You aren’t answering the question I’m trying to ask! Of course I understand why someone would peg to the dollar, but I was asking about why I would create a token and - because there’s not enough liquidity for it on its own - peg it to Bancor in order to gain liquidity for my token.
That Bancor is tradable and floats isn’t relevant to my question. As I said, I might as well just use Bancor unless for some reason I want to give it a different name (eg for marketing pursposes) but otherwise, what’s the benefit here?
My understanding of their idea is that your token is part of a basket of coins, with the Bancor token being the only required other token in the basket. How much of your new token you put in the basket vs how much ‘reserve’ coins (Bancor, Ether, etc) will affect how much the overall basket is influenced by the price of your token. As pretty much all coins in an economy when everyone and everything has their own token of value (know as the long tail) will start out as illiquid and of low value, this setup allows your coin/basket to still be traded freely. As your token builds value it can then begin to have a greater effect on the overall value of your basket.
I understood that, but being pegged to a basket is no different (Bancor = the basket). Yes, your token has some influence on the basket, but I don’t see how what problem it solves. If your token is influential enough to affect the basket that implies it has liquidity of its own, and I’d expect it to be viable stand alone.
I think it is more about when the token is starting out and has low liquidity. At that time people will still trade it, basically as an arbitrage opportunity, in order to keep the value of the basket in line with it’s reserves.
The reason why most tokens don’t got liduity is because they are not added to exchanges (centralized exchanges). A good example are N99’s seeds and SAFE FS coins, some people who hold tokens might get impatience with the progress of a project, that might be a reason why you want liquidity. If you got a sell order for a token that’s almost there for a week, I think you would love to have instant liquidity.
Bancor is just a way to exchange tokens, most Ethereum projects don’t know about this and are mostly only on Etherdelta. This talk about tokens on the SAFE Network is to reduce the use of exchanges or turn it all into smartcontracts. But now I’ve grown tired of talking if somebody implement this it will be better, ideally you want to put out a bounty for something like this, I can chip in 100 euro’s.
How would you define arbitrage? To me if there is low liquidity it would give opportunities for marketmanipulation. For me arbitrage is when there are a difference in price between example two exchanges and you make money on that difference until the gap is closed. I personally don’t think there will be liquidity problem because SAFE probably will be among the top popular coins and they have quite good liquidity. Also when the coin can be used on the network it probably will lead to liquidity by the price of demand and supply, also the inflation of the coin will lead to liquidity.
But I do have had thoughts that there could be two coins on SAFE, one coin that is pegged and works like money for example to buy storage, and another coin “Safecoin” as a “store of value” asset, like gold. The technology and farming would give the the “store of value” asset value and the price would reflect demand and supply.
An asset that acts like money with low volatility and another asset that would function as a “store of value”, I think would be optimal. The money asset could also be free floating if maybe the Maidsafe foundation could act like a centralbank that controlls the value by liquidity.
Cashflow (Allow every SAFE token to pay for every SAFE Network service)
SAFEcoin will just do fine on the network, but all new SAFE Network token (projects) should connect to enable each others users to pay for goods & services on the SAFE Network.
It’s important that we start making apps, this community lately has been getting attacks with strange questions if the SAFE Network is world changing. LET’S CODE OR PAY TO GET APPS CREATED AND SEE WHAT SAFE CAN REALLY DO.
I was just talking about Bancor, and am honestly approaching the limits of my understanding of their project. But in general I think the idea is that if I have a basket that is contains 1 BNT for every 1 of MyUselessToken, then even though no-one is interested in buying MyUselessToken, people would still be interested in buying my basket if its price falls below 1 BNT. This is what gives liquidity to all baskets, even though no body is interested in all of the underlying tokens (only the reserve tokens).
This weekend I have played with a simulation of a decentralized exchange app. A full implementation based on those ideas could be intended to run on SAFENetwork - even without compute.
The simulations consists of the high level mocked business logic and a extremely simplified simulation of close groups and consensus algorithms. (it’s misrepresenting, so please do not take any of it for a correct representation, it is all just hasty shortcuts).
An implementation running on SAFENetwork would not use this code at all. So this is just playing.
For real implementation, it needs either multisig, or the consensus algorithm implemented in the app layer, together with all the security related to maintaining close group integrity (I.e. more or less a duplicate of SAFE algos). These simulations mock the case when duplication of consensus and security patterns have been made.
What it does:
Simulations use a preset number of clients, agents and tokens. All clients have at least 1 of each token.
Continuously, clients add an order for a random pair.
