I am being attacked on liquidity provider points...
The new liquidity provider rules gives no credit to orders that are not on the books for 30 minutes. This was put in to combat self-trading, which has been done extensively by the abit account that is getting virtually all the liquidity points and awards. So not providing much real liquidity, but getting all the rewards.
Now it is escalated to deliberate attack against my earning points. I made a very tight spread of .001 with 1000 STEEM on both sides: https://steemit.com/trading/@jl777/0-000-spread-in-internal-market
I saw some people buy from both sides and excitedly checked on the number of points I earned. I checked via API call, but couldnt find myself. Thinking I had a bug, I went to https://steemd.com/tools, but not there either. Since the entire point of liquidity points is to incentivize providing liquidity, I should get more than 0 points.
It gets worse...
After the first batch sold on both sides, I put another pair of orders in. This time it is sitting on the books for a while and then BAM! both get cleared. Before the 30 minutes. I get a feeling that something is not right, looked like a bot did it and sure enough both sides were cleared out by abit, the very selftrader who has a monopoly on the liquidity points. This means he has a bot that will clear out my bid and ask before 30 minutes to make sure I get 0 points, regardless of how much real liquidity I have provided. And once my bid and ask are out of the way, he will selftrade and get the points without providing any liquidity.
I proposed solutions to this in my other posts.I hope that this will be addressed soon
I think liquidity rewards should be capped. Maybe set some hard % limits on rewards for example.
100 Steem volume = 0.1%
200 Steem volume = 0.2%
etc etc with a max cap of 3%
This would incentivize whale users while also avoiding the "winner" takes all mindset of current reward scheme.
I posted solutions to the problem: https://steemit.com/trading/@jl777/steem-dollars-discount-why-is-it-always-below-open-market-price
abit confirms he would stop if he had to provide realtime pegged spreads to earn points
Or decrease the cap to 5 min, however give it a very small reward and increase the reward with time. Something needs to be done
If a precondition for "providing liquidity" is that it's liquidity that nobody wants or needs, rewarding it at all is nothing but a glorified scam. We need the kind of liquidity that won't last long, because it's needed by the market in order for it to function. The additional STEEM being funneled into @abit's account for no reason whatsoever debases the currency that the rest of us hold. I fully expect exactly nothing to change, based on what I've witnessed so far.
Agree and disagree.
We do need liquidity. But it's hard to measure how much liquidity we really need, also hard to measure how much liquidity I and other players have provided. We've been trying to build and keep walls, with big risks. Current implementation of liquidity reward is an experience which succeeded in some ways but failed in other ways. We need to improve it but not kill it due to some failure.
If you're not a trader and don't want to benefit traders or the ones who want liquidity, I feel you.
I disagree. Ultimately this ensures that liquidity is provided in an already thin market. In the future this may be worth considering, but not right now. There'd be no point receiving Steem and SBD if you can't liquidate them.
For context, I sold about $500 worth of SBD and the price collapsed from $1.03 to $0.91.
I think people should not criticize @abit before considering the value he is adding to Steem.
I am protesting that he is preventing me (and all other market makers) to make a single STEEM from the liquidity bonuses. When is a centralized monopoly become a good thing?
Decentralization does not mean equity.
Anyone with more money can pretty much out compete this market maker.
It's not an infrastructure backed monopoly (i.e. licensed to operate by state decree, or obtaining some sort of patent or expensive license).
when the biggest cap market maker gets a monopoly, it would be like the miner with the highest hashrate being able to generate all the blocks and prevent all the other miners from generating blocks.
Since abit was smart enough (he is very very smart!) to identify and capitalize on this, he is getting 1200 STEEM more per hour, every hour, every day and the capital requirement to compete against him keeps going up. At this point it would take over $1 mil USD to compete against abit
so while any billionaire could take away abit's effective monopoly, none will. Additionally your logic that it isnt a real monopoly since it isnt via license/patent ignores the things like MSFT monopoly. doesnt matter how a monopoly starts, once it is there they should operate by different rules.
but now we have abit accumulating 1 million STEEM per month. liquid STEEM and he is a smart guy who doesnt care about the community. This is a risk factor to all of STEEM, regardless of your theoretical points.
the theory doesnt work if the incentive system is broken. you are presupposing the incentive system is working. I tell you it is broken.
Seems you are more interested in wealth distribution than liquidity provision. I have witnessed first hand the liquidity being provided by @abit. It would not be so easy to attract a lot of liquidity for a flegling crypto on an uncertain platform.
well unless it is fixed all we will have is abit setting the price arbitrarily with 10%+ spreads we had before. this requires a human involved solution: https://steemit.com/steem/@jl777/solution-to-liquidity-points-bugs
To even be able to receive the rewards he must be providing the majority of the liquidity.
