So you borrow your BitUSD.... with bitshares.... the BitUSD

in bitshares •  7 years ago 

So you borrow your BitUSD.... with bitshares.... the BitUSD is created with a minimum of 1.75 x the collateralized amount... if your bitshares price drops below x amount you loose your collateral. When you borrow your BitUSD the call price shows up in the box. If you collateralized more your call price goes down more. You can adjust your ratios up or down at any time.... Your basically betting that bitshares price will increase....

So then after you get your borrowed BitUSD or bitCNY (there seems to be better volume / liquidity with that one) you buy more bitshares and ride the price up....

At some point you have to pay the BitUSD or bitCNY back. So then you sell your bitshares to buy the market pegged asset that you owe on... since bitshares are worth more now it costs less Bitshares to buy the BitUSD back to pay off your loan. Your basically keeping the difference between the price of your loan before and the price of the loan now in bitshares.

Note you want to pick a stable thing that bitshares will rise against... like Id avoid the bitBitcoin... a rising bitcoin price could create a very expensive buy back... and you could get called because the bitcoin price is rising relative to the bitShare price too fast... bitcoin is very hard to predict how it affects bitshares sometimes it seems like they both go up and sometimes they diverge.

So it’s not like shorting on Poloniex where you are betting the bitshares price is declining.... and you are buying the back at the lower price... you basicAlly get Margin called if the bitshares price drops past your uncollateralized position.. hope this helps...

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Thanks for this!