Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Official Response to “Bancor Is Flawed”

blog.bancor.network

Post reply on HN
Print view View original

71–80 of 103 posts

Re: Official Response to “Bancor Is Flawed”

#71

Post by cyphar »

Thanks for confirming that the original article was correct in its analysis and that you have no substantial rebuttal other than nitpicking. Aside from the awful usage of "fake news" (almost as though you think it makes you sound more credible), your first rebuttal is this:

> At time of raise its was $153M within 2:25, this has been covered widely including a formal statement on our blog.

I think you missed the point the article was making.

As someone who isn't very familiar with economics, the original article was clear and concise with very clear Gedankenerfahrung which encapsulated individual problems with the Bancor protocol. While writing technical pieces like that is difficult, this reads more like a bad teacher trying to save face when a clever student shows them up. You're just hurting your own credibility.

Re: Official Response to “Bancor Is Flawed”

#72

Post by Bartweiss »

franciscop wrote: post #32

Well they should learn though: - Their clients tell them the message is not clear so they make a video. - "Bancor is Flawed" says too many buzzwords make it unclear and fluffy. - You have to Google to understand the words according to Bancor themselves. - They even have to add parenthesis in this article to explain some words! But they still think their message is clear. While I have no idea about this world, I do ca…

I'm always surprised when companies use "you misunderstood us" as a defense. It's a reasonable point in personal communications, but when you're a business and virtually everyone misunderstands you the same way, that's your fault. Failing to explain better (even after you're misunderstood) is a hint that you're either bad at your job, or don't have an idea you'd be willing to explain more clearly.

Re: Official Response to “Bancor Is Flawed”

#73

Post by JumpCrisscross »

thisisit wrote: post #60
marcosdumay wrote: post #56

Earlier quoted context omitted.

That "at the same time" is the important piece. It means there's an speculator in the middle that will guess a price it can buy to sell later and make some money out of the transaction.

My guess is you talking about arbitrage[1]. As Sirer pointed out tokens on Bancor present a huge opportunity for arbitragers and it is bad. As time is an unknown risk factor, the speculator will simply buy on Bancor, take the token out and sell it on exchange immediately to make a profit. [1] http://www.investopedia.com/terms/a/arbitrage.asp

Arbitrage transports price information between places, e.g if a stock is trading for 360 in Chicago and 370 in New York (after accounting for transportation ). Market making transports price information across time, i.e. I buy a sheep at 9am and sell it at Noon. Arbitrage is classically riskless while market making involves significant risk.

Re: Official Response to “Bancor Is Flawed”

#74

Post by JumpCrisscross »

thisisit wrote: post #59
JumpCrisscross wrote: post #33

> With Bancor, there is no need for two opposite wants to exist at the same time in order for the price discovery (through actual trading) to function I don't understand. If everyone wants to buy, nobody will trade and price discovery will not occur. Can someone please help me understand this?

This is the very basic function of a market maker. They offer to "make" a market even when none exists. So if everyone wants to buy they will keep offering until their inventory runs out. I haven't read the Bancor paper or code so I am not sure if this is implemented but every market maker's another objective is to make money. So they normally don't trade on a fair price, rather fair price - x/2 to buy and fair price…

I was expecting something different given the novelty of the term "asymmetric price discovery" to this former equity derivatives market maker.

Also, nitpick, a market maker has to actually trade for price discovery to have occurred. I can run around quoting "bid AAPL 2 at 10 billion" all day long, if nobody bites I didn't promote price discovery.

TL; DR You can't asymmetrically discover prices.

Re: Official Response to “Bancor Is Flawed”

#75

Post by Bartweiss »

thisisit wrote: post #60
marcosdumay wrote: post #56

Earlier quoted context omitted.

That "at the same time" is the important piece. It means there's an speculator in the middle that will guess a price it can buy to sell later and make some money out of the transaction.

My guess is you talking about arbitrage[1]. As Sirer pointed out tokens on Bancor present a huge opportunity for arbitragers and it is bad. As time is an unknown risk factor, the speculator will simply buy on Bancor, take the token out and sell it on exchange immediately to make a profit. [1] http://www.investopedia.com/terms/a/arbitrage.asp

I think "is it arbitrage" is a major part of the issue.

Bancor is claiming to be a market maker offering a spread (basically, taking a cut for insuring liquidity). Sirer is suggesting that without being able to react to real-world changes, Bancor will burn reserves to offer up something like arbitrage whenever the market changes. Well, arbitrage or "just giving away money", depending on how you count it.

