Segregated Trading Pairs Decrease Overall Liquidity

in bitshares •  7 years ago  (edited)

Bitshares is a platform for Decentralized Trading. It is a protocol that allows users to create assets and post limit orders. One way of trading on the DEX is through a gateway like OpenLedger or Crypto-Bridge. Both use the Bitshares user interface and offer IOUs that can be traded for anything else on the DEX.

The Bitshares community would benefit from connecting and scaling the different trading pairs on DEX. Below are the order books for OL & CB.

Screenshot 2018-04-10 14.29.32.png
Screenshot 2018-04-10 14.29.26.png

The OL limit order book offers superior liquidity. CB is the more immature organization – although they do offer an innovative profit-sharing mechanism. Both market maker subsidies and dividends from the transaction fees on the CB network. There must be potential for the core BTS protocol to capture the value from consolidating and scaling all the .BTC trading pairs on DEX.

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Good read @john-robert ! See u at the BTS Telegram...

I know a lot of people are thinking about combining the different gateway assets. It's been discussed several times on bitsharestalk, but it always comes down to not forcing people to be stuck with a gateway they might not want. Like if you think you're buying open.LTC and suddenly you have bridge.LTC in your account. Then you might have to pay different fees than you expected if you want to get your LTC's out.

But I agree, it would improve the platform tremendously to have this feature.

Do you have some idea how to get the gateways to come together and do this this? because the bts programmers don't think they can do it.

  ·  7 years ago (edited)

They could issue bitBTC instead of open.btc and bridge.btc... then the trading and long-term holding of assets would be risk-free for users. The only time when they fund would be in other's hands would be when depositing/withdrawing real BTC. After bitBTC proves to work, others could follow.

Gateways would have to use their money at the beginning as a collateral to create bitBTC. A small fee could be introduced on trading bitBTC which would be used for buying BTS at the open market which would indirectly lower gateway's risk.

This is more in line with the potential response. The issue simply stated is that the overall network would benefit from a concentration of trading volume to make the DEX more attractive to other traders. A committee run escrow account could be a solution but either way it would be helpful to have the gateways themselves on board. This is where the Federated nature of "Federated Gateways" comes into play.

Of course the risk with bitBTC in that way is that it is shorted so it can black swan. which would cause a pretty big scandal if people had deposited.

I guess you would also lose the direct relation with how much gateway.asset is deposited and how much they are holding.

bitBTC could be utilized in this scenario if the community directed some of the shared treasury to support the bitBTC market.

The bts protocol is quite flexible and I am sure there is technically a way to accomplish something similar. I am still thinking of how a solution could be implemented but it is definitely important to build up the gateways and encourage them to work together since they are stakeholders as well.

BTS blockchain would then be outwardly displaying preferential treatment for gateways. As mentioned already before, people CHOOSING their wallet is important. You can't just throw peoples BTS at bitcoin that COULD be compromised and POSSIBLY not paid back.

The idea being explored here is a way for the bts protocol to enable greater liquidity among BTC pairings to support all gateways. It is a structural headwind for the platform to support several various BTC pairings each struggling with lagging liquidity. This is still a brainstorming session - I do not proclaim to have a situation right now.

I suppose if you were to have a set-up screen where you could aggregate them via GUI. The reason I think this is import is because is exchange/gateway A: has some sort of quantum resistant service and gateway b: has a shaky design with a vulnerability -- I want to be able to choose which gateway will receive x.asset. The BTS blockchain is not Atomic Swap and thus the central security of the gateway is imperative and thus the grouping is subject to massive implications.

Yes the idea would be to grant the user maximum freedom to use which gateway he wanted. Bts protocol is not atomic swap but it is a second layer solution (DEX) for other chains like BTC.

So I would be willing to "federate", as you mentioned, my own pairings, but I think for worker/commitee action to choose a default would be wrong.

Yes the gateways would vountarily form a federation. Non-Aggression Principle.

Emphasizing personal preference and responsibility in the gateway would be sufficient for a true decentralized exchange. The only way I can see this working is if a ton of money is spent verifying security and/or insuring storage for this "easy-mode" pairing. But I guess the BTS commitee and workers have a metric ton of money to work with. lol

Agreed that the committee may not be well-positioned to handle this. There could be an opportunity for a private firm to serve as a BTC wholesale of sorts on the DEX.

I see what you mean, that would require a HELL of a lot of faith in the ecosystem itself. The stability and security of the "dpos" "voting block" can be a blessing, but it could also shove a knife in the back of the beast. You know what i mean?

I do. I trust the market and the dex is just that.

Open Ledger.... putting the centralization back into the Dex...one stealth fee hike at a time.

You can treat the gateways as, gateways - simply for adding asset to your DEX account on BitShares. You don't have to trade any of their assets or other gateways. Then you trade the DEX bit-assets until you wish to cash out and use any of the possible gateways to do so.

Or you can use their trading assets that are backed and supported by the coins network wallet. This is more secure and traceable than any other Exchange you have to choose from, as they use of-blockchain books.

Without the gateways, adding other coins through deposits/withdrawals would be an issue.

PS. Fees are always visible

Either way, you choice every day.

What's wrong with choice?

I kind of like it the way it is. It puts pressure on the different gateways to offer the latest and greatest. Openledger, who has been the dominant player certainly has been forced to step up their game in the competition with cryptobridge. Which benefits all.

The only exception where a joint gateway system would be good is the bigger coins like btc, eth and ltc. But there are talks and initiatives to manage this through atomic swap.

@funkit can you say more detail on the atomic swap discussions. I am sure a lot of Bitsharians would be interested in these matters.

It's in the works and we'll have more news about implementation soon. Further description of atomic swaps on Graphene chains here.

Thank you for the details. I heard about your announcement regarding the atomic swap. Definitely looking forward to learning more about scorum.

No. I can't because I'm not familiar with the terms and how it will all work. But I know Open Ledger has it in the BSIP they produced a few months ago. And I have overheard something about it in a Bitshares Hangout. I would ask Taconator if I were you. Fuzzy might also be a good resource.

Great thank you.

This is my opinion. I think joining gateways is going to take a lot of thought. Because the security of OL is not the security of DEEX and both of them are not the security of Cryptobridge. So with that said, gateway separation is equally as important as joining/the ease of understanding.

You cannot "JOIN" three different variables that are not identical. Right when "one of the joined platforms" lsoes access to x amount of tokens -- the ENTIRE JOINED ASSET IS AT RISK OF A LACK OF FAITH. Which is a MASSIVE problem.

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