An OrderContract is created, and Client transfers the tokens to sell to it.
Agents are assigned to the OrderContract, and matching starts. The OrderContracts create MatchContracts when a match is found, and ask the matched order to agree to the match. If so, the matched order transfers ownership of its tokens to sell to the MatchContract, and finally the close group responsible for the MatchContract transfers the tokens to the Clients, and the rewards to all agents (those of the two OrderContracts, as well as those of the MatchContract).
At end of trade, a price service is updated with the trade info.
Fixed some initial performance flaws. So this basically runs from end to end to produce trades.
Do not pay too much attention to the financial/mathematical operations, they are just dummies and shortcuts. Nothing is as it should be in a real implementation.
Looking at what could be done later:
A real implementation of a decentralized exchange is a simple binary that anyone can run as to contribute to the secure exchange network, and gain rewards from it.
The way I designed the simulations is that all agents in a group that run this binary, is rewarded for every successful trade the group expedites.
So Bob and Alice can just spin up the app, let it run in the background and earn tokens.
In a real world implementation, all you would need to do as an agent is to specify a wallet id and a minimum reward percent (percent of traded tokens).
An agent is assigned to a group that handles a specific trade order (i.e. it is among n closest to the order id). The agents will be querying for other orders matching this specific order. They will filter by the average reward of the specific order and the order compared to. The resulting reward must be at least the same as the group average minimum reward.
This way, all users that place a trade order, must specify a reward that is high enough so that the order will be expedited by agents.
At the same time, all agents must specify a reward low enough so that they find any orders to expedite (and thus make money from the reward).
A supply/demand equilibrium will be reached.
The reward will be paid in both of the tokens in the pair traded.
This way, all tokens will be spread among all agents.
Since the aim of this envisioned transaction system is to let all apps receive all tokens as payments, and correspondingly letting all users pay with any token in all apps, the tokens of this ecosystem will be highly dispersed among the network users.
Going a bit beyond:
Price pushing force would be achieved both via the smart tokens of a bancor like protocol also running in the system (+ the arbitrageurs effect), and also - as I have imagined it - from every wallet owner ranking their tokens.
Like so: The most attractive tokens would always be preferred in trade + bought with a slight premium. The least attractive would always be disfavored + sold at a slight discount. The rate of premium + discount would be both configurable, as well as algorithmic.
Also, for users who do not wish to micro manage thousands of tokens in their wallet, piggy backing and getting values from other sources would be possible.
And by this, token market prices would be molded.
If you allow me to get a bit carried away and be a bit visionary here…
In the most extrapolated situation, everything in human society could be tokenized, and all of it would be handled on SAFENetwork. Services big and small, paying for haircut and babysitter, groceries, manufacturer orders, finance, goverment spending, salaries, investments, etc. etc… The full spectrum of transactions.
Every single point of transaction (all apps) would accept every tradable token.
The key here is that a decentralized exchange should be complemented with something like a Bancor protocol, where all said tokens are available too. SAFECoin would naturally be the backing coin. I’m still not fully convinced of the necessity of such though, and what advantages specialized tokens would give in a world where something like SAFECoin can be used everywhere for everything. But that aside
So the vision is the ultimate transaction system.
If anything can handle something like it, it is the SAFENetwork.
A global transaction network, with total token interchangeability, high dispersion of tokens and as a result: wallets of each and everyone having a lot more diversification and resiliency against different market fluctuations. All people would (eventually) hold the entire world as backing asset, instead of mostly their native currency, maybe a property and a few stocks.
I imagine this transaction system as a high level system where the individual tokens are a detail that most can simply disregard from. Yes, some ranking would be needed from user perspective, and if all ranked token T at last place, it would not be very liquid. But, as a world wide transaction network, there would always be a very large share who went with some default configuration (sourced from a service provider for example).
Yes, I have been thinking along the lines of smart contracts, managed by close groups. Just like the SAFE net binaries are executed by a node, so can smart contract code be, and consensus and security can be achieved with the exact same patterns and algorithms That way, there is no need for atomicity in this regard.
In my playful code above, this is the concept I have reflected in a very simplified manner.
In general the motive is to provide narrow incentives around a project, but yes, the limits of how far to push this is still up for debate. Many say it has already gone too far with all of the ERC20 tokens on Ethereum, with too much friction created in the user experience. Your vision of eliminating that friction sounds great and would absolutely be needed!
