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Bsip 0018 (#26) 

* Replaced auto-revive empty with auto-recollateralize, auto-revive empty is handled in bsip-0017a
* Detailed description of bid mechanism
* Modified some details for clarity
oxarbitrage-patch-1
Peter Conrad 2017-07-06 10:26:30 +02:00 committed by Fabian Schuh
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@ -1,6 +1,6 @@
BSIP: 00018
Title: Revive BitAsset through buying Settlement Pool
Authors: Fabian Schuh
Authors: Fabian Schuh, Peter Conrad
Status: Draft
Type: Protocol
Created: 2017-06-05
@ -43,29 +43,30 @@ position is lower than the fees required to get rid of it.
# Rationale
When a market-pegged assets undergoes a global settlement, one of the crucial
When a market-pegged asset undergoes a global settlement, one of the crucial
mechanisms that support the peg (namely "margin calls") is no longer available.
However, other mechanisms, such as the "face-value", trading and settlement
still exist and, unless the valuation of BTS decreases significantly, the
outstanding debt (the BitAsset long positions) are still collateralized by
approximately 100% through the settlement pool at the fixed settlement price.
still exist and, unless the valuation of the underlying asset decreases
significantly, the outstanding debt (the BitAsset long positions) are still
collateralized through the settlement pool at the fixed settlement price. It is
even possible that the value of the collateral exceeds the nominal value of the
MPA significantly.
This means, if a global settlement event happened on USD at a price of 1
For example, if a global settlement event happened on USD at a price of 1
bitUSD/BTS, then an outstanding debt of 1000 bitUSD would be backed by
1000 BTS in the settlement pool of the bitUSD asset and no other call
positions would be open by anyone else. Every bitUSD long position
could, in this case, claim BTS from the settlement pool at a rate of
1:1.
1000 BTS in the settlement pool of the bitUSD asset. No other call positions
would be open by anyone else. Every bitUSD long position could, in this case,
claim BTS from the settlement pool at a rate of 1:1.
# Proposal
All that is needed for the asset to be *revived* is:
* empty the settlement pool
* re-enable price feeds
* replace the settlement pool with sufficiently collateralized call positions.
Since after a global settlement, the collateral for the outstanding long
positions are stored in the settlement pool, we here propose to **obtain
positions are stored in the settlement pool, we here propose a way to **obtain
the funds in the settlement pool and its outstanding debt from the
network**. Since the collateral ratio of the settlement pool after a
global settlement is 100%, obtaining the settlement funds in order to
@ -75,6 +76,9 @@ global settlement or margin call right away.
# Specifications
Like in BSIP-0017, let SWAN be an asset that has seen global settlement, and
let BACK be the asset backing SWAN.
## Bugfix: MPAs that have seen a global settlement cannot be settled after the price feed expires
It has turned out that force-settling an MPA requires a valid price feed
@ -88,104 +92,159 @@ This bug will be fixed. See
https://github.com/cryptonomex/graphene/issues/664#issuecomment-254056746
for a discussion.
## Auto-revive empty bitassets
(This fix is also part of BSIP-0017. Obviously, it needs to be fixed only once.
It is repeated here because it is currently unclear which of these proposals
will be implemented.)
A bitasset is "empty" if nobody is holding a positive amount of it
anymore. The only reasonable exception to this rule is the pool of
accumulated fees belonging to the asset itself. This situation can occur
after all holders of a globally settled asset have settled their
position via forced settlement.
The emptiness of a bitasset can easily be determined. When the BitAsset is
empty, the remainder of the settlement fund will be paid out to the
issuer, the accumulated fees and the current supply are reset to zero,
and the settlement price is cleared.
## `bid_settlement_funds_operation`
## Auto-revive after increase of settlement fund value
This applies only to SmartCoins, not to Prediction Markets.
A price increase of BACK can lead to the situation where SWAN is worth much more
than it was originally intended to be. I. e. the value of the settlement fund
becomes much greater than the nominal value of the existing supply of SWAN.
