Please Continue Funding DEXBot August 2019

dexbot(46)

Published in

#dexbot

Words

1743

Reading

8 min

Listen

Play

DEXBot is Currently Voted Out. Please Vote for DEXBot!
August 2019
Permie

DEXBot is about increasing the liquidity of the DEX.

DEXBot aims to translate into Mandarin and increase relations with the Chinese BitShares Community.

https://www.dexbot.info/2019/06/04/dexbot-worker-proposal-wp3/

DEXBot’s research into the liquidity of DEX markets has found and tentatively concluded that:

On the OPEN.BTC:bts market ~75% of orders are placed with the DEXBot’s Staggered Orders strategy feature. https://steemit.com/bitshares/@cryptick/bitshares-liquidity-report-on-the-open-btc-and-bts-market

On the bitCNY:bts market; ~57% of open orders are placed with DEXBot’s Staggered Orders strategy feature. https://steemit.com/bitshares/@cryptick/bitshares-bitcny-and-bts-market

DEXBot is already providing vital liquidity. With continued funding DEXBot can grow upon this success.

DEXBot Current Budget Situation

Due to prudent management of the funds; DEXBot WP3 has 2 months ($48,000) of funding held in reserve. This is to mitigate the risk of short term loss of funding due to being relegated from the Worker Proposal Funding Zone temporarily. This reserve is currently being spent to continue development during this period of being voted out.

The DEXBot arbitrage feature will not be lost or abandoned due to this period of being voted out. The 60 day DEXBot reserve budget allows DEXBot to finish part-complete development and not have to lose it’s key developers to other projects.

DEXBot WP3 (Scheduled for July to December 2019) has so far, from 1/07/19 to 20/08/19, spent $38,000 of the $149,000 planned budget.

Expenses documented here: https://docs.google.com/spreadsheets/d/1XPTGlHe6Xiw2xii9QQ-RWgS55oTEWerAXwMPEsgTbe0/edit#gid=2025101644

AND
https://1drv.ms/x/s!AjNxlbf-fDQJagkgB81_-drYTh4
DEXBot still needs to be voted back into the Funding Zone for a further ~90 days to get it’s full budget.

Liquidity is Analogous to Good Quality Wait-Staff in a Restaurant:

More Market Makers are required to supply the good service that the prospective DEX users need in order to come and trade on BitShares instead of a CEX.

DEXBot develops new features to attract more market makers to the DEX.

Low Liquidity is like poor service at a restaurant. Users don’t come to the DEX because it’s cheaper and they don’t come just to trade coins. They come for privacy and security.

But it’s all about the service.
Users want to trade their preferred coins in markets that have high liquidity.
High liquidity = high quality service.
Low liquidity gives a poor user experience and makes them more likely to stay away from the DEX.

Low liquidity is like going to a fancy restaurant to eat great food but where the waiter is slow and only brings your meal piece by piece instead of all at once.

Market Makers are to BitShares what good wait-staff are to an upmarket restaurant.

Currently BitShares’ market makers are low paid. Poorly paid restaurant wait-staff do not provide good service.
DEXBot has plans to develop a Liquidity Reward Scheme, but due to the funding situation these plans cannot be put into action. DEXBot needs to get back into the funding zone.

DEXBot builds the tools for BitShares to provide good quality service to its users. BitShares has a very strong offering of security and privacy. Privacy and security are an additional service for which users are willing to pay.

Cutting funding for important development, particularly DEXBot which aids liquidity, only exacerbates the problem of low liquidity and low user adoption of BitShares.

Continued funding for DEXBot will allow the continued development of the open-source market making bot DEXBot that makes it easier for market makers.

The DEXBot Arbitrage Features will be completed due to the 60-day DEXBot Reserves

Traditional Arbitrage Feature Specification:
https://1drv.ms/w/s!AjNxlbf-fDQJaePNQU7T4aPfJiQ

Excerpt:
DEXBot will use ccxt which allows access to 135 CEX’s in one go. Binance and most of the big ones are included.
See the full list here: https://github.com/ccxt/ccxt/blob/master/wiki/Exchange-Markets.md

Why does BitShares want arbitrage?

Trade volume, better price discovery, tighter spreads as arb bots will take good offers and encourage market makers to have offers close to the market price on the DEX order books as often as possible. The higher the volume of trading, in part increased by arb bots, allows market makers to turn over their capital more frequently thus making market making participation more attractive to traders.
Arbitrage between the DEX and CEX helps to keep the price on the DEX in-line with it’s competitors and improve the price peg and help keep the SmartCoin premiums low. Low SmartCoin premiums are essential to SmartCoin success.

Why does BitShares want to connect to other exchanges?

Arbitrage requires access to at least two separate exchanges as it relies on the price discrepancy, or lag, between prices for assets offered in two separate marketplaces.

How should the arbitrage feature on DEXBot operate? What logic should it follow?

DEXBot should have knowledge and ability to post orders on the books of at least two other exchanges.
One of those two exchanges must always be the Bitshares DEX.

