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Enumivo Liquidity Network

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I'm typing as I think so bear with me.

Think of the following technologies:

1. Logarithmic Market Scoring Rule

2. Automated Market Maker

3. Stablecoins

4. Decentralized Price Oracle

5. Schelling Point

As LiteShares (LTS) was originally intended to be used to power a decentralized exchange and stablecoins, I'm now continuing it inside the Enumivo platform. 1000M LTS tokens are now in existence and I own 100M LTS, the rest of the 900M are being distributed, and given the low value (almost zero but nonzero) of LTS tokens at the moment, I have decided to donate 50M of my holdings to what I will call the Enumivo Liquidity Network. Consider it as an experiment but I will do my best to make it work. That's why I'm willing to donate 50M LTS for it. Either it becomes nothing or something, but the journey will be fun.

The recent days I have been obsessed about stablecoins since I wanted to have a USD inside Enumivo but with my experience with SAT, PHP, CNY, i realized it would be cumbersome to issue my own tokens and honor it. I needed USD in order for me to not have a hard time dealing with computations for payroll, expenses, bounties, rewards, etc.

I have also witnessed a few evolutions of the market maker I originally ask the community to design for me and eventually written by @ansen. I had few realizations but I now I will be modifying slightly Hanson's LMSR to create an "always-liquid" market maker for all tokens inside of Enumivo. This will provide a liquidity network of stablecoins and user-issued tokens.

Instead of initially planning to issue USD and accept deposits and process withdrawals, which I hate since it would be centralized and I don't want to be a central authority regarding it, I will be creating initially a market maker using LMSR that will involve trading LTS and a new token USD. The difference will be, the USD token will be under the sole control of the LTS/USD LMSR Market Maker. It will initially have 1 USD and x LTS (which i will donate), and every time the market maker's USD funds fall below 1 USD, it will automatically replenish it to 1 USD. So the USD token will be issued by the market maker and will always buy it back. Nobody will be compelled to honor USD, but I believe it will eventually follow fiat USD value.

At this point, LTS and USD will be tradable against each other freely and as more and more need for USD will be, more USD will be printed by the market maker. If the USD demand drops, the market maker will always be ready to buy it back.

At this point, only LTS and USD will be in the Enumivo Liquidity Network.

Then, I will create other stablecoins like ETH, BTC, EOS, etc. Let's say I do ETH first, it will be like USD, maybe make it automatically replenish at anything below 0.01 ETH. So I will then initially add LTS and 0.01 ETH in the LTS/ETH market.

At this point we have LTS/USD and LTS/ETH. Both the stablecoins USD and ETH can be bought at the automated market makers, there will always be available if you have the LTS to buy it and if it runs out, it will just create from thin air.

Now we don't have a market yet for ETH/USD, but both are stablecoins, and for me to create it, I will need to supply it some initial liquidity so I will be forced to use part of the 50M LTS to buy some ETH and USD and create the ETH/USD market. This market being both stablecoins, doesn't have the capacity to mint either ETH or USD. Only the LTS/USD market can mint new USD and the LTS/ETH market can mint new ETH.

At this point we have 3 markets.

LTS/USD

LTS/ETH

ETH/USD

The sequence will always be like this. Create a new stablecoin and make a market for it against LTS, and give it sole authority to mint the stablecoin as needed. Then create other markets with it buy using LTS to buy other stablecoins to pair with it.

So everytime we add a new stablecoin, it will be mintable by the market maker that handles it, and it will have other market makers to pair with all other existing stablecoins.

And using the same market maker, there will also be a market for LTS and ENU using the same algorithm. I will also donating LTS and ENU for its initial liquidity. Now Imagine so many tokens tradable among each other in one network.

Each stablecoin will have their own issuer contract so no single person is compelled to honor it or its value. But by schelling point/self-fulfilling prophesy, everyone can trade and make corrections in the market if there are any market price changes outside. If the price of BTC outside increases and the price of BTC in the liquidity network is low, traders will buy it because everyone will think that it will increase, making it a self-fulfilling prophesy.

What would be the value of the stablecoin USD? There is an instantaneous price at any point in time but if you hold 100 USD, does that mean it is really worth 100 USD? No. If you hold 100 USD and the market is not liquid, and you want to sell it to someone for 100 USD fiat, would you expect him to buy it? No. In an illiquid market your 100 USD will either take time to become real 100 USD or if you want it quick, it will be worth less than 100 USD because if someone wants to convert it to another stablecoin or token, being in an illiquid market would cause massive price movements and price slippage. Therefore, the confidence to the stablecoins is dependent on how liquid the Enumivo Liquidity Network would be. As the trading volume increases, you would expect your stablecoin to be worth near the real coin it represents.

