derivative_market_within_stellar.org_net_project
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derivative_market_within_stellar.org_net_project [2017/04/24 07:58] sacarlson created |
derivative_market_within_stellar.org_net_project [2017/04/24 08:22] (current) sacarlson [Can we have more than one account deposit funds as sellers of a contract?] |
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| - | # Technicals of What’s needed to add a derivative market traded on stellar.org network | + | ====== Technicals of What’s needed to add a derivative market traded on stellar.org network ====== |
| - | Funtracker.site Bank has begun preliminary design of a derivative market run from within stellar.org network integrated trade system. | + | Funtracker.site Bank has begun preliminary design of a derivative market run from within stellar.org networks integrated trade system. |
| - | It’s time our dreams to become your reality. | + | It’s time our dreams become your reality. |
| - | I have been asked now by a few people and from some of our friends in NYC that have been asking me about the possibilities of setting up a derivative market on the stellar.net internal trading market. I think this could be huge with the present market of derivatives now at an estimated 1.2 Quadrillion USD in capitalized market value. If we just get involved in 0.001% of that market it would still be huuuge. So with my contacts interest and the known world capitalization in this market it seems like a no brainer. | + | ===== Why do we need this? ===== |
| + | I have been asked now by a few people and from some of our friends in NYC that have been asking me about the possibilities of setting up a derivative market on the stellar.net internal trading market. I think this could be huge with the present market of derivatives now at an estimated 1.2 Quadrillion USD in capitalized market value. If we just get involved in 0.001% of that market it would still be huuuge. So with my contacts interest and the known world capitalization in this market it seems like a no brainer. | ||
| - | # What are derivatives? | + | ===== What are derivatives? ===== |
| Before I get into details about what would be different about trading derivatives on stellar.org net, you best know what derivatives are. In short: “The derivatives market is the financial market for derivatives, financial instruments like futures contracts or options, which are derived from other forms of assets. The market can be divided into two, that for exchange-traded derivatives and that for over-the-counter derivatives.”. To get more details on derivatives see https://en.wikipedia.org/wiki/Derivatives_market | Before I get into details about what would be different about trading derivatives on stellar.org net, you best know what derivatives are. In short: “The derivatives market is the financial market for derivatives, financial instruments like futures contracts or options, which are derived from other forms of assets. The market can be divided into two, that for exchange-traded derivatives and that for over-the-counter derivatives.”. To get more details on derivatives see https://en.wikipedia.org/wiki/Derivatives_market | ||
| - | # What would be needed on stellar.org network to allow selling issued derivatives? | + | ===== What would be needed on stellar.org network to allow selling issued derivatives? ===== |
| The first problem I see is what systems would be required to enforce the outcome of derivative contracts. This is where my imagination steps in and sees a quorum of enforcement robots that monitor the base asset prices within the derivative and sign off on payments at the end of a contract to the winners and loosers of the contract. | The first problem I see is what systems would be required to enforce the outcome of derivative contracts. This is where my imagination steps in and sees a quorum of enforcement robots that monitor the base asset prices within the derivative and sign off on payments at the end of a contract to the winners and loosers of the contract. | ||
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| In early stage of the prototype that will be running on testnet we can setup with a single bot to start first phase of testing and debuging of the project. | In early stage of the prototype that will be running on testnet we can setup with a single bot to start first phase of testing and debuging of the project. | ||
| - | # What tools are needed to buy derivatives on stellar.org? | + | ===== What tools are needed to buy derivatives on stellar.org? ===== |
| The same tools used to buy and sell assets like currency that already exist on stellar.org can be used to buy and sell the issued derivative assets. The main difference is that the asset would become worthless to buy after the expire date of the contract. The holders on record at the end of the contract would auto receive the final outcome of the contract if it ended at any positive value that would be sent to the same account that holds the contract issue. The account would also have to be setup with trust in the asset that it hopes to receive. | The same tools used to buy and sell assets like currency that already exist on stellar.org can be used to buy and sell the issued derivative assets. The main difference is that the asset would become worthless to buy after the expire date of the contract. The holders on record at the end of the contract would auto receive the final outcome of the contract if it ended at any positive value that would be sent to the same account that holds the contract issue. The account would also have to be setup with trust in the asset that it hopes to receive. | ||
