BSIP: 0076
Title: Threshold for price feeds through voting
Authors: Abit More
Status: Draft
Type: Informational
Created: 2019-09-25
This BSIP defines a process to influence the pegging status of committee-owned smartcoins through poll voting.
In order to maintain the peg of the smartcoins, smartcoins holders now have the right to be always possible to buy collateral at a "fair" price. For committee-owned smartcoins, the collateral is BTS. However, when the BTS token is being dumped in Centralized Exchanges with fake volume and even fake supply, the value of the token is distorted, thus, forcing BTS token holders who have their BTS token trapped in debt positions as collateral to sell their collateral at the distorted price via margin calls or force-settlements is unfair. The same situation applies to non-committee-owned smart coins as well.
Smartcoins are products of the BitShares platform, their rules are defined by the platform for the benefit of the platform and the BTS token holders. If a product brings more harm than benefit to the platform, its rules need to be optimized, under extreme conditions, the product needs to be halted. For smartcoins, when the cost to maintain the peg is too high to afford, it's time to give up the peg.
Ideally a smartcoin owner should be able to define a set of conditions about when to give up the peg and how to de-peg, but it needs time to design and implement. Before the final solution got worked out, it's up to the price feed producers to execute the will for the asset owner on whether to maintain the peg at a given point and how to de-peg. For committee-owned smartcoins, the owner is actually all BTS holders who could express their will by voting, the price feed producers are the active witnesses.
The BTS token holders define a threshold, if the market trading price of BTS is below the threshold, witnesses should feed the threshold but not the market trading price, thus would effectively break the peg as intended. When the market trading price of BTS is above the threshold, witnesses should feed the market trading price, so the peg will be restored automatically. The mechanism is similar to the Global-Settlement Protection mechanism as described in BSIP 58.
Changes to the threshold will be decided on individual committee-owned smartcoins by voting, each time one change is issued 2 poll worker proposals will be created standing FOR and AGAINST the change.
For example, to decide whether to change the price feed threshold of bitCNY to 0.2 CNY each BTS, 2 poll worker proposals will be created for voting:
Poll-BSIP**-Change bitCNY feed threshold [from the previous value when applicable] to 0.2 CNY per BTS
Poll-BSIP**-Not change bitCNY feed threshold [from the previous value when applicable] to 0.2 CNY per BTS
If the voting confirm the change, committee will announce the change at least 3 days before the change is implemented by witnesses.
Some people think it's the debt position holders' responsibility to always maintain their collateral ratio to a fair level. However, when the collateral's price can drop to zero due to unfair manipulation, it's not possible to always maintain a good CR. Higher or lower, there is a point that the peg would break.
This BSIP may negatively impact smartcoin holders since their holdings will likely devalue when the voted point is met, which would likely be worse than before. Businesses built on top of the smartcoins may be impacted. Reputation of smartcoins as well as the BitShares brand may be impacted.
Discussions about changing the threshold to what value is not in the scope of this BSIP. The values should be carefully selected to comply with the market status and to mitigate potential risks. Voters will need to evaluate each setting that is proposed in a BSIP poll.
A new feature that allows an asset owner to directly set, update or unset the threshold will be described in a new BSIP. It's not in the scope of this BSIP.
It is important to define a process for the BTS token holders to decide to change pegging status of committee-owned smartcoins through voting. This can currently be achieved with the technical options that are available to the price feed producers aka witnesses.
This document is placed in the public domain.