So 10% spreads are the cost of liquidity. Which is fair enough in my opinion.
The way the system currently works, liquidity is favoured over spread which makes perfect sense for a new volatile crypto.
not true. he can get the points without providing any actual liquidity by selftrading
at the level of rewards, the spread should be 0.1% or less
the current system is NOT working. that is my judgement
No, I'm providing great liquidity right now. Never been better.
At least that's an improvement.
why do you have to be so greedy?
you can easily allow other market makers to collect half the rewards, but you are actively clearing out their quotes so they dont get any points
The more points he receives the more incentive he has to keep providing liquidity.
As I said below liquidity > spread.
I want a real solution so I can get out of the game..
distance from realtime implied value seems like it is a real solution as it becomes too risky for your taste
Sorry I don't understand what you're saying. Would you like to make it clearer? Oh, nvm. Saw your another comment.
I think @abit is steamit staff and just making sure nobody is exploiting this until there's a real solution. #justathought
Exactly. It needs to be very attractive for early market makers in a new coin to provide liquidity or little liquidity will be provided. This means your Steem/SBD will be worth little more than the upticks below your post.
do you not understand that abit is getting 100% of the rewards?
Sorry if my tone was arrogant. Didn't mean to assert anything, just to present my argument with more clarity.
I don't care about the person, I care about the liquidity. 10 people trading $10, or one person trading $100 is completely irrelevant when what matters is liquidity.
If you see things from the users point of view surely you would agree?
What is happening is you want your wages to protected, as workers always have done, by inefficient idealistic implementations that appeal to notions of democracy (from the network's perspective), rather than for any practical reason (despite your own wealth) in terms of improving the network.
He's not providing any liquidity, though. If he was providing liquidity, it wouldn't sit on the market for over 30 minutes. When he says he's providing liquidity and it's never been better, he's mocking us. He knows exactly what he's doing.
What matters in the network is liquidity, doesn't matter who's providing it.
Explained here: https://steemit.com/money/@positive/why-you-shouldn-t-criticize-liquidity-monopolists-or-why-liquidity-greater-than-spread-they-give-your-steem-value
gee if your post says its true, it must be. sorry I didnt realize the definite proof about this was posted by you already.
having fewer active people involved appears to be what you want and that is what will happen
//Unable to update the post, so reply here.
While I was writing above message, I have been keeping walls with 15K STEEM volume on both side of the market, with a spread around 1%, for some hours. I was proud of such liquidity I was providing.
However, the wall was broken later when the market was moving down quickly, made me a loss around 2K STEEM.
Lessons learned. Don't play against the market.
I'm not playing without risk.
I think you make good point. Somewhere I read it is going to increase to 1 hour in hard fork.
increasing time makes it worse.as it is 30 minutes means 29 minutes of real liquidity has no value as I posted here: https://steemit.com/steem/@jl777/does-liquidity-reward-really-require-bid-to-be-there-for-30-minutes
It increased from 1 minute to 30 minutes. I see little evidence that it helps. Maybe too soon to say though.
I thing all trades should count for liquidity points/rewards!
at 30 minutes a larger capitalized market maker can simply clear out the smaller ones at 20 minutes, like abit is doing and make sure his sybil accounts are the only ones who have any points. A stalemate is fine by him as he stacked the top of the list with dozens of his accounts
time on the books should be a factor, not a threshold as I posted before. it is the binary all or nothing aspect about the time on books that allows this attack. if it was part of the equation then, well it might create a nonstop frenzy of orderclearing, all the time. But if to also add a distance from implied realtime price then it adds risk to the process.
What we have here is analogous to N@S. The selftrading marketmaker has nothing at stake and so can do infinite orderpairs without risk. Add risk to the equation, then even abit says it is too dangerous to keep doing what he is doing
Nonstop order clearing would cause the highest SP to always win since network bandwidth is allocated by SP.
I don't really know of a good solution. I think your idea of voting might be the best we're going to do, but it requires significant implementation effort and then the issue is whether voters will even be informed. Given the highly technical nature of the problem I suspect most voters would not be.
there is no perfect solution and human judgement is needed. that is why i suggested allocating half to vetted market makers, the other half can continue to be gifted to abit until an algo is finally created that works. distance to realtime implied price as a factor and duration of quote will go a long way to reduce the advantage by adding risk to the market maker
clearly the current situation is DOA (unless you are abit who advocates having just a single market maker - him)
why not let the various market makers vote on each other? that could be a factor along with half a dozen prominent stakeholders
I think someone have a very powerfull bot working in the exchange, does it growth the risk of flash crash for steem?
theoretically maybe, but currently the incentive system must be fixed. abit is getting 28,800 STEEM per day, every day while providing minimal liquidity and preventing any other market makers from getting anything