When the value of the settlement fund reaches the minimum required collateral
(in terms of price feed and MCR), a call_order_object owned by the issuer of
SWAN is created (or updated) that takes the settlement_fund as collateral and
covers the full debt. The settlement_fund and the settlement_price will then
be cleared, which revives the asset.
The condition can easily be checked at the time the price feed is updated.
Obviously, this requires a price feed. Currently it is not possible to
publish a price feed for assets that have seen global settlement. This
restriction will be removed.
## Recollateralize
This applies only to SmartCoins, not to Prediction Markets.
### Overview
The idea of turning the settlement fund into a short position when its
value has increased sufficiently can easily be extended. If the value of
the settlement fund itself is not sufficient to create a sufficiently
collateralized short position (in terms of price feed and MCR), an
investor could volunteer to add the required amount of collateral to the
fund and take ownership of the resulting short position
(collateral+debt).
the settlement fund itself is too low to create a sufficiently collateralized
short position (in terms of price feed and MCR), investors could volunteer to
add the required amount of collateral to the fund and take ownership of the
resulting short position (collateral+debt).
This operation is all that is needed empty the settlement pool and re-enable price feeds.
It has the following payload:
The proposed operation enables potential investors to "bid" additional
collateral for taking over part of the debt (or all of it). When enough bids
have been made to cover the full outstanding debt, and all of them are
sufficiently collateralized (in terms of price feed and MCR), the
settlement_fund and the bids are turned into call positions. Finally, the
settlement_price is removed from the asset, which revives it.
* `fee` (asset_type): The operation requires a fee to be paid
* `symbol` (asset_id_typ): Symbol that has a settlement fund to be claimed.
* `account` (account_type): This account obtains the collateral **as well** as
the debt (i.e. call position) and has to either pay additional collateral,
provide shares of the BitAsset to reduce the outstanding debt, or a combination
of both.
* `additional_collateral` (asset_type): Collateral paid by the account in
order to support the call position
* `obtain_settlement_funds` (asset_type): The amount of settlement funds the
account is willing to obtain
If the available bids cover more than the outstanding debt, bids with a higher
collateral/debt ratio are preferred over those with a lower ratio. The intent is
to turn the competition among investors into better collateralized calls, which
is in the interest of the MPA holders.
### `bid_collateral_operation`
The operation has the following payload:
* `fee`(asset_type): The operation requires a fee to be paid
* `bidder`(account_type): This account pays the additional collateral and
will become the owner of the resulting call position, if the bid is accepted
* `additional_collateral`(asset_type): Collateral paid by the account in order
to support the call position
* `debt_covered`(asset_type): The amount of debt the account is willing to cover
The operation works as follows:
1. It pays a fee
2. It reduces the account's balance by `debt`.
The debt is used to reduce the outstanding shares of the globally settled BitAsset.
3. It reduces the account's balance by `collateral`.
The collateral is used to initially support the accounts' call position.
However, technically, only little additional collateral is required (if the
valuation of the collateral hasn't change since the global
settlement) if the owner accepts a margin call.
4. The global settlement flag is removed from the asset.
5. The asset is re-enabled such that price feeds can be produced again.
6. After sufficient price feeds, the asset can be borrowed again.
1. It pays a fee
2. If account has already placed a bid on the same MPA, the existing bid is
cancelled (see below).
3. If `debt_covered` equals 0, no further action is taken.
4. It reduces the account's balance by `additional_collateral`.
5. It creates a `collateral_bid_object` containing the `bidder` and the partial
inverted swan price calculated as `additional_collateral` / `debt_covered`.
The required checks for the operation are:
The required validity checks for the operation are:
* Has the asset globally settled?
* Are funds in the settlement pool?
