Author Topic: Support BitUSD Price by Forced Covering at a Profit  (Read 6261 times)

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Offline luckybit

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Re: Support BitUSD Price by Forced Covering at a Profit
« Reply #30 on: August 31, 2014, 11:45:47 pm »
Surely bitUSD is a safe haven for any perceived future drop in BTSX. While BTSX rises perhaps it'll be tempting not to buy bitUSD but to short it? So, between those two, you have a draw into bitUSD.

I'm not sure whether you need to control the market as much as sell the idea of it. I wonder there needs to be some ELI5 descriptions for those of us with less experience of financial markets; and those of us who've drunk too much beer :p

If ever there is a prospect of bitUSD being widely available on exchanges and used in the real world, it seems very likely it'll find its market. USD is an imposed consensus; bitUSD is a distributed consensus and as such it's not bitUSD==USD but the peg and the utility and the idea of bitXYZ acknowledging real world assets is a powerful one. Just add time.. not rules.

Quote this:

The only way BitUSD will be used as a safe haven is if information flow and market signalling is improved. People make rational decisions only when they receive timely information otherwise it's just gambling.

BitUSD is best used when you have accurate pertinent information about a market disrupting event which is about to occur. A spike in the purchasing of BitUSD may be a statistical indicator that something has happened which will result in a crash in the price. If Mt Gox gets hacked, if the Bitcoin ETF is about to open, if big whale investors are about to enter the market, all of that influences whether or not people should buy BitUSD because it's a prediction market.

Information right now doesn't flow very well. It's hidden in the forums, in the Mumble meetings, etc. This lack of information flow causes a delay in people purchasing BitUSD, and it is partially why people don't value BitUSD yet. It's going to take a dramatically more interconnected and efficient information flow to create a true information market.

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Offline luckybit

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Re: Support BitUSD Price by Forced Covering at a Profit
« Reply #31 on: August 31, 2014, 11:54:13 pm »
Well, I think it shows that the token she holds will fetch the holder $1 given some time.  If she offers it at a discount ($0.90) I believe there will be other people willing to scoop it up knowing that they will eventually get $1 for it, assuming Bob doesn't take the opportunity.

Maybe Alice shouldn't be buying things that she doesn't want.  All in all, I think with enough people participating my belief is that this problem does not exist and is purely academic.

That's right. All markets will move to equilibrium (price parity) given enough time and liquidity.

The only reasons the peg is slightly off presently is the wallet software (could be more stable and also needs to help the user know when opportunities arise), not enough traders and few abritage opportunities at the moment.

Everyone is forgetting the key element of an information market. Information flow is a key element and we have very poor information flow. If information is like the oxygen in our blood flowing through our bloodstream then if we have poor circulation we can't survive.

BitUSD/BTSX is an information market. It's a prediction market where you're trying to guess whether BTSX is going up or down in price. Since most people have been convinced that it's going up in price not many people decided to buy BitUSD. The other problem is not many people even knew what BitUSD is or how to use it (myself among them).

So you have to consider the amount of time it takes to master the UI of Bitshares X along with figuring out all the advanced features. As expertise begins to increase, along with automation, there will be people who can capitalize quickly, if and only if information circulates.

So we need to build information feeds into the GUI so that information can flow efficiently to eyeballs. The GUI could be like the heart of the whole ecosystem where all information flows through so that everyone using Bitshares X software receives a live stream on their dashboard. This would increase situation awareness and information flow so that speculators can make rational informed decisions quickly.

Right now the Bitshares interface and bugs in the software prevent anyone from using it properly.
« Last Edit: September 01, 2014, 12:03:22 am by luckybit »
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Re: Support BitUSD Price by Forced Covering at a Profit
« Reply #32 on: August 31, 2014, 11:57:30 pm »
Frankly I understand nothing of this, so I have stayed away, but was wondering something (might be stupid).

Is one of the issues is that there are not enough longs or shorts; means at some point one look more attractive than the other and so its skewing it? In that case, can you introduce some kind of 'odds'? In betting, if you are taking less risk, you will receive  a less return; but higher risk nets higher profits.

In the same way if it feels like majority is against, say, short, but you do anyway, shouldn't there be a more incentive? Might balance up both sides this way.

Offline bytemaster

Re: Support BitUSD Price by Forced Covering at a Profit
« Reply #33 on: September 01, 2014, 12:02:09 am »
Surely bitUSD is a safe haven for any perceived future drop in BTSX. While BTSX rises perhaps it'll be tempting not to buy bitUSD but to short it? So, between those two, you have a draw into bitUSD.