I'm hardly qualified to judge the question, but it's disturbing that Bancor basically dodged the main complaint in this response.

Re: Official Response to “Bancor Is Flawed”

#76

Post by Bartweiss »

JumpCrisscross wrote: post #73
thisisit wrote: post #60

Earlier quoted context omitted.

My guess is you talking about arbitrage[1]. As Sirer pointed out tokens on Bancor present a huge opportunity for arbitragers and it is bad. As time is an unknown risk factor, the speculator will simply buy on Bancor, take the token out and sell it on exchange immediately to make a profit. [1] http://www.investopedia.com/terms/a/arbitrage.asp

Arbitrage transports price information between places , e.g if a stock is trading for 360 in Chicago and 370 in New York (after accounting for transportation ). Market making transports price information across time , i.e. I buy a sheep at 9am and sell it at Noon. Arbitrage is classically riskless while market making involves significant risk.

Yeah - in theory Bancor is market making. In practice, I'm not so sure. They don't seem to have answer the 'market trailing' claim, and if they (for instance) trail during crashes, they offer arbitrage to everyone else, paid out of the reserve.

Re: Official Response to “Bancor Is Flawed”

#78

Post by Bartweiss »

davidgerard wrote: post #9

yeah, not taking Emin Gün Sirer critiques seriously is not the sort of thing that works out well in cryptos.

He's often wrong on the market (infamously told people to sell Bitcoin at like $100), but that mostly seems to be about underestimating optimism. On tech critiques like this... well, he predicted the DAO attack in such detail that people accused him of being the one behind it. Seeing a non-response to Sirer here seems very, very bad for Bancor.

Re: Official Response to “Bancor Is Flawed”

#79

Post by thisisit »

JumpCrisscross wrote: post #73
thisisit wrote: post #60

Earlier quoted context omitted.

My guess is you talking about arbitrage[1]. As Sirer pointed out tokens on Bancor present a huge opportunity for arbitragers and it is bad. As time is an unknown risk factor, the speculator will simply buy on Bancor, take the token out and sell it on exchange immediately to make a profit. [1] http://www.investopedia.com/terms/a/arbitrage.asp

Arbitrage transports price information between places , e.g if a stock is trading for 360 in Chicago and 370 in New York (after accounting for transportation ). Market making transports price information across time , i.e. I buy a sheep at 9am and sell it at Noon. Arbitrage is classically riskless while market making involves significant risk.

Not really. The word you are looking for your second example about sheep is simply - speculator. Not market maker and not even arbitrage.

From [1]:The most common type of market maker is a brokerage house that provides purchase and sale solutions for investors in order to keep the financial markets liquid. A market maker can also be an individual intermediary, but due to the size of securities needed to facilitate the volume of purchases and sales, almost all market makers are large institutions.

The keywords being "provides purchase and sale solution". So a better example will be you staying at the same place buying and selling sheep as they come about, specially if there is no one to take up a buyer or seller on their offers or bids.

[1]:http://www.investopedia.com/terms/m/marketmaker.asp

Re: Official Response to “Bancor Is Flawed”

#80

Post by JumpCrisscross »

thisisit wrote: post #79
JumpCrisscross wrote: post #73

Earlier quoted context omitted.

Arbitrage transports price information between places , e.g if a stock is trading for 360 in Chicago and 370 in New York (after accounting for transportation ). Market making transports price information across time , i.e. I buy a sheep at 9am and sell it at Noon. Arbitrage is classically riskless while market making involves significant risk.

Not really. The word you are looking for your second example about sheep is simply - speculator. Not market maker and not even arbitrage. From [1]:The most common type of market maker is a brokerage house that provides purchase and sale solutions for investors in order to keep the financial markets liquid. A market maker can also be an individual intermediary, but due to the size of securities needed to facilitate th…

> Not really. The word you are looking for...is simply - speculator

Market making necessarily involves speculating. They're one and the same.

Modern market making has many conventions extraneous to the definition, but there are still markets where market makers only quote one side of the market at a time. For over-the-counter stocks in the United States, you are even allowed to offer soft quotes, i.e. the market maker can renege on a posted quote if they want.

The sheep example is resolutely a market maker. Just in an illiquid market.

Source: I used to be a designated market maker.

Post reply on HN