Merge pull request #222 from bitshares/bsip76

BSIP 76: Threshold for price feeds through voting

bsip-0076.md

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+    BSIP: 0076
+    Title: Threshold for price feeds through voting
+    Authors: Abit More
+    Status: Draft
+    Type: Informational
+    Created: 2019-09-25
+
+# Abstract
+
+This BSIP defines a process to influence the pegging status of committee-owned smartcoins through poll voting.
+
+# Motivation
+
+In order to maintain the peg of the smartcoins, smartcoins holders now have the right to be always
+possible to buy collateral at a "fair" price. For committee-owned smartcoins, the collateral is BTS.
+However, when the BTS token is being dumped in Centralized Exchanges with fake volume and even fake supply,
+the value of the token is distorted, thus, forcing BTS token holders who have their BTS token trapped in
+debt positions as collateral to sell their collateral at the distorted price via margin calls or
+force-settlements is unfair.
+The same situation applies to non-committee-owned smart coins as well.
+
+Smartcoins are products of the BitShares platform, their rules are defined by the platform
+for the benefit of the platform and the BTS token holders.
+If a product brings more harm than benefit to the platform, its rules need to be optimized,
+under extreme conditions, the product needs to be halted.
+For smartcoins, when the cost to maintain the peg is too high to afford, it's time to give up the peg.
+
+# Rationale
+
+Ideally a smartcoin owner should be able to define a set of conditions about when to give up the peg
+and how to de-peg, but it needs time to design and implement. Before the final solution got worked out,
+it's up to the price feed producers to execute the will for the asset owner on whether to maintain
+the peg at a given point and how to de-peg. For committee-owned smartcoins, the owner is actually
+all BTS holders who could express their will by voting, the price feed producers are the active witnesses.
+
+# Specification
+
+The BTS token holders define a threshold, if the market trading price of BTS is below the threshold,
+witnesses should feed the threshold but not the market trading price, thus would effectively break
+the peg as intended. When the market trading price of BTS is above the threshold, witnesses should
+feed the market trading price, so the peg will be restored automatically. The mechanism is similar to
+the Global-Settlement Protection mechanism as described in [BSIP 58](bsip-0058.md).
+
+Changes to the threshold will be decided on individual committee-owned smartcoins by voting, each time
+one change is issued 2 poll worker proposals will be created standing FOR and AGAINST the change.
+
+For example, to decide whether to change the price feed threshold of bitCNY to 0.2 CNY each BTS,
+2 poll worker proposals will be created for voting:
+
+Poll-BSIP**-Change bitCNY feed threshold [from the previous value when applicable] to 0.2 CNY per BTS
+
+Poll-BSIP**-Not change bitCNY feed threshold [from the previous value when applicable] to 0.2 CNY per BTS
+
+If the voting confirm the change, committee will announce the change at least 3 days before the change
+is implemented by witnesses.
+
+# Discussion
+
+Some people think it's the debt position holders' responsibility to always maintain their
+collateral ratio to a fair level. However, when the collateral's price can drop to zero due to
+unfair manipulation, it's not possible to always maintain a good CR.
+Higher or lower, there is a point that the peg would break.
+
+This BSIP may negatively impact smartcoin holders since their holdings will likely devalue when
+the voted point is met, which would likely be worse than before.
+Businesses built on top of the smartcoins may be impacted.
+Reputation of smartcoins as well as the BitShares brand may be impacted.
+
+Discussions about changing the threshold to what value is not in the scope of this BSIP.
+The values should be carefully selected to comply with the market status and to mitigate potential risks.
+Voters will need to evaluate each setting that is proposed in a BSIP poll.
+
+A new feature that allows an asset owner to directly set, update or unset the threshold will
+be described in a new BSIP. It's not in the scope of this BSIP.
+
+# Non-Technical Summary
+
+It is important to define a process for the BTS token holders to decide to change
+pegging status of committee-owned smartcoins through voting.
+This can currently be achieved with the technical options that are available to
+the price feed producers aka witnesses.
+
+# See Also
+* https://bitsharestalk.org/index.php?topic=29635.0
+* https://bitsharestalk.org/index.php?topic=29633.0
+
+# Copyright
+This document is placed in the public domain.