I'm not sure whether you need to control the market as much as sell the idea of it. I wonder there needs to be some ELI5 descriptions for those of us with less experience of financial markets; and those of us who've drunk too much beer :p

If ever there is a prospect of bitUSD being widely available on exchanges and used in the real world, it seems very likely it'll find its market. USD is an imposed consensus; bitUSD is a distributed consensus and as such it's not bitUSD==USD but the peg and the utility and the idea of bitXYZ acknowledging real world assets is a powerful one. Just add time.. not rules.

Quote this:

The only way BitUSD will be used as a safe haven is if information flow and market signalling is improved. People make rational decisions only when they receive timely information otherwise it's just gambling.

BitUSD is best used when you have accurate pertinent information about a market disrupting event which is about to occur. A spike in the purchasing of BitUSD may be a statistical indicator that something has happened which will result in a crash in the price. If Mt Gox gets hacked, if the Bitcoin ETF is about to open, if big whale investors are about to enter the market, all of that influences whether or not people should buy BitUSD because it's a prediction market.

Information right now doesn't flow very well. It's hidden in the forums, in the Mumble meetings, etc. This lack of information flow causes a delay in people purchasing BitUSD, and it is partially why people don't value BitUSD yet. It's going to take a dramatically more interconnected and efficient information flow to create a true information market.

+5!
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Offline Blahbleuhbleuh

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Re: Support BitUSD Price by Forced Covering at a Profit
« Reply #34 on: September 01, 2014, 12:21:00 am »
This is history in the making.

I love that you guys are taking the time to dissect every idea and try to implement something that works.

You are operating well outside of the dogmatic belief systems that some people have on here, and you can only be cheered for it.

I think considering to implement multiple, different solutions might be more productive than to just try to get the one way that will work out of the box, because who knows what happens when it gets out of the box?

Good job guys, keep an open mind.

Offline okidoki

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Re: Support BitUSD Price by Forced Covering at a Profit
« Reply #35 on: September 01, 2014, 12:47:45 am »
So this discussion is mostly focused on "how do we make a peg work in a thin market".

...without thinning the market more :-)

Yes, please do not complicate this market with lots of regulations and profit limits for arbitrages, and strange policies like only people who are long bitUSD can short for the same amount... If I had a position and saw it forcefully closed I would say: "What shit is [email protected]!" Also if I have to be long and short at the same time, I do not enter the market at all. You eliminate all the profit!!

Also market feeds do not reflect sudden -50% to +90% price moves of the value of BitShares X!!

Let the people make their bets and introduce another market on Bter in order to increment the transparency of the market and let the arbitrage work. PLEASE!!! This will help the market to be attractive for traders and give it more and more liquidity. You have to give it some time....
« Last Edit: September 01, 2014, 12:49:54 am by okidoki »

Offline liondani

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Re: Support BitUSD Price by Forced Covering at a Profit
« Reply #36 on: September 01, 2014, 01:11:38 am »
So this discussion is mostly focused on "how do we make a peg work in a thin market".

...without thinning the market more :-)

Yes, please do not complicate this market with lots of regulations and profit limits for arbitrages, and strange policies like only people who are long bitUSD can short for the same amount... If I had a position and saw it forcefully closed I would say: "What shit is [email protected]!" Also if I have to be long and short at the same time, I do not enter the market at all. You eliminate all the profit!!

Also market feeds do not reflect sudden -50% to +90% price moves of the value of BitShares X!!

Let the people make their bets and introduce another market on Bter in order to increment the transparency of the market and let the arbitrage work. PLEASE!!! This will help the market to be attractive for traders and give it more and more liquidity. You have to give it some time....

I tend to agree with that... my only concerns are that we have many "newbies" that express the same thing, and less  "older" members they do...(?)  ::)


PS Don't take it personal  ;)

Offline tonyk

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Re: Support BitUSD Price by Forced Covering at a Profit
« Reply #37 on: September 01, 2014, 01:15:27 am »
So this discussion is mostly focused on "how do we make a peg work in a thin market".

...without thinning the market more :-)

Yes, please do not complicate this market with lots of regulations and profit limits for arbitrages, and strange policies like only people who are long bitUSD can short for the same amount... If I had a position and saw it forcefully closed I would say: "What shit is [email protected]!" Also if I have to be long and short at the same time, I do not enter the market at all. You eliminate all the profit!!

Also market feeds do not reflect sudden -50% to +90% price moves of the value of BitShares X!!

Let the people make their bets and introduce another market on Bter in order to increment the transparency of the market and let the arbitrage work. PLEASE!!! This will help the market to be attractive for traders and give it more and more liquidity. You have to give it some time....

I tend to agree with that... my only concerns are that we have many "newbies" that express the same thing, and less  "older" members they do...(?)  ::)


PS Don't take it personal  ;)


I personally do not like text in red... although in this case it is in the correct color for wrong.
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline yellowecho

Re: Support BitUSD Price by Forced Covering at a Profit
« Reply #38 on: September 01, 2014, 01:31:02 am »
This is history in the making.

