BTS DEX BOT Proposal
I started trading on the DEX not so long ago (when Bittrex shut their doors to us). Since then I have been involved in discussions with groups in the community who, like myself, love Bitshares and want to help and see it grow. There’s many ways to do this, people tend to pick things of interest to them.
So! A few of us started a telegram room, the “Liquidity Room”, where we spoke about how we can improve liquidity on the DEX, strategies such as relative and staggered orders and where we discovered BtsBots and from here the “Bot Proposal Room” was born. This is grass roots stuff, this is the community coming together to get things done.
I’m sure many of you will have heard about this proposal recently but perhaps don’t know much about it. Here’s a link to it if not:
A lot of you have probably heard the terms “liquidity” and “market makers”, whether you understand fully what they are is another matter. Let me assure you, it’s not complicated. Check out these links quickly if you would like a better understanding:
What is liquidity? https://www.investopedia.com/terms/l/liquidity.asp
What is market making? https://www.youtube.com/watch?v=Guqs3eOgm6o
The idea of the worker proposal is to provide the basic tools needed, to any Bitshares user (or groups of users), to be a market maker and help provide serious liquidity to any market on the DEX. On centralized exchanges you have a select few who work secretly behind the scenes manipulating the direction of markets. I’m sure many of you have seen the recent accusations of a certain CEX doing exactly this. By providing the tools to everyone we not only offer everyone an equal chance to profit from the growth and adoption of the DEX but we also spread and distribute the job of market making throughout the entire community at all levels.
The strategies (or market making tools), the bot proposal intends to provide users with are as follows.
Relative Orders: This basically finds the highest buy offer and the lowest sell offer, calculates the mid point and places orders at your preferred spread. This strategy provides a buffer of orders around the midpoint at any time it’s being used. Somebody for example might cover the spread of 1% either side. Others might cover 2% either side. Competition will close the spread as market makers fight to have their orders filled first.
Triangle Arbitrage: This strategy would help keep balance between our markets but also bring to life our dead ones. One of the great things about Bitshares is we can create our own markets so we can easily trade any coin we want and take the liquidity from Bitcoin with this strategy. You would trade 3 markets, eg: BTS-USD, BTS-BTC & BTC-USD. If you replaced BTS with a lesser traded coin you can see now how this would encourage other coin communities to come here and boost the liquidity of their own coins.
Staggered Orders: A defined limit is set and orders placed either side of a set point, when the price moves in one direction orders behind it are replaced. It sells on the way up and buys on the way down. A great strategy that will put a lot of orders on the books and greatly improve market depth. The deeper our markets the more big boys we attract.
I thought I would share my thoughts and vision on this proposal seeing as I have been more involved than most. We really want to hear what you guys think as this is a project from the community for the community and that includes you! So please come to our telegram room and tell us your thoughts, link below. :)