Title: Backing an MPA with multiple assets
Authors: CM
Status: Draft
Type: Protocol
Discussion: https://bitsharestalk.org/index.php?topic=26948.msg321465#msg321465
Replaces: N/A
Superseded-By: N/A
Worker: TBA

Abstract

Enable configuring multiple assets as backing collateral for an MPA.

Motivation

Currently you can only configure one asset (BTC, UIA or MPA) as the backing collateral for an MPA, so if you want to back an USD MPA with a BTC UIA then you need to do this on an individual gateway basis which would result in many identical purpose MPA.

Current smartcoin supply is dwarfed by the marketcap of USDT, we need to think of ways of increasing supply of MPA such as multi-asset backing to attract shorters from other cryptocurrencies.

Rational

• If multi-asset backed MPA is successful in generating a large supply then its use on the BTS DEX would provide fees to the reserve pool and attract a lot of new users to the BTS DEX.
• Settling the MPA for an index of crypto assets would be a relatively simple method of exchanging FIAT into an instant crypto portfolio.

Specifications

Example JSON configuration of an MPA backed by multiple assets:

{
  "reference_asset": {
    "name": "USD",
    "amount": 1,
    "feed_price": bitUSD.median_feed_price
  },
  "allowed_backing": {
    "BTC": {
      "allowed_tokens": [{"name": "<gateway(s)>.BTC", "mcr": 200}, {"name": "bitBTC", "mcr": 200}],  
      "feed_price": (reference_asset["feed_price"]/bitBTC.median_feed_price)
    },
    "ETH": {
      "allowed_tokens": [{"name": "<gateway(s)>.ETH", "mcr": 200}, {"name": "bitETH", "mcr": 200}],  
      "feed_price": (reference_asset["feed_price"]/bitETH.median_feed_price)
    },
    "USD": {
      "allowed_tokens": [{"name": "<gateway(s)>.USD", "mcr": 200}, {"name": "bitUSD", "mcr": 100}],  
      "feed_price": (reference_asset["feed_price"]/bitUSD.median_feed_price)
    },
    "BTS": {
      "allowed_tokens": [{"name": "BTS", "mcr": 175}],
      "feed_price": (1/reference_asset["feed_price"])
    }
  }
}

Discussion

• How to set feed price of backing collateral?
  • Via internal BTS DEX price references of similar assets?
  • Price feed updates which provides both the 'reference_asset.feed_price' and the 'allowed_backing.ticker.feed_price' values?
• Should different allowed tokens have different minimum collateral ratios? Currently this is included in the specification example under 'mcr' within each 'allowed_tokens'.
• Should we account for market fees and withdrawal fees in UIA collateral valuation?
• How to perform a force settlement of MPA in return for multiple backing assets?
  • Who would be the least collateralized position in a forced settlement?
    • Determined on an individual backing asset basis? (Least BTC position despite highest USD position triggers force settlement including BTC+USD?)
    • Deterined as the minimum total backing collateral value?
  • Could the user have a preference in what they're paid out, even if it means delays?
• Could you remove an asset as backing collateral if there is 0 of the asset being used as backing collateral?
• Could you add new backing collateral assets once supply > 1, or would it be finalized?

Summary for Shareholders

• Proposal for introducing additional (optional) backing collateral assets.
• Could result in more fees for reserve pool, if successful.
• Likely would require mandatory network upgrade.
• Would potentially require a worker proposal to complete, if outside the scope of the bitshares-core dev team.

Copyright

MIT licensed.

See Also

N/A.

So, what are your thoughts on this draft BSIP?

Regards,
CM.