| - | # Bots Sign off on what? | + | ===== Bots Sign off on what? ===== |
| The way I see it participants that are selling contracts would have to put up a deposit of funds that would be locked in a multi-signature account with the signers being the team of robots. The asset within the escrowed account could be most any decided holding asset for the escrow but I assume it would be the base asset of the asset pair involved in the contract. The amount of this deposit is a big unknown for me as it is dependent on the volatility of the asset that the derivative is tied to and the volatility of the asset within the holding escrow. For this number we will need some experts to step in that can inform us on how to estimate these amounts. | The way I see it participants that are selling contracts would have to put up a deposit of funds that would be locked in a multi-signature account with the signers being the team of robots. The asset within the escrowed account could be most any decided holding asset for the escrow but I assume it would be the base asset of the asset pair involved in the contract. The amount of this deposit is a big unknown for me as it is dependent on the volatility of the asset that the derivative is tied to and the volatility of the asset within the holding escrow. For this number we will need some experts to step in that can inform us on how to estimate these amounts. | ||
| Also the amount in escrowed accounts will be transparent in the stellar.org ledgers to the buyers so the buyers can also decide on what they are willing to risk with the amount seen in the escrowed accounts along with the outstanding contracts already floating in the open market on this contract also visible in the stellar.org ledgers. | Also the amount in escrowed accounts will be transparent in the stellar.org ledgers to the buyers so the buyers can also decide on what they are willing to risk with the amount seen in the escrowed accounts along with the outstanding contracts already floating in the open market on this contract also visible in the stellar.org ledgers. | ||
| - | # Can't we have a single bonded deposit for each account with multi contracts running? | + | ===== Can't we have a single bonded deposit for each account with multi contracts running? ===== |
| - | I'm not sure about this one as it would be much more complex to even know how close a group of contracts were from becoming insolvent. If this could be done it might require less escrowed funds to create a group of contracts that might be working against each other like pairs of put call on an asset. Maybe just limit multi to put call on the same asset at some point and later expand on methods to track entire portfolio of an account to verify liquidity. | + | I'm not sure about this one as it would be much more complex to even know how close a group of contracts were from becoming insolvent. If this could be done it might require less escrowed funds to create a group of contracts that might be working against each other like pairs of put call on an asset. Maybe just limit multi to put call on the same asset at some point and later expand on methods to track entire portfolios or at least all linked to a single asset on an account to verify liquidity. |
| - | # Who and how would the bots get paid for there services? | + | ===== Can we have more than one account deposit funds as sellers of a contract? ===== |
| + | I guess so but they will all go insolvent at the same time I would assume or am I wrong. maybe the added funds from more than one issue seller would add liquidity? I think I would have to run some spread sheet simulations on this to verify at some point. | ||
| + | ===== Who and how would the bots get paid for there services? ===== | ||
| I'm guessing someone will have to pay for the team of trust bots to perform there services of monitoring and signing of contracts. The final contract distribution would have some amount of the funds diverted to each of the team of bots involved in the contract. This might be in some small percentage of the net of the contract block or a fixed fee for each contract. There is also no reason there can't be more than one team of bots that can compete on prices charged for services rendered. The choice may also depend on what group of bots are most trusted on the net at the time. Their reliability records and such also would be a part or what the market would be willing to pay the trust bot group. | I'm guessing someone will have to pay for the team of trust bots to perform there services of monitoring and signing of contracts. The final contract distribution would have some amount of the funds diverted to each of the team of bots involved in the contract. This might be in some small percentage of the net of the contract block or a fixed fee for each contract. There is also no reason there can't be more than one team of bots that can compete on prices charged for services rendered. The choice may also depend on what group of bots are most trusted on the net at the time. Their reliability records and such also would be a part or what the market would be willing to pay the trust bot group. | ||
| - | # What standards will we have as to what to name the asset as to what the derivative is and based on? | + | ===== What standards will we have as to what to name the asset as to what the derivative is and based on? ===== |
| Not really sure about this as we have only 12 letters to play with in stellar.org as far as an asset name. | Not really sure about this as we have only 12 letters to play with in stellar.org as far as an asset name. | ||