“Mirrored” Arbitrage Feature Specification:
https://1drv.ms/w/s!AjNxlbf-fDQJbAbWTiR_BEQW4WM

Excerpt:
Mirrored Arbitrage is similar to traditional arbitrage except that it involves one limit order and one market order. As opposed to traditional arbitrage which involves two market orders.

Traditional arbitrage lies hidden ready to pounce on an arbitrage opportunity that arises out of two limit orders being placed by other traders on two separate exchanges.

Mirrored Arbitrage instead analyses the orderbook of Exchange-1 (CEX), and places a limit order on Exchange-2 (DEX) that if filled would allow DEXBot to take an offer from Exchange-1 and realise a profit. DEXBot should read the orderbook of the CEX and predict/front-run arbitrage opportunities by placing limit orders on the DEX and only acting on the CEX if the DEX limit-order is filled.

DEXBot supports liquidity and trading activity on the BitShares DEX so the exchange where limit orders are placed will be the DEX and the exchange where market orders are taken will be a CEX.

The orderbook of the CEX will be dynamic and ever changing so the limit orders on the DEX will have to be placed/cancelled and replaced in response to the updated CEX orderbook - within a margin of error to reduce wasting fees on unnecessarily minute order changes.

DEXBot must be aware of the state of the CEX orderbook with minimal time-lag and updated as frequently as is possible.

DEXBot will constantly monitor the CEX’s orderbook information and use the data to place limit orders on the DEX at prices %offset to the CEX.

DEXBot has several features waiting in the planning stages that can only be developed if DEXBot gets voted back into the funding zone:

DEXBot Translation into Mandarin and Russian
DEXBot has plans to translate the DEXBot wiki documentation and the GUI into Mandarin and Russian to increase the appeal to a wider audience and to include the very important Chinese and Russian BitShares communities.

Diversified-Portfolio Rebalancer
Users will be able to set parameters for a diversified portfolio. DEXBot will buy/sell components of the user-chosen basket of assets to maintain their portfolio at the user-set ratios. This feature will aid the bts price by buying bts when the price goes down, and selling bts when the price goes up. Dampening volatility and increasing the stability of bts price growth. The portfolio balancer will allow market makers to hold a diversified portfolio which is a proven strategy to reduce risk. Market makers who hold reserves in a diversified portfolio are more able and willing to provide liquidity as they can feel more comfortable about the risk of price volatility in the markets they choose to provide liquidity to.

Lower Risk Profile = More Comfortable Market Makers = Higher Liquidity

Liquidity Rewards Tool
DEXBot plans to develop a system to identify users who provide liquidity to a range of DEX markets. SmartCoin:bts and SmartCoin:Gateway. Different UIA tokens for each gateway will be developed to allow gateways to reward the liquidity that market makers are providing to them by buying their UIA on the free market that the gateway themselves choose to pay. Gateways will be able to compete with each other to attract market makers and the liquidity they bring to their Gateway. Gateways and the DEX will be able to easily reward the free market for providing liquidity. The alternative is for Gateways and the DEX to provide the liquidity itself, taking on 100% of the risk and consuming 100% of the capital required to place into open orders. Rewarding the free market with a 0.1-1% reward allows Gateways to reduce the cost of providing liquidity themselves by a factor of 100-1000. The ability to reward liquidity to these SmartCoin:Gateway markets by consequence increases the liquidity of bitCNY and other SmartCoins. There will be more bitCNY in circulation and thus more bitCNY available on the market for bitCNY debtors to service their debts and more easily avoid margin call. The DEX needs more bitCNY being traded on the DEX not sitting in accounts unable to be purchased. https://docs.google.com/document/d/1uOQIZBuqFjiUnkBiWisoEkxQeEDe6xw00Zh-0GM0ly4/edit?usp=sharing

Rewarding Liquidity = Higher Liquidity.

Stop-Loss feature
DEXBot can provide Stop-Loss features to sell a given asset should that asset fall to a user-defined price. This allows market makers to limit their exposure to a particular asset and reduce the risk that comes from market making. DEXBot is the ideal environment to provide stop loss features as the logic can be held off-chain. If Stop Losses were to be added on-chain, stop losses would be visible for all to see. Stop-Loss “Hunters” would then deliberately try to push the price lower to trigger another traders Stop-Loss in order for the Hunter to profit.

Lower risk = More Market Makers = Higher Liquidity.

Forecasting tools
To inform for prudent market making. Market makers want to know the likelihood of a bull or bear market in the assets that they provide liquidity to. Knowledge is power.

Market makers with More Information = More Comfort with Supplying Liquidity = Higher Liquidity.

27.0 How To Vote On BitShares and Support DEXBot - https://github.com/Codaone/DEXBot/wiki/How-To-Vote-On-BitShares-and-Support-DEXBot

27.0.1 DEXBot is funded by the BitShares blockchain via a "Worker Proposal" (WP). Holders of bts vote for projects that they want to fund. To get funding, a Worker Proposal must receive more votes than the "Refund400k" Worker Proposal. Refund400k tells the blockchain not to fund any WP's with fewer votes and send any leftover funding back to the Reserve Pool.

27.1 Step 1 Navigate to your BitShares wallet: