[ANN][XCP] Counterparty - Pioneering Peer-to-Peer Finance - Official Thread

[led_lcd]

All,

I've been discussing with busoni who operates Poloniex the possibility of Poloniex basically issuing and underwriting the value of 1 XBTC = 1 BTC.

I have already issued 21M XBTC (divisible, non callable). It isn't locked because I'm getting an error locking it but this will be done prior to any sale of XBTC.

The idea is that Poloniex will create an service which will buy and sell XBTC to BTC at a fixed value of 1:1. The fee will be kept low + tx fees.

Pros
* Frictionless trading against XBTC
* More choice in the way the DEX is utilized

Cons
* Further centralized risk on Poloniex

If the idea goes forward, I'll transfer the asset to himself so there will be no more XBTC in circulation than what he sells.

How does everyone feel about this?

I'm going to attempt to instigate more feedback on this.

I'll explain one big advantage of the above. If Poloniex proves to be trustworthy, then a XBTC will have and maintain the same buying power as a BTC.

This means you can trade XCP for XBTC without using btcpay. You can totally avoid the troll orders because XCP and XBTC can be both held in escrow.

This will hold true for any Counterparty asset vs BTC.

While this is a good idea overall, I don't think that Poloniex should be the only backer. This should be decentralised as much as possible. And Poloniex should be 100% transparent about their balances and reserves of XBTC and BTC for their own sake.

Is there not an issue with the fact that there are 21 Million XBTC and just over 12.4 Million BTC (including all the burned and lost coins!)?

I do like the idea that it would be possible for more than one backer to underwrite the value.

As you said, it would be possible for a backer to disclose their holdings of BTC.

The 21M of XBTC in theory shouldn't be a problem. Basically the underwriter(s) would enforce a constrained supply - they should never sell or transfer XBTC for any less or more than 1 BTC. There will therefore never be any more XBTC in circulation than BTC.

Now, let's say Joe is having some troubles with finances and wants to liquidate his XBTC quickly. Maybe he doesn't like using an underwriter which will return a 1:1 ratio and uses the DEX and sells at a discount of 50%. The purchaser of the XBTC would likely want to cash out at a rate of 1:1, thus returning back to market value. Also, it would be possible for the underwriter to buy back on the DGEX but then returning XBTC back to his pool and maintaining a constrained supply.

[1714991723]

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[1714991723]

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[led_lcd]

1) trolls could attack XBTC/BTC like they did to XCP/BTC.
2) x BTC needs to be put in a public address for x XBTC to circulate in counterparty.

1) They wouldn't be able to attack XBTC because

a) BTC cannot be held in escrow
b) XBTC can be held in escrow

This means that:
i) Someone cannot make an order without adequate XBTC
ii) Counterparty will hold in escrow XBTC so they cannot revoke their side of the order

2) As discussed XBTC would remain as an artificially constrained asset. This has the effect of tending to return back to market value.

You could think of XBTC <--> BTC as a gateway service.

[led_lcd]

All,

I've been discussing with busoni who operates Poloniex the possibility of Poloniex basically issuing and underwriting the value of 1 XBTC = 1 BTC.

I have already issued 21M XBTC (divisible, non callable). It isn't locked because I'm getting an error locking it but this will be done prior to any sale of XBTC.

The idea is that Poloniex will create an service which will buy and sell XBTC to BTC at a fixed value of 1:1. The fee will be kept low + tx fees.

Pros
* Frictionless trading against XBTC
* More choice in the way the DEX is utilized

Cons
* Further centralized risk on Poloniex

If the idea goes forward, I'll transfer the asset to himself so there will be no more XBTC in circulation than what he sells.

How does everyone feel about this?

I'm going to attempt to instigate more feedback on this.

I'll explain one big advantage of the above. If Poloniex proves to be trustworthy, then a XBTC will have and maintain the same buying power as a BTC.

This means you can trade XCP for XBTC without using btcpay. You can totally avoid the troll orders because XCP and XBTC can be both held in escrow.

This will hold true for any Counterparty asset vs BTC.

This is a great idea! It's great to see such an excellent use of the protocol.

Just so Poloniex can prepare for the worst: Even if he underwrites XBTC with BTC, it is possible that he could end up taking a loss (e.g. the price of XBTC plummets and it will be in his best interest to buy back XBTC below parity). I would strongly suggest that he make a CFD and short the price of XBTC to hedge against the devaluation of XBTC. In this case, if BTC/XBTC < 1, he can make up for it with profits from his CFD.

led_lcd, I will PM you with some more details.