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| The bots responsible for the escrow can also be seen as the signers of the escrow fund so the buyer has access to all the info they might need as far as I know so far. | The bots responsible for the escrow can also be seen as the signers of the escrow fund so the buyer has access to all the info they might need as far as I know so far. | ||
| - | # User Interface site to register a sale of a derivative asset block | + | ===== User Interface site to register a sale of a derivative asset block ===== |
| It would not be very complex. just some boxes to fill in that would include: the asset/issuer or asset:market of the intended derivative, the expire date of the contract, Put or Call select, The strike price, premium price desired, The number of blocks of shares in the contract (100 shares per block same as other markets or maybe added mini blocks of 10 like we have on some other select markets), and the base asset/issuer of what the contract is escrowed in and finally paid out in but valued at contract expire to worth in the derivative asset. | It would not be very complex. just some boxes to fill in that would include: the asset/issuer or asset:market of the intended derivative, the expire date of the contract, Put or Call select, The strike price, premium price desired, The number of blocks of shares in the contract (100 shares per block same as other markets or maybe added mini blocks of 10 like we have on some other select markets), and the base asset/issuer of what the contract is escrowed in and finally paid out in but valued at contract expire to worth in the derivative asset. | ||
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| I should note that in this case we expected the asset of the derivative to be an asset within the stellar.net market, but in reality the derivative asset could point outside stellar market from feeds from the NYSE, NASDAQ, commodities or most any other world market or event that the bots can monitor. Over time different groups of bots will have the ability to monitor different feeds even beyond our present imagination. | I should note that in this case we expected the asset of the derivative to be an asset within the stellar.net market, but in reality the derivative asset could point outside stellar market from feeds from the NYSE, NASDAQ, commodities or most any other world market or event that the bots can monitor. Over time different groups of bots will have the ability to monitor different feeds even beyond our present imagination. | ||
| - | # What programing language will the bots be programed in? | + | ===== What programing language will the bots be programed in? ===== |
| The bots can be written in more than one language but to start I think the first will be in JavaScript nodejs. There may also be one written first or second in ruby as we already have some tools written in ruby for bots that are already running on the stellar.org net in a similar nature. One thing for sure I feel the bots code should be open source on all of them and they need to all work together as one. | The bots can be written in more than one language but to start I think the first will be in JavaScript nodejs. There may also be one written first or second in ruby as we already have some tools written in ruby for bots that are already running on the stellar.org net in a similar nature. One thing for sure I feel the bots code should be open source on all of them and they need to all work together as one. | ||
| - | # Who’s going to build it? | + | ===== Who’s going to build it? ===== |
| I have to admit this project may be above me to complete myself and I am asking for help on this one as I have asked before on many of my other projects with little success in the past of getting little or any. | I have to admit this project may be above me to complete myself and I am asking for help on this one as I have asked before on many of my other projects with little success in the past of getting little or any. | ||
| I think to start we need feedback and more ideas about the design and the problems that I have not yet foreseen before we can even begin to start to code up a proof-of-concept on each of the parts needed. | I think to start we need feedback and more ideas about the design and the problems that I have not yet foreseen before we can even begin to start to code up a proof-of-concept on each of the parts needed. | ||
| - | Funding would also help if someone doesn't have the skills to help but has funds to contribute to the project that would help us get some expert consultants and programmers to step in and help to expedite it's completion. If you want to contribute funds you can contact the Funtracker.site Bank Manager at https://chat.funtracker.site/channel/bank for details. | + | Funding would also help if someone doesn't have the skills or knowledge to help but has funds to contribute to the project that would help us get some expert consultants and programmers to step in and help to expedite it's completion. If you want to contribute funds you can contact the Funtracker.site Bank Manager or sacarlson at https://chat.funtracker.site/channel/bank for details. |
| I estimate it will take 6 months to 1 year or more after coding begins to complete a proof-of-concept without much help. | I estimate it will take 6 months to 1 year or more after coding begins to complete a proof-of-concept without much help. | ||
derivative_market_within_stellar.org_net_project.1493020717.txt.gz · Last modified: 2017/04/24 07:58 by sacarlson
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