I've been thinking that one of the things that is missing from Steem-Engine is liquidity for the market. Maybe not all tokens should be traded a lot, but we should be able to get some good volume against bitcoin, litecoin, doge, BCH, and other majors that are being added to the exchange soon.
I could run around begging people to put money on the exchange and that might work, but I like to think of ways that abundance can be achieved. I've been thinking about the need of a market making bot and how we can make one that anyone who puts money into it can benefit from it.
Proof of Trade Digital Mining Bot
So, I want it so that you buy a token, the token funds are used to fund a market making bot, and the token ownership determines your percent chance of getting daily rewards from trading. It's a combination of the mining concept and market making trading concept.
So, a market making bot will buy and sell tokens. When it sells them it buys some back at a cheaper price. When it buys them it also sells some at a higher price. The bot doesn't really care about the current prices. It's just trading back and forth all day and trying to skim off of every trade.
Often this function is performed by 1 person with a lot of money, but I'd rather open source it and allow many people with smaller amounts of money to profit from this thing. It's important to me that everyone on the exchange has a chance to make money because of their involvement on the exchange!
So, how does it work again?
Step 1. Money is raised and all of it goes into purchasing steemp/and a pegged crypto.
Step 2. For every dollar raised you get 1 Proof-of-Trading token.
Step 3. Steem and Crypto bids are placed in a spread on both sides of the trade in a range.
Step 4. Trading happens and every trade generates money.
Step 5. 100% Proceeds of the bot are randomly given out each day according to how many tokens the owners hold.
Parts of this might be reproduced from this open source market making bot that already exists
Repository
https://github.com/aggroed/proofoftrademining
Steem Engine exists as https://github.com/MattyIce/steem-engine
Details
Bot will be opensource and MIT lisenced.
Components
None of it currently exists
Deadline
6/1/19
Communication
[email protected] or Discord- https://discord.gg/whqnzqT
Don't you ever sleep?!!
How do you keep coming up with AND implementing such great innovations one after the other?
Can we clone @aggroed?
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A question on this.
It seems to me part of the problem of crypto (first seen in stocks and other commodities) is the speculation leads to inflated and deflated prices instead of being based close to the actual value of the item.
When you say market making, is that a different way of saying it will push prices (in effect, picking momentary winners and losers) up or down based on what the power of the market making bot is doing?
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All crypto fans bitching against banks and exchanges but when they smell the money....
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A market maker provides liquidity in a market. It helps to keep the spreads close so people can trade in and out of assets quickly. If you want to see a market that does not have them, look at the pink sheets.
As for the first part, what is the actual value of an item? The only way that can be established monetarily is by markets. Even analysts who operate based upon valuations will disagree on the value of a stock even when they are looking at the same one.
What is the actual value of Bitcoin? Of Steem? Of IBM? Of gold? That is what makes markets...you might think one (gold lets say) is too high while I think it too low.
Market markers will not affect that. If I put in a price for gold at $100 below the last trade and you put it in $100 above the last one, both of us will fall outside the range of the market maker so our trades will just sit.
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Usually not what the market makers give an appearance of. A drastic example would be what happened in England during the Napoleon war, more common examples would be what takes place on the stock market and crypto exchanges today. A drastic case for this was when Bitcoin shot up to 20k. They do typically have the ability to manipulate values independent of the item in question, so wanting to understand here if this market maker bot would be doing the same thing under the guise of liquidity as you put it. Seems to me those who control the liquidity have it within their means to artificially dry the well up and then scoop up a lot of bargains to resell at a later date.
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The market maker over an exchange tends not to engage in what you mention. That is not in the exchanges best interest. They want to provide the liquidity to people keep using the exchange.
What you are referring to is those bots that put in a wall of buy orders (fake) in an effort to draw others buyers in to sell to them and the reverse on the sell side. These tend not to be the exchange market makers like @aggroed is talking about. It is not in Steem Engines best interest to have its bot manipulating pricing since that would cause people to leave the exchange.
The manipulation would come from someone making their own bot and using it on Steem Engine. If you are I did that, then we could manipulate (attempt to) the pricing on different tokens to our advantage. And if we had enough capital behind us, we could affect the liquidity by the ebb and flow of our actions.
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I love it. This is a great project from the sound of it. I am with you on the open source while allowing the average Jane and Joe to make money.
This is really going to be a nice addition to Steem-Engine. I have a few pieces of the Fed's worthless reserve debt that I could contribute....not a ton mind you but enough to get in on the action.
I am working on an idea that might pull you into. It is an extension of what we discussed on your show a few weeks ago. The market maker actually could really make what I am thinking work.
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Average Jane and Joe are always a bag holder at the end.
Repeat: Always.
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I have no idea to read into code but this is a great initiative except that one must consider that market makers often need plenty of capital when liquidity dries up as it ultimately becomes “the buyer of last resort.”. It must remain solvent to maintain the demand/supply accordingly. I would say that it must selective regarding the tokens to support.
Posted using Partiko iOS
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I really like the idea, and agree that boosting trading volume would increase the appeal of Steem Engine.
Would a straight profit share token be a better investment concept? Point 5 sounds like a lottery, but as a small player here, if I put in just a few dollars worth, I may only get a tiny percentage change of a return.
My preference would be a tipu style profit share with a reinvest option. This would also organically grow the pool of funds available to the bot to trade with. I think all holders should get equal roi per token, big or small.
Love the idea in general, just adding my 2c worth.
Posted using Partiko Android
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I actually do both a flat ROI per SP and random bonuses at @accelerator. This was designed to change the "reward curve" so that smaller delegators can make a significantly higher return with the bonuses while larger investors still get a high % return.
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Great news. I am sure that this significantly increases the liquidity of tokens and popularity Steem-Engine.
!dramatoken
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DRAMATIC ERROR WHILE PARSING DRAMATIC ERRORTo view or trade
DRAMAgo to steem-engine.com.Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
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Really interesting idea @aggroed, I can't wait to see it in action
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This post has been included in the latest edition of The Steem News - a compilation of the key news stories on the Steem blockchain.
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