Profit Strategies with HONEST Tokens, BTS, and BitShares Financial Instruments

Abstract:

This technical paper explores advanced profit strategies using Market Pegged Assets (MPAs), Short Selling, and Liquidity Pools on the BitShares Blockchain. Focusing on HONEST tokens (e.g., HONEST.USD, HONEST.BTC) and BTS, this guide provides practical insights into leveraging these financial instruments for profitable trading. Examples and strategies are presented with a focus on simplicity for readers with minimal blockchain knowledge.

1. Introduction:

The BitShares Blockchain offers a unique financial ecosystem with various instruments for traders seeking profit opportunities. This paper elucidates strategies involving HONEST tokens, representing Market Pegged Assets, and BTS, the core token of the blockchain.

2. Market Pegged Assets (MPAs):

2.1 Understanding MPAs:

Market Pegged Assets (MPAs) on BitShares, including HONEST tokens, mimic the value of real-world assets like fiat currencies or commodities. For example, HONEST.USD represents the value of the US Dollar.

2.2 Profit Opportunities with MPAs:

Long Positions: Invest in HONEST tokens anticipating an increase in their value relative to BTS.
- Example: Purchase HONEST.USD when expecting the US Dollar to strengthen.
Short Positions: Borrow HONEST tokens to sell when anticipating a decrease in their value, aiming to buy them back at a lower price.
- Example: Short HONEST.BTC if anticipating a Bitcoin price decline.

3. Short Selling Including Short Tokens:

HONEST has introduced a new concept to Bitshares MPA’s. Tokens with Inverse Price Feed.

E.g. if HONEST.BTC is fed a price of BTC/BTS
then HONEST.BTCSHORT is fed the inverse price of BTS/BTC

3.1 Short and Long Positions:

Short Position: Selling borrowed assets with the intention to repurchase them later at a lower price.
Long Position: Buying assets with the expectation that their value will increase.

3.2 Profit from Short Selling:

Example: Borrow HONEST.BTC, sell it for BTS, wait for the price to drop, repurchase HONEST.BTC at a lower price, and return the borrowed amount, profiting from the price difference.

3.3 Profit from Short Selling Short Tokens:

Short tokens are the inverse of their corresponding MPAs, reflecting a belief in the devaluation of the underlying collateral asset.
Example: Borrow HONEST.BTCSHORT and sell it for BTS, expecting the value of HONEST.BTCSHORT to decrease relative to the BTS collateral. Repurchase HONEST.BTCSHORT at a lower price to cover the short position.

3.4 Risks and Considerations:

Short selling short tokens involves anticipating an increase in the value of the underlying asset.
Traders should carefully assess market conditions and conduct thorough research before engaging in short selling short tokens.

3.5 Short Token Feed Price Calculation:

The feed prices for short tokens are generated inversely to their corresponding MPAs:

edict["settlement_price"] = 1 / feed if short, else feed

3.7 Conclusion:

Integrating short selling short tokens into your trading strategy adds flexibility and opportunities to profit from market movements.
Traders should be aware of the additional complexities introduced by short tokens and consider their risk tolerance and market analysis before engaging in short selling short tokens.

4. Liquidity Pools:

4.1 Earning from Liquidity Pools:

By staking BTS or HONEST tokens in a Liquidity Pool, traders earn a share of the fees generated by the pool, providing a continuous profit stream.
Example: Stake BTS in the HONEST.USD:BTS Liquidity Pool, earning a percentage of the fees generated from transactions in that pool.

4.2 Combining MPAs and Liquidity Pools:

Create Liquidity Pools using HONEST tokens to facilitate trading pairs and earn fees.
Example: Create a Liquidity Pool with HONEST.USD and BTS, allowing users to trade between them while earning fees for providing liquidity.

5. Conclusion:

Understanding how to profit with MPAs, Short Selling, and Liquidity Pools on BitShares involves strategically using HONEST tokens and BTS. By taking advantage of price movements, engaging in short-selling opportunities, and participating in liquidity provision, traders can enhance their profitability within the BitShares ecosystem.

Note: This paper assumes a basic understanding of trading concepts and recommends thorough research and practice before implementing these strategies. Always consider the risks associated with trading and blockchain investments.