* `debt` > 0 or `collateral` > 0
* `obtain_settlement_funds` <= `settlement_pool`
* the account has sufficient balance to cover `additional_collateral`
* `debt` == 0 || `debt` > 0 && `collateral` > 0
If the checks are successful, a `call_order_object` belonging to the
investor will be created or updated as described above. Then, the
settlement price and `settlement_fund` will be cleared.
The required evalutation checks for the operation are:
The fee for this operation will be paid by the investor/recoverer. The
fee is equal to the fee of the `call_order_update` operation.
* debt_covered.asset must be a bitasset (not a PM) with a settlement_price
* additional_collateral.asset must be the asset backing SWAN
* account must have sufficient BACK, i. e. at least additional_collateral
Obviously, the operation must be authorized by `bidder`.
### `collateral_bid_object`
The `collateral_bid_object` stores information about bids offered by accounts
using the `bid_collateral_operation`. It is indexed
1. by_id
2. by debt asset and bidder
3. by debt asset and partial inverted swan price.
When a `collateral_bid_object` is cancelled, the additional_collateral (i. e.
the partial inverted swan price's base) is returned to the bidder and the
`collateral_bid_object` is deleted.
The intent of the partial inverted swan price is to facilitate selection of the
bids that will result in the call_order_objects with the lowest debt/collateral
ratio after the revival of the bitasset.
### Maintenance
In every maintenance interval, all MPAs that have a settlement_price are checked
if
* they have a valid price feed, and
* if enough sufficiently collateralized bids are available to cover the debt.
If both conditions are met, for each `collateral_bid_object` (in order of
descending partial inverted swan price) a new call_order_object will be
constructed in this way, starting with remaining_debt=SWAN.current_supply:
* call.borrower = bid.bidder
* call.debt = bid.debt.amount
* call.collateral = call.debt * SWAN.settlement_price + bid.additional_collateral.amount
* remaining_debt -= call.debt
* SWAN.settlement_fund -= call.debt * SWAN.settlement_price
If remaining_debt reaches 0, any remaining bids will be cancelled.
It is likely that for the last converted bid the requested debt will be less
than the remaining_debt. In that case, call.debt will be set to remaining_debt
and call.collateral will be set to asset.settlement_fund + additional_collateral.
### `execute_bid_operation`
In order to make the revival event visible in the bid owners' account histories,
a new virtual `execute_bid_operation` will be introduced, that contains these
parameters:
* the `bidder`
* the actual covered `debt`
* the total `collateral` of the resulting call_order
The semantics of that operation includes the removal of the existing bid and
the creation of the new call_order as described above.
# Discussion
## Sufficient Collateral
Given that at the time of claiming the settlement funds, the blockchain
cannot know the valuation of the collateral, the user needs to ensure
that sufficient collateral is provided to support the call position
**after** the price feeds are refreshed. Otherwise, the asset will
either experience another global settlement event right away, or the
call position will be margin called. In any way, it is up to the user
of the above operation to take that risk.
## Partially Obtaining Settlement Funds
In the case a widely used BitAsset is globally settled, the costs of providing
the collateral can be shared among multiple participants by means of only
obtaining a fraction of the settlement pool.
In the case a widely used BitAsset is globally settled, the cost of providing
sufficient collateral and the associated risk may be prohibitively high. The
proposed bidding mechanism allows to split the cost (and the risk) among
multiple participants.
## BitAssets using BitAssets as collateral are unaffected
One huge advantage of this approach is BitAssets that are collateralized
by other BitAssets are not directly affected by this proposal. Even
though the *economical debt* of such asset may be argued about if the
One huge advantage of this approach over BSIP-0017 is that BitAssets which are
collateralized by other BitAssets are not directly affected by this proposal.
Even though the *economical debt* of such asset may be argued about if the
collateral asset experienced a global settlement, the *technical debt*
is unaffected. Converting the settlement pool into a regular call
position through this proposal would not only restore the original
BitAsset, but also reset the collateral of the derived BitAsset.
## Committee funded BitAsset Recovery
## Cost vs. Profit
This operation opens an interesting cost vs. profit trade-off for those willing