Prediction Markets > Outside Work

Smart Markets for Stablecoins

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evand:
http://cdetr.io/smart-markets/

Has lots of really good stuff about batch processing of combinatorial orders, and how that's relevant to derivative contracts on prices of instruments, which can be used to make stable coins in the normal prediction market sense.

Also has obvious extensions to combinatorial prediction markets that aren't about financial derivatives, but those aren't discussed explicitly. Useful for the same underlying reason, though: participants might want to specifically buy a share bundle instead of individual shares.

psztorc:
Yes Mr. Detrio was one of the first and most active members of this forum, and he has really useful ideas concerning blockchain MSRs.

Bitcoinfan:
That was a really good paper and well written.  It begs a stupid question.  Or two.  Isn't it a misnomer to call continuous Combinator Markets the equivalent of stablecoins.  In these type of markets, your coin is stable until the expiration date arrives.  Then your coins are frozen until the judication period, and afterwards you will have to reinvest in another market (be it short or long-dated).  It's a derivative, or a instrument, but not a value stable coin per-say. 

However, the other question is more of a thought that borrows a shade from the new Bitshares 2.0 model.  Could you have non-expiring like a normal truthcoin market, where the market has to be resolved each month?  That is to say, a continuous resolution for the market will serve as a peg.  The use of this peg is to offer a settlement for say maybe 50% of trades.  So every month, 50% of the transaction, prioritized largest to least holders can get the price at what the feed says.  Then the markets still continue for the other 50%, veering off that peg price as the days pass. 

Will this work in a lmrs mechanism?  There are so many benefits of lmsr as said in this article, like shared liquidity and efficient trading...  But to have a price-stable currency in one would be a win.

psztorc:

--- Quote from: Bitcoinfan on July 26, 2015, 08:12:58 pm ---That was a really good paper and well written.  It begs a stupid question.  Or two.  Isn't it a misnomer to call continuous Combinator Markets the equivalent of stablecoins.  In these type of markets, your coin is stable until the expiration date arrives.  Then your coins are frozen until the judication period, and afterwards you will have to reinvest in another market (be it short or long-dated).  It's a derivative, or a instrument, but not a value stable coin per-say.

--- End quote ---

The price of the stablecoin-dimension should always equal the current price. See:

"Arbitrage Guarantees that PV(Forward) = Spot"
http://www.truthcoin.info/blog/win-win-blocksize/

and...

https://github.com/truthcoin/www.truthcoin.info/blob/gh-pages/faq/index.md#in-some-of-your-notes-you-suggested-timelines-of-a-couple-of-weeks-for-voting-would-it-be-fair-to-say-this-wouldnt-be-suitable-to-horse-racing-etc-where-the-events-happen-very-fast-there-are-many-of-them-and-payouts-need-to-be-made-fairly-quickly

After the target date, you can sell and move on to a new dimension which references a later date.

Bitcoinfan:

--- Quote from: psztorc on July 28, 2015, 04:09:22 am ---
--- Quote from: Bitcoinfan on July 26, 2015, 08:12:58 pm ---That was a really good paper and well written.  It begs a stupid question.  Or two.  Isn't it a misnomer to call continuous Combinator Markets the equivalent of stablecoins.  In these type of markets, your coin is stable until the expiration date arrives.  Then your coins are frozen until the judication period, and afterwards you will have to reinvest in another market (be it short or long-dated).  It's a derivative, or a instrument, but not a value stable coin per-say.

--- End quote ---

The price of the stablecoin-dimension should always equal the current price. See:

"Arbitrage Guarantees that PV(Forward) = Spot"
http://www.truthcoin.info/blog/win-win-blocksize/

and...

https://github.com/truthcoin/www.truthcoin.info/blob/gh-pages/faq/index.md#in-some-of-your-notes-you-suggested-timelines-of-a-couple-of-weeks-for-voting-would-it-be-fair-to-say-this-wouldnt-be-suitable-to-horse-racing-etc-where-the-events-happen-very-fast-there-are-many-of-them-and-payouts-need-to-be-made-fairly-quickly

After the target date, you can sell and move on to a new dimension which references a later date.

--- End quote ---

True- that's exactly what I said.  -- eg.The price of the stablecoin-dimension should always equal the current price. -- for that time period stated--

Given by your old diagram here, in Truthcoin, a "stablecoin" requires switching from dimension to dimension to have continual stability.  I'm trying to figure out why everyone is calling it a stablecoin when in fact its behavior more like a CFD, futures/ other derivative types?  Its kind of the misplaced name because it does not have the true stability of a currency due to manual efforts needed to perform inter-trading into another dimension and the costs involved in that switch.  Yes moot point when considering a very long contract, like USD price until 2100, but even this has a risk premium associated with it, so it will not equal the spot price of USD today.  Everyone has different expectations of what the USD price will be in 2100. 

http://www.truthcoin.info/images/BitUsdTracking.jpg

Given this, I'm wondering what's the impact of having a market resolve on one day, but the USD/BTC dimension continuing onward because it has a longer resolution date, maybe a month or two later.  What happens to your funds then?  Does a trader have to wait until the last longest date is resolved to get funds back?  Is inter-dimension time differences a risk?

But I really wanted to explore this second idea, which is how to get a stable currency in a LMSR market, without the need to periodically move from dimension to dimension.  I'll come back on this with more explanation in case you don't understand what Im talking about.  But the gist is do you think a non-expiring LMSR is possible with Truthcoin/ price feed?

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