Later, as more and more tokens will be tradable in the Enumivo Liquidity Network, we can also create a smart contract that will allow you to convert one token to another at the best possible price thereby eliminating arbitrage within the network.

Another important thing needed will be to massively improve user experience and the price feed so that everyone can react quickly to price movements.

I don't have time to proofread so bear with me.

Let me know your comments.

Edited by enumivo
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If one day the market becoming very big, let's say, one big cheese hold 1000 Enumivo-BTC, and he wants to transfer them to classic-BTC. Who should he ask for? And how can they trust each other?

Edited by PeiLin

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1 hour ago, PeiLin said:

If one day the market becoming very big, let's say, one big cheese hold 1000 Enumivo-BTC, and he wants to transfer them to classic-BTC. Who should he ask for? And how can they trust each other?

if it is really big, that means the liquidity and trading volume is high, that will open up so many opportunities for gateways to trade stablecoins to fiat. so for now i'd really worry more on making it get there. 🙂

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I think the enu/usd market should be creat before the lts/usd ,in my opinion more and  more stablecoins will be created!we need BTC and but we need more stablecoins than BTC!Do you know what I mean?

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1 hour ago, Canton Wang said:

I think the enu/usd market should be creat before the lts/usd ,in my opinion more and  more stablecoins will be created!we need BTC and but we need more stablecoins than BTC!Do you know what I mean?

i have made some changes in my design by creating all fiat and crypto stablecoins all at once to be able to have a fair launch. i'm now going for LMSR instead of bancor style. so all tokens will be interconnected among each other and trading any 2 tokens will have an effect to every other token. i think this will have a very fair launch and everyone trading will not have any unfair advantage over anyone.

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I didn't know anything about LMSR, Google a bit ant found this one :

https://www.cultivatelabs.com/prediction-markets-guide/how-does-logarithmic-market-scoring-rule-lmsr-work

Also I found that Augur failed to run it because of high gas prices, I think for enumivo it is a good idea to have such market maker. It is more sophisticated than a simple bancor like and will work for small market. 

For enumivo with its own blockchain and free transaction cost, no matter if LMSR needs more transactions per trade. 

 

Edited by gij
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8 hours ago, gij said:

I didn't know anything about LMSR, Google a bit ant found this one :

Thanks for your shared, @gij. Me either.
I think the most important thing is "liquidity". "Liquidity" means that more people trust and use it. This is also the mechanism for all currencies to succeed.
Hope it will be easy to run and popular. With the open mind and we try it first.

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After days of analyzing and researching, it would seem the solution to having a stablecoin would appear to be very simple and radical and crazy. I can't believe it. They have been talking about collateral debt positions like bitshares and makerdao and other complex systems, I can't believe that I always come back to a solution that is just very simple, it's so simple I can't believe it won't work but all my simulations worked.

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15 minutes ago, enumivo said:

After days of analyzing and researching, it would seem the solution to having a stablecoin would appear to be very simple and radical and crazy. I can't believe it. They have been talking about collateral debt positions like bitshares and makerdao and other complex systems, I can't believe that I always come back to a solution that is just very simple, it's so simple I can't believe it won't work but all my simulations worked.

Congratulation, I cant wait to see it, will it be launched soon?

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5 minutes ago, PeiLin said:

Congratulation, I cant wait to see it, will it be launched soon?

yes soon, but honestly although i can explain it well and all my simulations say it works, i'm ashamed to admit that the solution is very simple.

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3 minutes ago, enumivo said:

yes soon, but honestly although i can explain it well and all my simulations say it works, i'm ashamed to admit that the solution is very simple.

I think no need to fell ashamed for it is simple, if it can works great, then it is great.

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23 hours ago, enumivo said:

是的,但老实说,虽然我可以很好地解释它并且我所有的模拟都说它有效,但我很惭愧地承认解决方案非常简单。

大道至简,所有有效的方案一定是最简单的和广泛使用的。

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23 hours ago, enumivo said:

yes soon, but honestly although i can explain it well and all my simulations say it works, i'm ashamed to admit that the solution is very simple.

just do it ! 

实践是检验真理的唯一标准

in English , Practice is the sole criterion for testing truth. 

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23 hours ago, PeiLin said:

I think no need to fell ashamed for it is simple, if it can works great, then it is great.

 

23 hours ago, PeiLin said:

I think no need to fell ashamed for it is simple, if it can works great, then it is great.

整个文章翻译一下,AP还是有很多不一样的想法,大概意思我感觉他是反对稳定币的!

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45 minutes ago, Canton Wang said:

 

整个文章翻译一下,AP还是有很多不一样的想法,大概意思我感觉他是反对稳定币的!

他是支持稳定币的,正在研究一种运行稳定币的新公式。预计很快就会上线了。

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