SBD at .0025 BTC?? How is this making any sense? I explain what happened with the pricings today
Lots of excitement in the markets today, first and foremost the commencement of Poloniex trading. Some big surprises, but first some backstory.
As you might know from my recent posts the current liquidity points system is broken. Broken as in DOA, fail, not doing what it is supposed to at all. I traded probably over $100,000 worth in the internal market in the last 24 hours. I've had many orders on the books, a lot of them filled, but before the 30 minutes since I usually price it close to the fair market value.
So, you can see how many liquidity points the second most active market maker has received: https://steemd.com/tools
Find the "jl777" entry... Hmm... you cant find it either? You can see my trade record here https://steemd.com/@jl777
But the reason I get no points is that around 20 minutes after I list it, if it is still there, abit kindly clears it for me. He says he is doing it for some reason other than preventing me from getting any points, but my guess is that is why he does it. He likes to keep his monopoly on the liquidity awards, with his dozens of accounts all in a queue for the hourly 1200 STEEM. Anyway, that is a dead horse, no sense to keep beating it.
abit tries to defend his behavior by saying he is providing liquidity and how wonderful a job he is doing. However, his primary goal is to get as many of the liquidity awards he can, and so far he seems to be getting 100% of them. which adds up to 28,800 liquid STEEM per day giving him so much capital he can basically dominate any other market maker (and probably all others combined). And his power grows hourly.
I said that if I was getting such rewards I would create a pegged SBD market with a tight spread. abit then offered me 10,000 STEEM bounty if I deployed such a bot. Well, I figured might as well make such a bot and get the bounty, since I cant get any of the liquidity awards, at least I would get more working capital. So, I wrote it today, but the problem is there is no way to get past the large walls abit puts up. So I ask about how I can collect the bounty and he responds:
"abitmore commented 2 hours ago
Yes adm is my account. I set a wall up just now after saw a wall setup by others.
TBH the offer for trading around peg is not really an offer. If you come up with better idea, I'm wiling to provider another offer."
So, his offer was not really an offer. Surprise surprise. I am sure he will downvote this post also, like he downvoted my prior one that used aggressive language against him. He has so much steem, it cut my blog reward in half due to his downvote. So, it is not enough he gets 28,800 liquidity awards per day, it is not enough he zeroes my chances to get any points, he has to downvote my posts!
Anyway, now I have an automated market maker that is tracking prices on bittrex, poloniex and the internal market and it can create a SBD market that is close to the implied price.
Back to the markets...
After polo started trading, the price went up 50% to peak around .0065, but generally .0055 to .0060, but with polo leading the price rise on lower volumes than trex. The big surprise was SBD, which was pumped to .0025, which is over $1.60! Now are the polo traders just not understanding what the SBD is or do they know something?
My guess is that it was someone who understands the steemit market very well that pumped the SBD price, maybe even abit himself. The reason is that as I was debugging my automated market maker, I stopped manually pegging the SBD price to the implied price. In anycase, when the trex price is so different from polo price, it is not really possible to even know what the implied price is. So, one tweak I need is to have the automarketmaker wait for orderly markets, meaning if there are arbitrages possible then wait for them to work through the exchanges as it means the prices will be changing soon, and possibly dramatically.
The reason why paying $1.60 for SBD isnt insane is that the internal market plummeted to $2.50 per STEEM, when the implied value was $4+. Now if you calculate 4/2.5 = 1.6x. Coincidence? Actually no, that is the correct price. So it means the polo traders buying SBD at .002 were making money!
Anyway, now the markets are settling down, things start to appear a lot more sane, but it actually wasnt that insane even during the SBD pump. right now implied SBD is 3.75, but there is an ask at 3.25. A 15% difference. The BTC implied price for SBD is .0015, so the corresponding price is 0.00173. SBD is trading at .002, which is probably inventory that was purchased below $3.
See, not so crazy
Great article and although it took a while for me to research and understand, it is a major problem for this platform (which you say is being addressed). The difference between your article and mine https://steemit.com/steemit/@ghostyeti/steem-dollars-going-nuts-on-poloniex-greed-fear-cycle-in-effect-for-steem shows the difference between a professional trader compared to those people like myself so trade part time, often as a third of fourth revenue stream/job.
"Not so crazy after all "... Is still disagree. It is crazy. Completely crazy and when there is money to be made, it unexpectedly brings out these market conditions where the vast majority get eaten alive.