One thing is that things could be tokenized in different ways. For example a hairdresser chain might sell haircut options, giving people the right to buy a haircut for a specific price on a specific date in the future. Some of these kinds of options might turn out very useful while others won’t. Financial instruments that are now mainly used by big business could be democratized and used and created by everyone, for a lot more things than can be done today. Investors might for example want to speculate on the price of haircuts in South Africa. Tokens could be made that would be redeemable for a good or service or they could be contracts representing pure bets.
Eventually I imagine we’ll see software creating tokens for weird things the we’ll barely understand what is, with software services and intelligent agents trading with each other with some tokens representing some state for something like readings from some IoT devices or whatever. These things are not just democratization of finance, new and more efficient and automated ways of doing thing, but also building blocks for a new machine economy that will have profound impact in the coming decades. A completely autonomous self-driving car might be buying future contracts for electricity from an autonomous power plant. Large parts of the economy could be automated. A factory might autonomously ramp or down production based on market demand, even buy new land it needs to expand more and at the same time be trading future contracts for raw materials to try and minimize risk.
Wouldn’t this essentially end up being an almost complete parallel implementation of SAFE, if it was going to be anything more than proof of concept or simulation, just with a simple version of compute in addition?
A general framework for network agreed logic (running any smart contracts).
A specific network agreed logic for a specific app.
#1. Is the most versatile and I would say furthest away for implementation due to complexity of the problem. #2. Would be best implemented in SAFENetwork by MaidSafe, so that the very same structures for consensus and security could be used. Far away still, since it is not listed as a priority. #3. Could be implemented as a standalone app. Closest, as it can be started now and does not depend on MaidSafe team.
Possibility exists, at least theoretically, that if #3 is well designed, the network agreed logic implementation would be abstracted away in such a manner that it could eventually be switched out with what ever solution is later implemented in SAFENetwork.
EDIT2: Actually, about complete parallel implementation… Not so sure about that. The most necessary parts of the logic that has been tried and tested can be re-implemented in a more slim form, adapted to this use case. I think it would be a spin off, with potential for evolution, rather than a parallel implementation. Data storage and communication would still happen over SAFENet.
I was thinking along the lines of it would have it’s own close groups etc.
I think the app wouldn’t know which other nodes are in it’s close group and even if it did the other nodes in the close group might not necessarily run the app, so the app would have to create it’s own close groups among the nodes that run the app, so then it would kinda run its own parallel SAFE network for computation and I guess the nodes might communicate through that, or is there a way around that?
Yes you’re right about that.
I just meant that it wouldn’t be a parallel implementation of the entire SAFE network, but parts of it. But yeah, a quite large part
Keeping an own network of nodes, close groups, with a routing table, rank, churn events, node managers etc., that would be needed. But all related to storing data (i.e. other users’ chunks) would be excluded.
The good thing about it is that the logic is already there in code. Even though it is not exactly trivial to re-implement in another language. I had a brief go at it a couple of months ago with XorName.rs, Prefix.rs etc. and got stuck on RoutingTable.rs The Kademlia thing is tricky.
It would be very good to learn rust because of all benefits, both of the language itself, and to be working in same language as safe network itself. A little bit more … “messy” of course being lower level. And less tooling support than I’m used to, so productivity takes a hit.
Another problem with all of this parallel stuff, is that if messaging is supposed to happen through writing to MDs, there will be an initial cost of running these agents, before they start to yield from successful contract executions.
I think it would be quite an attractive thing all in all to be able to run a decentralized exchange agent and earn from facilitated trades. And that initial cost would actually serve as a proof of stake.
Hi @tobbetj I’m incredibly sorry for not picking up your question 20days ago
Ico’s are a great way to fund projects, so I think there will be more tokens. At the moment on clearnet there are 1339 cryptocurrencies, but everything is so balkanized.
Imagine if you could go anywhere in the world and pay with the currency that you hold at the moment. You wouldn’t have to waste time to go to exchange currency plus pay a fee, this is really the old world. Through Abra and projects like Ten X this is already happening.
Thanks for the reply, no problem, I’am on this forum for the long run so no hurry. I agree with your point that alt coins is a interesting way of funding projects and it will be exciting to see how it evolves, it can go many ways in the mid to long term.
When I thought of multiple coins on SAFE I got this horrifict thought of that it would be a coin for every service example, music-, travel-, upload, ebaycoin and so on and that they all would have to be strangely converted for every use on SAFE.
Yes, low tx fees and international transactions, TenX is very interesting. Would be great if SAFE somewhere in the future maybe also could have the function of TenX and others. It feels like SAFE could somewhere in the future possibly make a high percent of all alt-coins unnecessary.