I love that you guys are taking the time to dissect every idea and try to implement something that works.

You are operating well outside of the dogmatic belief systems that some people have on here, and you can only be cheered for it.

I think considering to implement multiple, different solutions might be more productive than to just try to get the one way that will work out of the box, because who knows what happens when it gets out of the box?

Good job guys, keep an open mind.

There's continuous dialogue about systematic improvements  in order to increase efficiency and reduce costs like a company (DA) should do. A beautiful aspect of the Bitshares platform is that it incentivizes R&D! 
696c6f766562726f776e696573

Offline yellowecho

Re: Support BitUSD Price by Forced Covering at a Profit
« Reply #39 on: September 01, 2014, 01:49:37 am »
If we are going to rely on a price feed we can force covering any time the highest offer to buy BitUSD is less than 90% of the feed price.

Could price feeds reduce price security?  Could there be DDOS attacks on feed sources to could make the network less stable?  Just wondering..


Does this punish shorts?  I don't think it does.  I think it supports the peg by adding liquidity without adding any risk to the shorts. 

I think this added liquidity should come form which ever shorts are least collateralized.  This way the shorts which don't want to be forced into providing liquidity pre-maturely can avoid it by having a large surplus of collateral and thus making the entire network more secure. 

Under this system BitUSD is always worth at least $0.90 and the market makers / market will likely drive that to near $0.99- $1.01.

I don't mind this approach but I'm glad we're discussing it.  I have been Alice and run into a couple liquidity problems so far trading BTSX and I think what you're proposing would be fair and increase liquidity.  With that said, is it the best way?  Will liquidity not increase as other currencies/options are added to the platform?  In your example Alice is stuck because there is one exit from her USD position and it's blocked.  But what if there were more exits?  What if Alice could buy CNY from Zhang Li?  ;)  Or Bitcoins from Stan?   More exits = more liquidity. 
696c6f766562726f776e696573

Offline yiminh

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Re: Support BitUSD Price by Forced Covering at a Profit
« Reply #40 on: September 01, 2014, 02:13:36 am »
I have a perfect solution to this pegging problem, only need one little change to the current system, no price feeds, no 90% stuff, if you post a 10 M BTSX bounty, I'll post it.

Offline tonyk

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Re: Support BitUSD Price by Forced Covering at a Profit
« Reply #41 on: September 01, 2014, 02:19:15 am »
Sure, only if it is implemented without changes you get the 1 Million bounty!

10Mil are you nuts?
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline yellowecho

Re: Support BitUSD Price by Forced Covering at a Profit
« Reply #42 on: September 01, 2014, 02:20:02 am »
696c6f766562726f776e696573

Offline James212

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Re: Support BitUSD Price by Forced Covering at a Profit
« Reply #43 on: September 01, 2014, 02:23:05 am »
Surely bitUSD is a safe haven for any perceived future drop in BTSX. While BTSX rises perhaps it'll be tempting not to buy bitUSD but to short it? So, between those two, you have a draw into bitUSD.

I'm not sure whether you need to control the market as much as sell the idea of it. I wonder there needs to be some ELI5 descriptions for those of us with less experience of financial markets; and those of us who've drunk too much beer :p

If ever there is a prospect of bitUSD being widely available on exchanges and used in the real world, it seems very likely it'll find its market. USD is an imposed consensus; bitUSD is a distributed consensus and as such it's not bitUSD==USD but the peg and the utility and the idea of bitXYZ acknowledging real world assets is a powerful one. Just add time.. not rules.

Quote this:

The only way BitUSD will be used as a safe haven is if information flow and market signalling is improved. People make rational decisions only when they receive timely information otherwise it's just gambling.

BitUSD is best used when you have accurate pertinent information about a market disrupting event which is about to occur. A spike in the purchasing of BitUSD may be a statistical indicator that something has happened which will result in a crash in the price. If Mt Gox gets hacked, if the Bitcoin ETF is about to open, if big whale investors are about to enter the market, all of that influences whether or not people should buy BitUSD because it's a prediction market.

Information right now doesn't flow very well. It's hidden in the forums, in the Mumble meetings, etc. This lack of information flow causes a delay in people purchasing BitUSD, and it is partially why people don't value BitUSD yet. It's going to take a dramatically more interconnected and efficient information flow to create a true information market.

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Offline yiminh

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Re: Support BitUSD Price by Forced Covering at a Profit
« Reply #44 on: September 01, 2014, 02:30:11 am »
Sure, only if it is implemented without changes you get the 1 Million bounty!

10Mil are you nuts?

Don't you think it's worth 10M BTSX if it worked?