The only solution is for the average punter to not engage in high risk trading but it's fair to say there will always be fuel for the fire.
Following your Steem progress with intrigue, please keep up the good work.
For those of you who are interested in market making please join us on the chat at #market-making channel on slack.
The the arbi between our native internal exchange and the other exchange represented the 150% or even more premium on the SBD.
Re: The Steem Dollar Polo Pump: There is still a lot of confusion about over what exactly Steem, Steem Power, and Steem dollars are. It would be really nice if this site actually explained the difference in a prominent place. The originator of the pump might know the difference between all 3, but it would not shock me if people buying into it have no clue.
My latest Steemit post: https://steemit.com/steemit/@bitcoinmeister/steemit-users-need-to-break-their-coinmarketcap-price-checking-addiction-and-work-more-on-marketing-steemit-to-the-masses
Take a look at the White Paper, put yourself in the shoes of the creator, and you might understand better.
I understand the difference between the three coins, but many people do not. The white paper is not a simple faq or a simple about us section. The 3 coins needs to be simply explained in a faq or an about us.
Oh my bad. TBH, it took me awhile to understand it as well. But i guess there'll be kind souls working on fun and nice videos to explain the difference soon. This place is gaining crazy popularity.
https://steemit.com/steemit/@jl777/automated-market-maker-deployed
Don't you mean implied *Steem price?
Anyway, Wow. I guess I was naive to assume ignorance. There are some suprisingly sharp traders.
Still seems to me that the layman can arbitrage these differences to his advantage with relatively low risk.
Especially if he uses the APIs provided by these exchanges.
I use "implied" to mean anything that is not an actual price, probably not the correct way to use it, but hopefully you will understand what I mean
yes, at first I thought it was just polo boys doing a pump,but when there was continuous volumes at above 0.002 I realized the implied price goes both ways. My conclusions was that there was a very sharp trader working all the markets and inciting the pump at polo.
So you guess it's me? LOL. Actually my wall in internal market got broken again by the pump. I have no interest at pumpings and dumpings on Polo and Trex. I only trade STEEM in BitShares. However it's free market, and it speaks, although sometimes go nuts, we must learn to adapt.
I only thought of you as it was quite clever to pump it to apparently absurd levels, while it actually had positive arbitrage value.
I learned quickly that if you piss a whale off, you can expect to never receive an upvote from them going forward, it's lame your getting downvoted though. Btw, I think your one of the coolest guys in Crypto jl777
Thanks!
It was only $50 (I made so much with my intro post, I have a decent budget to experiment with), but the fact he does such things while claiming he is doing a good job, well, you can decide what type of person he is. I wouldnt want to use any aggressive language and make him more upset
I think part of the problem is that the liquidity reward is paid in STEEM. In order to trade on both sides of the spread, abit needs SBD, so he has to sell.
indeed there is 1200 liquid STEEM going to a single person, every hour, every day. It is to the point where it becomes a steem-wide risk factor. That is why I keep harping on this, in spite of the negative consequences I suffer.
abit needs SBD, STEEM, Steem Power, BTC, USD, gold, etc. We must subsidize all of his needs
And what closes the loop? Only the owner of the Steemit-Market who takes deposits in BTC, sell STEEM at $3.80... then buys STEEM back at $3.00. So this is by design so owner can charge a 30% exchange fee to n00bs.
And this is why I decided to pull all my money out of STEEM. I have no intention of volunteering to subsidize someone elses profits. Market making brings it's own rewards, but not here.
before you give up, realize that the devs are aware of this problem and will be fixing it: https://steemit.com/steem/@jl777/steemit-has-the-most-responsive-dev-team
This might explain a lot and also the fact that liquid Steem is going to only one person? Is the internal market the only market which can create Steem Dollars?
The only mechanism in which SBD are created is through Author rewards. SBD are destroyed when authors choose the 'convert to STEEM' option, too.
Well written, can tell you understand what it is you're talking about.
Been trying to learn all i can about this and this did help.
There is no doubt it is confusing. I have to multiply things out to make sure it isnt "upside down", which is really easy to do if you just deal with it at the math level. But if you see that your calcs show BTC should be ten cents, well its a good indication you made a mistake somewhere.
We now have SBD and STEEM trading in three different places all at the same time, any of which can do a +/- 25% in a blink. So its like juggling while ice skating, then the lights go out and you have to answer who has the banana