Quote from: QwertyCore on October 16, 2014, 05:33:18 PM

Quote from: 0x3d on October 16, 2014, 12:26:41 AM

[...]
My proposal which my PR-dept. decided to call "active-to-inactive swap-ratio adjusted common bucket fund" should average rallies out smoothly because, well, no walls at all plus neither longs nor lenders get left behind during rallies (meaning no FRR-wall-frustration induced re-balancing of wallets out of the blue leading to WTF-charts), only shorts and borrowers (= the longs, yes) need to suffer if swap demand grows above swap offer but this then is the auto-regulating loop (an effective market) we seem to be looking for so badly, is it not?
[...]

I have question for you, if the swap market was converted to a fund (no individual offers allowed), what would you use to determine the interest rate? Would you raise it as the funds available for use decrease or would you just keep it at a fixed rate?

Now I've explained that several times already but it would be your A: the rate would be variable, it would rise if there were less funds available on the swap market/fund and vice-versa. It's what the "swap-load" in prior posts is all about, it's a 24h (maybe less) averaged factor between available and used swaps which, on payout, would be multiplied with each individual user's "swap-weight" (the plankton must be able to grow vs. whales shouldn't be able to play the market I mentioned earlier) multiplied with a 24h (again, maybe less) averaged base value.

That base value would be what you earn on swap deposits when the "swap-load" is exactly 100% and I guess you're asking where that value should be coming from. Well that's the tricky part indeed.

Now one idea was to simply let BFX decide (every now and then) what kind of gains they'd like to make available on their platform but yeah, a magic number for this value, no good.

Another idea was to turn that value into a market of it's own but that train didn't quite leave the station as I have no idea what one would trade that BaseSwapRate against. Dollars? Withdrawal speed? Font size? Pink elephants?

Dead end?

So thinking this a bit different: What if we were to take the absolute value of all of BFX's markets volatility as the base swap rate? That way trading activity i.e. volume is the only way to push swap-rates up which would add yet another feedback loop to the system.

Short example ignoring alt markets for simplicity: yesterday at 2AM BTC was at 400$, today at 2AM it's at 404$ which gives a 24h volatility of 1%. Say the swap load is 50% the daily earning on everyone's swap deposit would be 1% * 50% = 0.5% * each individual user's swap-weight (which would scale linearly from some bigger number like 3 or 5 for the tinyest deposit and some fraction like 0.2 for the biggest whale on the swap market - we'd need some magic values here for sure).

Now imagine this going from 266 to what was it, 90? (Oh the Flashback... 2h GoxLag anyone?

) Thad would give us a SwapBaseRate of 65% or something but, as self-regulating as this would be, margin calls would've kicked the SwapLoad back to almost nothing limiting losses for traders and lenders alike.

I think this boils down to putting some real data which only BFX has into a spreadsheet and experiment around. And just in case: We have a static 3.3:1 leverage, a margin reqirement of exactly 15% and trade minima of 0.01 and 0.1 so don't even think of criticizing the remaining magic numbers, mkay? jk Wink