There is a possibility Poloniex will go bankrupt or its software fails, like MtGox. What will happen if such thing occur?

This is the largest risk. The price of XBTC would collapse.

Keep in mind, this idea is not to avoid using btcpay. It is merely an alternative. For small notionals, XBTC could be very handy.

Here's an option to reduce the risk of a single entity controlling all of XBTC causing systemic risk. How about I transfer XBTC to the developers and they by enrolment allocate portions of the XBTC to entities who wish to underwrite the value of XBTC to BTC. The more the better. That way, if any single entitty was to do a 'runner' it would have a reduced impact to the value of XBTC.

[uma97081]

Here's an option to reduce the risk of a single entity controlling all of XBTC causing systemic risk. How about I transfer XBTC to the developers and they by enrolment allocate portions of the XBTC to entities who wish to underwrite the value of XBTC to BTC. The more the better. That way, if any single entitty was to do a 'runner' it would have a reduced impact to the value of XBTC.

In such case, we need 100+ underwriters, I think.

[Alias]

Here's an option to reduce the risk of a single entity controlling all of XBTC causing systemic risk. How about I transfer XBTC to the developers and they by enrolment allocate portions of the XBTC to entities who wish to underwrite the value of XBTC to BTC. The more the better. That way, if any single entitty was to do a 'runner' it would have a reduced impact to the value of XBTC.

In such case, we need 100+ underwriters, I think.

In a situation like this each underwriter/backer can accept and exchange each others XBTC and BTC. There could still be room for Poloniex or another one or two larger more liquid underwriters to act as clearing houses for all the smaller underwriters.

I think there is only 1 way to perfectly implement this pegged value idea. Create a DAC (Distributed Autonomous Community) whose sole function is to take an amount of BTC as an input and return the same amount of XBTC to you in return. This DAC will run on at least all the underwriters computers. This keeps it as simple as possible. The DAC is trust-less and starts with the 21 Million XBTC. To get the XBTC you have to feed it with BTC. All the accounts would be transparent and really simple - only 1 address is needed for both the BTC and XCP.

This would work for any other crypto-currency too. The only caveat being that the members of the DAC community would have to run the blockchains of each cryptocurrency involved.

[led_lcd]

Here's an option to reduce the risk of a single entity controlling all of XBTC causing systemic risk. How about I transfer XBTC to the developers and they by enrolment allocate portions of the XBTC to entities who wish to underwrite the value of XBTC to BTC. The more the better. That way, if any single entitty was to do a 'runner' it would have a reduced impact to the value of XBTC.

In such case, we need 100+ underwriters, I think.

To be honest, I wouldn't be so inclined to this mechanism. It would incur overhead of the developers and they haven't agreed to any such role. They remain the neutral by writing the protocol and not the handling of a particular asset.

The greatest disadvantage I see so far is that there is a large risk of the underwriter.

Let's be clear that XBTC would merely be just like any other asset issued on Counterparty and is not trustless. It's not designed to be a replacement for btcpay. It is just another choice in the way in which people can use Counterparty.

I think if Poloniex or another exchange were to provide such a service it may help move greater volumes on the DEX.

[led_lcd]

Here's an option to reduce the risk of a single entity controlling all of XBTC causing systemic risk. How about I transfer XBTC to the developers and they by enrolment allocate portions of the XBTC to entities who wish to underwrite the value of XBTC to BTC. The more the better. That way, if any single entitty was to do a 'runner' it would have a reduced impact to the value of XBTC.

In such case, we need 100+ underwriters, I think.

In a situation like this each underwriter/backer can accept and exchange each others XBTC and BTC. There could still be room for Poloniex or another one or two larger more liquid underwriters to act as clearing houses for all the smaller underwriters.

I think there is only 1 way to perfectly implement this pegged value idea. Create a DAC (Distributed Autonomous Community) whose sole function is to take an amount of BTC as an input and return the same amount of XBTC to you in return. This DAC will run on at least all the underwriters computers. This keeps it as simple as possible. The DAC is trust-less and starts with the 21 Million XBTC. To get the XBTC you have to feed it with BTC. All the accounts would be transparent and really simple - only 1 address is needed for both the BTC and XCP.

This would work for any other crypto-currency too. The only caveat being that the members of the DAC community would have to run the blockchains of each cryptocurrency involved.

It certainly would be possible to code up a simple function as you described. The question I have though is how would the DAC essentially 'advertise' the directory of the addresses that serve up this function vs rogue nodes which would just eat up BTC?

[SyRenity]

Anyone care to elaborate on the "rumor" that "counterparty" as a whole is further along than NxT, Mastercoin, Bitshares ? 

