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RE: Proof of Trade Digital Mining Bot -
A question on this.
I've been thinking about the need of a market making bot
It seems to me part of the problem of crypto (first seen in stocks and other commodities) is the speculation leads to inflated and deflated prices instead of being based close to the actual value of the item.
When you say market making, is that a different way of saying it will push prices (in effect, picking momentary winners and losers) up or down based on what the power of the market making bot is doing?
All crypto fans bitching against banks and exchanges but when they smell the money....
A market maker provides liquidity in a market. It helps to keep the spreads close so people can trade in and out of assets quickly. If you want to see a market that does not have them, look at the pink sheets.
As for the first part, what is the actual value of an item? The only way that can be established monetarily is by markets. Even analysts who operate based upon valuations will disagree on the value of a stock even when they are looking at the same one.
What is the actual value of Bitcoin? Of Steem? Of IBM? Of gold? That is what makes markets...you might think one (gold lets say) is too high while I think it too low.
Market markers will not affect that. If I put in a price for gold at $100 below the last trade and you put it in $100 above the last one, both of us will fall outside the range of the market maker so our trades will just sit.
Usually not what the market makers give an appearance of. A drastic example would be what happened in England during the Napoleon war, more common examples would be what takes place on the stock market and crypto exchanges today. A drastic case for this was when Bitcoin shot up to 20k. They do typically have the ability to manipulate values independent of the item in question, so wanting to understand here if this market maker bot would be doing the same thing under the guise of liquidity as you put it. Seems to me those who control the liquidity have it within their means to artificially dry the well up and then scoop up a lot of bargains to resell at a later date.
The market maker over an exchange tends not to engage in what you mention. That is not in the exchanges best interest. They want to provide the liquidity to people keep using the exchange.
What you are referring to is those bots that put in a wall of buy orders (fake) in an effort to draw others buyers in to sell to them and the reverse on the sell side. These tend not to be the exchange market makers like @aggroed is talking about. It is not in Steem Engines best interest to have its bot manipulating pricing since that would cause people to leave the exchange.
The manipulation would come from someone making their own bot and using it on Steem Engine. If you are I did that, then we could manipulate (attempt to) the pricing on different tokens to our advantage. And if we had enough capital behind us, we could affect the liquidity by the ebb and flow of our actions.