[bisq-network/proposals] Fixed term BTC loans against BSQ collateral (#176)
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Wed Feb 12 12:01:25 UTC 2020
@stejbac Interesting and well thought out idea. I can't say if the technical details work as you say, but I don't see why you couldn't engineer that system. It would be interesting to see if there was interest or use of such a product.
In my opinion it doesn't help the underlying issue which is/was lack of BSQ demand, so I'm not sure it's worth expending a lot of energy to give people greater options in how they sell BSQ. Personally, I don't think a contributor should be worried about 'tanking' the price of BSQ when they cash their contributor checks in. The BSQ is an important health metric for the exchange, and the benefit of a falling price is the information that the BSQ budget needs to be tightened (for example). If people think, for example, that if volume increases in the future and project costs go down in the future, then monthly demand for BSQ will exceed the monthly supply and the price will go much higher, and they will benefit by waiting to sell. If someone thinks that BSQ will continue to be issued at a rate that will never be burned, then they may believe that the BSQ will continue to go lower as supply outstrips demand. That person may want to sell today at even a 'historically low' price.
Let's think from the viewpoint of the loan maker: it's synthetically selling a put on the BSQ price and getting that option premium in the form of "APR" or "loan interest". If the collateral values the loan at 5000 sats each, the borrower should only choose to pay it back if the BSQ market price is above that at the end date of the loan. Otherwise, they should choose to default and "sell" their BSQ at 5000. In this case the loan maker receives the BSQ at 5000 sats each + the interest payments made along the way.
As a former options trader, selling naked puts would be considered a very dangerous strategy, especially in a market as volatile as BTC multiplied by the volatile BSQ. In January alone, we've seen the range of 2000 sats to 10000 sats, that's huge volatility!
Of course, people should be able to enter into financial arrangements that they consensually choose, but again, this offering will not change the underlying demand for BSQ, only add to the diversity of outcomes.
Ultimately as discussed in the growth call by @m52go, we need to think of ways to increase fee revenue. And at least for me, the best way is to raise the **utility** of the BISQ program incrementally through improvements on the customer focused offerings. BISQ is already a huge success in my mind as a functional independent exchange, and things like the new Liquid BTC asset in the next version make me excited.
Also, projects like the API are another super high priority item in my mind (I'm not a dev) as you can enable higher volume trading.
Just my two cents and I'd love to hear what others think about the idea.
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