SBD at .0025 BTC?? How is this making any sense? I explain what happened with the pricings today

Lots of excitement in the markets today, first and foremost the commencement of Poloniex trading. Some big surprises, but first some backstory.

As you might know from my recent posts the current liquidity points system is broken. Broken as in DOA, fail, not doing what it is supposed to at all. I traded probably over $100,000 worth in the internal market in the last 24 hours. I've had many orders on the books, a lot of them filled, but before the 30 minutes since I usually price it close to the fair market value.

So, you can see how many liquidity points the second most active market maker has received: https://steemd.com/tools

Find the "jl777" entry... Hmm... you cant find it either? You can see my trade record here https://steemd.com/@jl777
But the reason I get no points is that around 20 minutes after I list it, if it is still there, abit kindly clears it for me. He says he is doing it for some reason other than preventing me from getting any points, but my guess is that is why he does it. He likes to keep his monopoly on the liquidity awards, with his dozens of accounts all in a queue for the hourly 1200 STEEM. Anyway, that is a dead horse, no sense to keep beating it.

abit tries to defend his behavior by saying he is providing liquidity and how wonderful a job he is doing. However, his primary goal is to get as many of the liquidity awards he can, and so far he seems to be getting 100% of them. which adds up to 28,800 liquid STEEM per day giving him so much capital he can basically dominate any other market maker (and probably all others combined). And his power grows hourly.

I said that if I was getting such rewards I would create a pegged SBD market with a tight spread. abit then offered me 10,000 STEEM bounty if I deployed such a bot. Well, I figured might as well make such a bot and get the bounty, since I cant get any of the liquidity awards, at least I would get more working capital. So, I wrote it today, but the problem is there is no way to get past the large walls abit puts up. So I ask about how I can collect the bounty and he responds:

"abitmore commented 2 hours ago
Yes adm is my account. I set a wall up just now after saw a wall setup by others.

TBH the offer for trading around peg is not really an offer. If you come up with better idea, I'm wiling to provider another offer."

So, his offer was not really an offer. Surprise surprise. I am sure he will downvote this post also, like he downvoted my prior one that used aggressive language against him. He has so much steem, it cut my blog reward in half due to his downvote. So, it is not enough he gets 28,800 liquidity awards per day, it is not enough he zeroes my chances to get any points, he has to downvote my posts!

Anyway, now I have an automated market maker that is tracking prices on bittrex, poloniex and the internal market and it can create a SBD market that is close to the implied price.

Back to the markets...

After polo started trading, the price went up 50% to peak around .0065, but generally .0055 to .0060, but with polo leading the price rise on lower volumes than trex. The big surprise was SBD, which was pumped to .0025, which is over $1.60! Now are the polo traders just not understanding what the SBD is or do they know something?

My guess is that it was someone who understands the steemit market very well that pumped the SBD price, maybe even abit himself. The reason is that as I was debugging my automated market maker, I stopped manually pegging the SBD price to the implied price. In anycase, when the trex price is so different from polo price, it is not really possible to even know what the implied price is. So, one tweak I need is to have the automarketmaker wait for orderly markets, meaning if there are arbitrages possible then wait for them to work through the exchanges as it means the prices will be changing soon, and possibly dramatically.

The reason why paying $1.60 for SBD isnt insane is that the internal market plummeted to $2.50 per STEEM, when the implied value was $4+. Now if you calculate 4/2.5 = 1.6x. Coincidence? Actually no, that is the correct price. So it means the polo traders buying SBD at .002 were making money!

Anyway, now the markets are settling down, things start to appear a lot more sane, but it actually wasnt that insane even during the SBD pump. right now implied SBD is 3.75, but there is an ask at 3.25. A 15% difference. The BTC implied price for SBD is .0015, so the corresponding price is 0.00173. SBD is trading at .002, which is probably inventory that was purchased below $3.

See, not so crazy