Proposal - Significant Enhancement to Market Engine

[jsidhu]

Great job. Really like the new system and the GUI - graphs, advanced mode and the way you enter shorts with collateral. It looks good and all seems much easier to use than the last time I tried trading a few weeks ago.

Will market makers not struggle to compete with long term shorts on collateral though?

What if there was a max collateral & after that you competed on fee per BTSX you were willing to pay to short, but that fee would only be deducted if you hadn't covered within a week/month.

I think something like this would actually benefit market makers as well as increase yield for BitAssets?

I have been thinking about this and market makers can provide high collateral because they get their yield from the spread.... shorts wouldn't want to post that high of a collateral because their ROI would be far less. 

The primary idea I have been contemplating is a "maximum short duration" on the order of a week to 1 month after which the short is required to cover at market price.  This keeps people honest and prevents market makers from having to carry the float for all short interest for all time.   A market maker can then count on all shorts having to cover and price their spreads accordingly.   I think "churn" of short orders will be important to the peg.

I know those that hold CFD contracts in the forex market through the brokers have an expiry where each month (or quarter, depending on CFD) you have to roll your contract over by rebuying the contract or simply letting it expire and taking the profit/loss. This only applies to CFD because maybe the broker is buying future contracts to hedge against your position internally. To the broker it ends up acting as a "short" position in a way.

So the daily rollover provides interest if holding in the right direction for all positions, and a montly rollover ends your contract ONLY if you are holding CFD positions. THis way the broker (market maker) is guaranteed to create fees from the spread because of the "churn".

[bytemaster]

Great job. Really like the new system and the GUI - graphs, advanced mode and the way you enter shorts with collateral. It looks good and all seems much easier to use than the last time I tried trading a few weeks ago.

Will market makers not struggle to compete with long term shorts on collateral though?

What if there was a max collateral & after that you competed on fee per BTSX you were willing to pay to short, but that fee would only be deducted if you hadn't covered within a week/month.

I think something like this would actually benefit market makers as well as increase yield for BitAssets?

I have been thinking about this and market makers can provide high collateral because they get their yield from the spread.... shorts wouldn't want to post that high of a collateral because their ROI would be far less. 

The primary idea I have been contemplating is a "maximum short duration" on the order of a week to 1 month after which the short is required to cover at market price.  This keeps people honest and prevents market makers from having to carry the float for all short interest for all time.   A market maker can then count on all shorts having to cover and price their spreads accordingly.   I think "churn" of short orders will be important to the peg.

[Empirical1.1]

Great job. Really like the new system and the GUI - graphs, advanced mode and the way you enter shorts with collateral. It looks good and all seems much easier to use than the last time I tried trading a few weeks ago.

Will market makers not struggle to compete with long term shorts on collateral though?

What if there was a max collateral & after that you competed on fee per BTSX you were willing to pay to short, but that fee would only be deducted if you hadn't covered within a week/month.

I think something like this would actually benefit market makers as well as increase yield for BitAssets?

[tonyk]

@Devs.
I do not know if this is by design but the short-wall is following the 1h average it seems not the feed price... Re: check the bitBTC/BTSX market right now.

Insufficient feeds

Sent from my SCH-I535 using Tapatalk

I had to restart due to the 'fork bug', but it seemed as if enough feeds were present at the time. 'Old feeds' will be a good explanation for that ...
Anyway, nothing too alarming, just a possible bug report, is what that  was.

[麥可貓]

there is a proposal about enabling short of BTSX to enhance peg here:
https://bitsharestalk.org/index.php?topic=9053.0

And I translated it as the following:


I think we can consider implementing 'short BTSX', just like 'futures markets' in real world.


Short of BTSX can be implemented by collateralization of BitAssets;  this will enable hedge of both sides, and prevent too many BitAsset short orders. In this way, the rules will be greatly simplified.

In the beginning of enabling BTSX short, some protections are still needed:
1、price feeding by delegates is still needed, and the extreme 10% of price feed should be removed from average price.
2、short of BTSX should be matched with minimal price, e.g.,100BTSX/BitCNY
3. order based on 1hr average price is still needed

with the short of BTSX, the process of pegging will be accelerated. If there is too many BTA in the market, short of BTSX can make extra profit.

and another rule should be added: all shorts needs to be covered in a year, or will be charged 5% of interest.

