Hello! I have a question, what is the mechanism by which the price of each asset fluctuates up and down? Who makes the market? Wouldn't everyone buy low and sell high?
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Hello! I have a question, what is the mechanism by which the price of each asset fluctuates up and down? Who makes the market? Wouldn't everyone buy low and sell high?
Hey, sorry for the late reply.
The mechanism that oscillates the price of each asset is the following price feed script: https://github.com/BTS-CM/Norns/blob/master/parallel_feed.py
In short, there are multiple trusted price feed publishers, they are tasked with broadcasting the latest values using the above script, this provides real-time prices for each asset & it should never deviate from the formula.
There are many different possible strategies, people could buy low sell high, others could short the peak and buy back their debt at the trough, some may buy and hold indefinetley or burn the token, some may buy a peak/trough and settle a similar peak/trough in the future. There's far more to this than solely trough->peak price movements.
I really appreciate you answering me, but unfortunately I still don't fully underside the 'other side' of this market.
I do get that some might hold a stable-ish asset.
The buy low sell high and short high repay low are really the same (or perhaps mirrored) actions in my mind.
My question is, who is buying what is being sold low? Who is taking money for a put at the top? I feel like I am missing a piece of this equation.
Thank you in advance for your patience!
At the moment, nobody because it's not an active asset on the Bitshares DEX yet.
Anyone can buy the low and settle the peak.
Someone who shorts the peak and buys back their debt at the trough can profit from debt destruction.
You may buy the peak and settle the next peak so as to keep 2x BTS locked up away from exchanges, the effect of liquid supply reduction is an unknown but people may have strategies around this.
Overall, it's an experiment and these answers are theoretical until it actually beings being traded & we see the reality of participant behaviour on the production network.