Topic: [GLBSE] - MINING_B.HEADS.FUT / MINING_B.TAILS.FUT - Bet against the mining bonds (Read 2370 times)

That is entirely possible. 

I'm very much open to alternate explanations if I didn't catch the first one correctly.

I don't think you understand what I'm talking about.

LOL, that's an awesome quote!  Sadly, so very true.


If a third party put in buy orders at rock bottom prices, or set a bot up to watch the market, wouldn't they snag your manipulatory shares for a song?

You are right that there may not be many people buying it.  It's very much experimental.  I'd be a little sad if no one is interested, but life goes on. 

And it's one of the biggest criticisms of the financial sector. There's a german proverb that could be translated like this: "Millions and millions of flies can't be wrong - eat more shit!".
I guess it's inevitable anyways, but still

The average is as far as I know only a weighed (hopefully by shares traded, not BTC volume) average over all trades happening in the last 5 days. If I manage to do an insane amount of trades, the few trades that happen afterwards are negligible.

The easiest victim currently is PUREMINING:
200 shares are enough to trade to myself at 0.00010001 - fees would be ~50 Satoshis each share so I can do a LOT of trades. This would eb done by a script of course and during a time where there's very few trades in general. It would be interesting to have a test asset + account to try out such an attack by the way and see how many trades you can actually do per minute... probably a lot. The couple dozen trades later on wouldn't matter much.

All in all I'd need:
~60 BTC to buy the 200 shares, out of these I'd loose ~8-10 BTC to existing bids and maybe a BTC or so to GLBSE fees.

For under 100 USD cost and under 1000 USD in cash currently I could crash PUREMINING. It might also be useful to do this right now, so your ticker starts too low and might gain more than these 5% over the month easily just by reverting to normal market prices for the other bet.

I predict for your asset though, that you will simply have noone/too few ppl. buying it. Just look at HEDGE...

I realize that's how it's supposed to be.  But that's not how it really is.  Everyone, and I mean everyone games the system to the best of their ability.

It's most certainly not arbitrary though.  More like a game of chess.

Sounds like 90% of what wall street does every day.  


But... could you keep it down for 5 days on average?

And, if you could, doesn't that benefit the people that want to buy the bond?  Seems like you selling your bonds at a loss to make a profit on my future would get fed back into the market as a benefit to the buyers of the bonds you're dumping.  If investors are smart, they'll catch on to your game fairly quickly and they'll just buy every time you try to dump your bonds, thus you lose.  The average doesn't go down enough to help you, and you've suffered a loss on the bonds you dumped.

I think a 5 day average is relatively safe and I wouldn't be surprised if people try to manipulate it but I'm not so sure they'll come out as well off as you might think.  The only easy manipulation I see is when the index is right at a 5.00% difference and they sell something off to push it to 5.0001%.

I'm excited to see how it actually pans out though.  If people actually do start panic selling, I might have to start buying.

Yes, but not in an arbitrary way, in a way that guarantees that someone with more knowledge about an event than the market at a given time can profit on average (and thus is incentivized to share his knowledge with the world by investing accordingly). On betsofbitco.in I can have exact knowledge of the probability of the event, and still lose averaging on its instantiation.

Yes, but usually you create only one asset per assumption (that you can then go long or short) if you IPO a company (it wouldn't be very inspiring if you offer shares that earn money if your company dies from the beginning...) - you in this case have more of a "meta" asset where you don't sell parts of a debt or company but a bet that benefits nobody but the investors that bet on the right side + you as you probably take a cut. You don't create new value, you just offer a way of redistributing it, based on some set parameters.

As your bet (every asset is a bet!) is based on some other assets though, you offer earnings/losses by manipulating these. So far one could only try to bet on timely dividend payments of some bigger players out there (so you only had the incentive of DDOSing GLBSE for a weekend or so - too expensive for the potential gains), in your case I can bet on stock prices though. As bids are always shallow on GLBSE, bets like this one (especially if they offer high returns) give quite some incentives to severely disrupt trading.
I can with just 100 shares move the most traded asset on GLBSE currently (GIGAMINING) for more than 10% down. Currently there are a lot of open bids, as the prices are quite cheap and some people panic-sold - a few weeks ago I could have nearly crashed that asset with 100 shares.

I'm pretty sure this is what most markets do?  Transfer cash from investor to investor?  Markets themselves certainly do not create cash out of thin air?

The assets behind the securities being traded may generate cash, but the trading on the market itself is mostly a battle of wits, is it not?

I'd tell you about the prediction assets I intend to issue, but why spoil the mystery?

There are multiple ways you can handle it. But as a general rule, for someone to take a short position someone else must take a long position, there's no way around that.

Now that you mention it, thinking about your proposed contract terms, it's not really a prediction market at all, it's more like a bet of the kind you find at betsofbitco.in, where funds are distributed in a somewhat arbitrary way from losers to winners.

MINING_B INDEX chart (and adjustments based on MH/s per bond) is up at:

http://www.everydayjim.com/mining_index.php

What is an example of situations in which the underlying would not be feasibly affected?  I can think of natural disasters and climate change.  What else?


Problem with that model is what happens when it's obvious to everyone that the market is going to tank?  Noone buys heads, everyone buys tails and I lose my shirt. 

Right, that's what I said.

This can be tricky, but dividing by what the hashrate was at the beginning of the month would work in most cases. Or you can just go by the geometric mean of the prices, then scale is irrelevant.

In general, when the underlying event can be affected, prediction assets are at risk of manipulation. They are best suited for situations when the underlying cannot be feasibly affected, otherwise you want to directly entangle your instrument with the underlying and its negative.

You could try the following: Issue two bonds/futures, a short and a long, for a price roughly equal to the current index A. At the end of the month, where the index is now B, pay 2A-B for the short bond and B for the long bond. If you sell equal amounts of both bonds, your own position is neutral (you always pay 2A for a pair of bonds) and buying a short bond is equivalent to selling short the basket on margin.

I suppose it gets harder too as GLBSE grows and we're (possibly) able to add more decent volume securities to the index.

I don't think we could prevent this really, but this issue isn't unique to this future either.  It sounds like you could do that and come out ahead with just regular shorting as well.  Would using the 5 day average mitigate that somewhat?

Depending on the payout and the following panic, it might even be worthwile to manipulate 5 day averages. However, you miht have a tough time competing with pirate rates in that case.

It sounds like what you're looking for is for the index to be sum(Bond 24h Avg / Bond MH/s) to reduce the impact a single large MH/s bond might have on the index?

Sounds work-able.  Within the framework of the contract, what action would you take when a bond issuer changes the MH/s their bonds represent?



Hah, that's what I get for responding in the AM before I'd had any coffee.  Given the volume and depth on GLBSE, it's really hard to make it so that you can't manipulate it given sufficient resources.  The approach I took to this was:

- Use the 5 highest volume bonds.
- Use the 24hr Avg

Can you think of any other reasonably straightforward ways to reduce manipulation?  For instance, it would be possible to use the 5 day average I suppose?