BitShares on the rise; How to enjoy the ride and still cash out if you need
Enjoying the ride, BTS on the rise again!
Most of us are enjoying the push in the price of BTS (Bitshares) lately. The coin has risen from $0.05 per BTS to $0.1 BTS in just a few days.
Owning BTS? Then you can borrow from yourself!
One, convenient, feature that the BitShares DEX has is that if you own BTS, you can use it as collateral. Simplified, this means that you can borrow from yourself.
You can borrow bitUSD, bitBTC, bitCNY, bitEUR, BTWTY and HERO assets. With a collateral of just 2x the amount, you can free some funds to use without losing your BTS value.
What is collateral?
By locking up your BTS as collateral, you can receive, in return, another asset in equal value times the ratio. At present, when BTS is worth $0.1 you can borrow 50 bitUSD by locking up 750 BTS. The ratio needs to cover any price changes and needs to be at least 1.75x the current price. If your ratio can no longer cover your debt, your loan will be force settled, which is when the network takes your collateral to cover the loan.
Each borrowable asset has their specific settings, which you should look up before doing any borrowing.
How to borrow bitUSD for BTS; An Example
- First, you need to own BTS on the BitShares DEX. If you do this, then you are all set and can go to the wallet, either through your Light Wallet Client or on https://wallet.bitshares.eu
- After logging in successfully, you go to the
Accounttab in the menu.
- Then click on
Margin Positionswhere you can see all the current borrowable assets, aka where you make Margin Positions.
What the Margin Window Means
Feed Price- This is the current price for one bitUSD in BTS
Your call price- Depending on your margin ratio, this is the lowest BTS price your collateral will be able to cover.
Debt- This is the amount you wish to borrow
Collateral- This is the amount of BTS you wish to lock up
Ratio- The ratio is how much of a price raise your collateral will cover. 1.75 means it will cover the exact price (not recommended), 3.5 means it will cover double the price.
When you're happy with your position, click on the
Update Position button and approve the transaction. Your asset will be in your wallet instantly.
What we have now...
So far, the chain has only created new bit-assets with your BTS as safe-keeping. Regardless of how the price now shifts, within your collateral ratio, you can still update the position to 0 debt, and nothing has happened.
What we can do now, is to sell this new bitUSD on the market and use them for whatever we wish. We can do more trading or buy something fancy.
that you still need to cover your debt at some point in time. Your current bitUSD is just a loan from the network, and if the BTS price drops again, you will be required to cover it with more BTS. If your BTS cannot cover your debt, they will be used by the network and force settled.
What Force Settlement is
When your BTS can no longer cover the value of the loan in BTS, the network will make sure that your debt is paid back. The network does this by putting your collateral BTS on to the market with a 10% discount for the buyers.
Good Luck, and happy trading!
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