[toast]

@Devs.
I do not know if this is by design but the short-wall is following the 1h average it seems not the feed price... Re: check the bitBTC/BTSX market right now.

Insufficient feeds

Sent from my SCH-I535 using Tapatalk

[tonyk]

@Devs.
I do not know if this is by design but the short-wall is following the 1h average it seems not the feed price... Re: check the bitBTC/BTSX market right now.

[oldman]

Monday will change all of that.  We will create a trading bot that will buy all the usd it can short at 99.5% of market price.

The bot is live I guess...

Can the devs confirm status? Be interesting to know if the bot is running..

[tonyk]

Monday will change all of that.  We will create a trading bot that will buy all the usd it can short at 99.5% of market price.

The bot is live I guess...

[starspirit]

Monday will change all of that.  We will create a trading bot that will buy all the usd it can short at 99.5% of market price.

There will be huge buy and sell walls right near the peg.   

Once those walls are proven then usd holders will consider the yield and utility and demand will come.

Is this reference to the market making bot made freely available in another thread? Are the walls expected immediately (now Monday is ending) or to build over time as more people use the bot? Or is it something else?

[Empirical1.1]

Think of the shorts as usd issuers who cannot run off with your money and are competing to put the most on the line. 

Right now few shorts want to cover because their losses are big and they don't think btsx can go much lower. 

I hope they are right. 

A market maker in my case is someone who doesn't mind a little short exposure because they are btsx bullish.   BitUSD will never surge to more than $1 while there are so many bulls like myself looking for leverage. 

The key is to allow shorts to cover with no fee as soon as possible to provide liquidity for usd holders. 

If people have high confidence that they can sell their usd near a dollar then they will buy.  The problem is that there is not any confidence in that and thus little demand. 

Monday will change all of that.  We will create a trading bot that will buy all the usd it can short at 99.5% of market price.

There will be huge buy and sell walls right near the peg.   

Once those walls are proven then usd holders will consider the yield and utility and demand will come.

Sounds good, this should work and have an incentivising effect for genuine longs too. I'm personally looking forward to a BitGold & BitSilver with more collateral as I was worried about a sudden upside revaluation due to Comex default or something.

However at some point increasing collateral won't create an additional incentive for genuine longs but converting competition from long term shorts who don't mind competing on fees, would. So it seems like there's money and BitAsset demand being left on the table here, though probably best not to over-complicate it.

Either way I won't judge this change by it's immediate effect as I think genuine long demand will build slowly, unless there's a real world financial event, as things like a very stable client, decentralisation of voting stake, as well as just a track record of a functioning BitAsset system may be required to create significant BitAsset demand.

 

[CLains]

Still blowing my mind that we can short bitUSD on a blockchain.   

[betax]

I think that now that the price of BTC, it will be a good idea to implement this
https://bitsharestalk.org/index.php?topic=9075.0
as discussed by emski and drltc.

If you can buy directly bitUSD with BTC it will allow day traders to close their positions at a minimal risk / expense.

Not trustless, not liquid, but trading:
https://bter.com/trade/BTC_BITUSD

Yes, a day trader is dealing at Bitstamp could just convert BTC to USD. The proposal here is that to avoid risks (Bitstamp, Bter going down, hacked, etc) is to convert your BTC to bitUsd and store it in your wallet.  Next day the day trader can start dealing again here or Bitstamp, Bter ....

*Extra*

BTW I am happy with the idea of the market maker, I am just proposing simple solutions to increase the demand of bitUSD which was one of the issues here.

[bytemaster]

Simplicity - add a checkbox "advanced mode" that will show all functionality.
Without it -> only simple buy/sell with a single click of a button.

This will make a lot more sense one the spread is narrow.

[emski]

Simplicity - add a checkbox "advanced mode" that will show all functionality.
Without it -> only simple buy/sell with a single click of a button.