Which rumor? I think you can pretty much see it for yourself - at the moment XCP provides the most well community tested 2nd gen features, though no one have them in production yet.

[heskey]

Lol, Im glad I pulled my dick out of this coin, someone just dumped 20k+ down to 0.002.
So much for a fair distribution.

[buaichiyuwh]

https://poloniex.com/exchange/btc_xcp   whats happening?  16k xcp sell  on 0.002xcp|btc??!!!  a bug or sth else?

[kuperis]

what just happend on poloniex? XCP price went down from 0.013 BTC to 0.002 in one dump... someone put sell order for 15k XCP, so price went down -80% in one order.... there is because of roumors ? or someones mistake ?

[roede94105]

LOL that dump is beautiful, wish I had some btc available right now

LOL HE JUST SWITCHED TO BUY ORDER LMAO

[matt608]

You can watch the XCP deposits here to poloniex here:

http://blockscan.com/address.aspx?q=15vA2MJ4ESG3Rt1PVQ79D1LFMBBNtcSz1f&p=0

Someone deposited 35k XCP and dumped 20k of them.  They've still got another 10-15k more to dump so it could go even lower...

[kuperis]

LOL that dump is beautiful, wish I had some btc available right now

LOL HE JUST SWITCHED TO BUY ORDER LMAO

kind a crazy think.... i got some very cheap.... 655 for avg 0.00075
and looks like someones mistake.... maybe just badtyping....

[Alias]

Here's an option to reduce the risk of a single entity controlling all of XBTC causing systemic risk. How about I transfer XBTC to the developers and they by enrolment allocate portions of the XBTC to entities who wish to underwrite the value of XBTC to BTC. The more the better. That way, if any single entitty was to do a 'runner' it would have a reduced impact to the value of XBTC.

In such case, we need 100+ underwriters, I think.

In a situation like this each underwriter/backer can accept and exchange each others XBTC and BTC. There could still be room for Poloniex or another one or two larger more liquid underwriters to act as clearing houses for all the smaller underwriters.

I think there is only 1 way to perfectly implement this pegged value idea. Create a DAC (Distributed Autonomous Community) whose sole function is to take an amount of BTC as an input and return the same amount of XBTC to you in return. This DAC will run on at least all the underwriters computers. This keeps it as simple as possible. The DAC is trust-less and starts with the 21 Million XBTC. To get the XBTC you have to feed it with BTC. All the accounts would be transparent and really simple - only 1 address is needed for both the BTC and XCP.

This would work for any other crypto-currency too. The only caveat being that the members of the DAC community would have to run the blockchains of each cryptocurrency involved.

It certainly would be possible to code up a simple function as you described. The question I have though is how would the DAC essentially 'advertise' the directory of the addresses that serve up this function vs rogue nodes which would just eat up BTC?

If I'm understanding your question correctly then the answer looks to be quite simple - the blockchain. Anyone can send BTC to the DAC and the DAC sends the XBTC back in return. Once you know the DAC's public key you can see all of these transactions and individuals can sign messages with their private keys to prove they were involved in transactions.

[lonsharim]

LOL that dump is beautiful, wish I had some btc available right now

LOL HE JUST SWITCHED TO BUY ORDER LMAO

kind a crazy think.... i got some very cheap.... 655 for avg 0.00075
and looks like someones mistake.... maybe just badtyping....

Very expensive mistake.

[Wit22]

Had no btc in there. I had just transferred out 10btc before...I would have bought them and made 60 btc. I feel pissed.

[HinnomTX]

I feel sorry for the guy. Open buy and sell orders right below the sell and buy boxes can confuse the novice. I can't remember, does poloniex have a confirmation dialog box?

[IamNotSure]

That's what traders call a "fat finger" I hope for the guy that he intended to do that (which makes him just stupid), because if he wasn't, that's an expensive mistake.

At least, since he had 35k XCP, he redistributed them nicely !

I feel sorry for the guy. Open buy and sell orders right below the sell and buy boxes can confuse the novice. I can't remember, does poloniex have a confirmation dialog box?

Hmmm... he wouldn't have transferred 35k XCP to buy them

Also, it's a reminder. Don't try to manipulate illiquid markets with a strong project behind.

[mtbitcoin]

I feel sorry for the guy. Open buy and sell orders right below the sell and buy boxes can confuse the novice. I can't remember, does poloniex have a confirmation dialog box?

No confirmation box. Could have been an extra "0" added to 0.02 vs 0.002.

Anyway, lucky for those who managed to sweep up the cheap coins at 0.002

Cheers