Bitshares bitAssets(Market Pegged Assets) Explained!
What are bitAssets(Market Pegged Assets)?
![](https://steemitimages.com/640x0/https://i.imgur.com/pJ1SvPj.png)
Bitshares DEX exchange
- USDT - every ea one of USDT is supported by USD (1:1).
- bitUSD - every bitUSD is supported by bitshares through collateralize loan that always have a value of 100% or higher.
For reference you can see Bitshares Docs MPA.
But I'll post it here anyway.
Market Pegged Assets
A simple example would be a MPA that is backed by USD (a stable crypto token within BitShares) that requires a collateral ratio of 200%. Then, in order to get new coin, we can borrow 100 USD worth of new coins by paying 200 USD.
By this, the supply of your coin is increased by 100. But how would it be decreased? The USD are locked in the smart contract and can only be reclaimed if the debt (here, 100 coins) are returned. Returning them will result in the coins being removed from the supply because the are no longer backed by any collateral.
So what for do we need a fair price? Remember that we chose a collateral ratio of 200%? That number tells us how well backed your coins are by the collateral. But what would happen if the value of your coin goes to the moon? Then your collateral ratio will reduce to say 150%. At a certain percentage, the blockchain will automatically trigger so called Margin Calls which will- Take your collateral (here, USD)
- Sell it in the market to buy back the coin you owe
- Close the contract
- Pay your the residual USD
A fair price thus tells the market what your coin is worth (e.g. traded for on external exchanges) and triggers margin calls if necessary.
But there is more! Everyone that holds your (MPA) coin in BitShares can convert the coin into the backing asset at a fair price. This procedure is called “settlement” and ensures that your MPA is always worth at least the fair price. In the User Interface, MPAs are easily distinguishable from UIAs in the asset explorer.SMARTCOINS
- (Bit)USD
- (Bit)CNY
- (Bit)EUR
- (Bit)GOLD
- (Bit)Silver
- (Bit)BTC
Balances in these assets are labeled with USD, CNY, etc., because represent the same value as their underly.
COLLATERALIZED TOKENS
MARKET MECHANICS
source: Bitshares Docs MPA
That's me trading on Bitshares DEX network
This is Nem Dayao,
Until next time. Happy trading everyone!
"I'm helping promote Bitshares because I believe Bitshares Network can one day revolutionize how cryptocurrency are used. If you have any Bitshares spare, you too can help me by donating. My Bitshares wallet is doc-mac18 Thank you!"
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