  I'm confident it won't work for reasons that go beyond looking at the price action.  I proposed the feeds because I thought we would need a backstop and I don't know why we switched to moving averages or why everyone hates the feed just on principle.  There's nothing wrong with using a feed and it doesn't violate any important principles.

There is no such thing as a decentralized feed... the data fed to the "decentralized" feeds are from centralized sources, and there is a smallish group of people that publish the said "decentralized" feeds. There are two weak links in that chain and it is not decentralized... call is pseudo-decentralized if you must, but it is not ideal and not decentralized in the sense of the true meaning of the word.

On top of there being not enough market depth and liquidity, bitUSD has another underlying factor that is stopping it from reaching parity, and changing the way the decentralized exchange functions will not fix it. That underlying issue is that there is simply not much demand for bitUSD. I would venture to say that a deflationary asset (gold/bitcoin?) with the exact same market system as bitUSD would be closer to its actual value, because then people have more of a reason to want to purchase it rather than hold onto their BTSX.

I think we as a community need to get together and organize projects that will increase the utility of bitUSD, because at the moment you can only buy or sell it and nothing else. I think most people in the Bitshares ecosystem are bullish on BitsharesX, so the demand is just not there. We need to get organized, brainstorm about the best use cases for bitUSD, and then raise funds and build those uses for it. I think things like gateways which would allow bitUSD to be spent anywhere Bitcoin is accepted is a good start, perhaps a multi-pool that pays out in bitUSD, things like this will increase the demand and thus keep bitUSD closer to its real life counterpart.

It is not the market system that is broken, the demand is just not there right now. We need to work on that as a community.
« Last Edit: August 29, 2014, 09:23:23 pm by CoinHoarder »
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Offline yiminh

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Re: BitUSD Market Maker - Proposal for Discussion
« Reply #56 on: August 29, 2014, 09:22:07 pm »
there maybe a lot of ways to keep the peg, you need to give the peg and market a lot of time to prove itself, changed the market engine and hard fork should be the last last resort, if you use AGS BTC buying BTSX again on the open market, we won't have this peg problem:) no rules have to be changed:)

Offline Empirical1

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Re: BitUSD Market Maker - Proposal for Discussion
« Reply #57 on: August 29, 2014, 09:22:57 pm »
have you ever played blackjack? when bets are down, cards are dealt, dealer can't say: OOps, there is a slight rule change, 22 beats 21:)

They are not changing the the rules...

https://bitsharestalk.org/index.php?topic=7231.0

Quote
Bottom line, we are going with the most market-based solution first and have fall backs to feed based solutions if they prove necessary

Offline bytemaster

Re: BitUSD Market Maker - Proposal for Discussion
« Reply #58 on: August 29, 2014, 09:24:24 pm »
The primary utility for BitUSD within our community is hedging against bubbles.
The secondary utility (longer term) is as a means of payment.
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Offline wesphily

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Re: BitUSD Market Maker - Proposal for Discussion
« Reply #59 on: August 29, 2014, 09:26:38 pm »
I know I have more trust in hedging into a decentralized exchange then into a centralized exchange where all my funds can be stolen by hackers. I think that people undervalue security and the skills of hackers. There are very few if any websites that can't be hacked. I really think there are none but there is only one way to prove that so I can't state that as a fact.


EDIT: Once bit(whatever) can be converted to the real version 1:1 we will be in the money.
« Last Edit: August 29, 2014, 09:31:17 pm by wesphily »