Bitshares Arbitrage. Let's Switch The Tables!
OK.. so the real point of this posting is below, but let me set this up:
In a previous article I wrote about the lack of parity between the Bitshares DEX and the outside world.
Lack of Adoption has created many situations where the DEX is an Island with a completely different set of values. That might seem extreme, but think about it.
Every trade has to be thought through with a scaling calculation.
Example. BTC is trading on the major exchanges for $10,000. On the DEX, OpenBTC is priced at $9,500, a full 5% below value. BTS is also under market price, by .. hm.. 5%. Then you go to the BTC pairs and while scanning the list you see that LTC price to bitcoin is at parity with the market.
I don't know how you react, but I get this Sherlock Holmes moment and immediately try to take advantage. I can buy Litecoin with BTC at one to one parity in an eco system that values everything else at 5% less.
So I deposit BTC, turn it into LTC and buy 5% more than I could have bought off the Island. Plus, when I send my litecoin off the Island, I get market price. Win!
DEVELOPERS! HERE'S THE POINT:
What if we let all Bitshares users in on the secret!?! What if we give the user the tools of ARBITRAGE!
Build it into the interface! Under each trading pair, add a column or two that can display the price of each asset with Binance, or Coinbase, or Poloniex prices, right next to the DEX prices? Give them a running average above or below market parity. Better yet, give them an average price OFF the Island of the DEX.
Bitshares is an Island, but we live in a global information mecca. Give the Bitshares DEX traders the information they need to make any lack of parity work for them.. Give the advantage of all the information on the Bitshares DEX. Give each asset a column that calculates the parity difference right next to the price.
Take what is a shrewd trading technique, and give it to the masses.
And THE MASSES WILL COME
Two things will happen:
Parity will be achieved. Every time there is a opportunity to make money, people will do it and the market will move towards parity.
Bitshares will have a great feature that others will want to use. Adoption should increase.
Bitshares will give the INDIVIDUAL the knowledge to increase value. Bitshares will display another reason why its the application for individual property rights!
IF YOU BUILD IT THEY WILL COME
Nice Post @songminer ! Upvote + resteem
I'm thinking about this a lot. For a long while the dex prices were always lower, then during the dip they were quite a bit higher and now they back to lower again.
The interesting thing though is that on some of the markets it can be pretty hard to use the good deals because the bots keep outbidding you. So every time you try to bid, they immediately go lower or higher.
I suspect it has to do with liquidity in general, but I think it will be even worse when all the planned bots are ready.
But if your suggestion can improve liquidity in the short run, then I'm all for trying it.
I keep hearing that AI bots outbid people on many exchanges, but I have yet to see anyone provide proof or even an example of it happening. It would be nice to understand this statement before having to experience it. Can you support this with a source?
I have screen shots, but of course that doesn't prove anything. But I can see that especially the account 'btsshr' always magically changes and outbids a lot of orders in split-seconds on the bitUSD/bts market, at least mine.
It might technically be possible for a human to delete and make a new order during the same block, but I think it's highly unlikely.
I'll see if I can find some concrete evidence on cryptofresh.
Cool. I believe you, as I've heard this before in other threads. It just would be nice to examine. :)
Fantastic post and great idea !!
There is the feed price up top and the settlement price. If the settlement is fair market value, what is the feed?
I notice the -5% value of say BTS, then the feed price is higher, and the settlement even a bit higher than the feed.
Also, you don't really send LTC off the island. You send BTS off by exchanging it to another coin. Semantics perhaps, but it may help to reduce confusion among newcomers.
This is a really cool idea. Thanks for sharing it. I'm not that familiar with bitshares and the developer tools around it, but I'm pretty sure there is a python api for interacting with bitshares. A cool idea would be to build a bot that sends you the current arbitrage opportunities on bitshares over slack or discord.
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STOPI like this idea really like this idea and would like to work to get it implemented. Could you share some details on how long it takes it process the various legs of the transactions and what costs are involved? Have you been about to do these opportunities regularly, or is it just periodically?