TLDR: As opposed to other exchanges, Bitshares basically allows you to trade a lot more assets besides Crypto by using smart tokens. From stock shares to petrol reserves
From investopedia https://www.investopedia.com/terms/d/derivative.asp :
A derivative is a financial security with a value that is reliant upon or derived from an underlying asset or group of assets. The derivative itself is a contract between two or more parties based upon the asset or assets. Its price is determined by fluctuations in the underlying asset. The most common underlying assets include stocks, bonds, commodities, currencies, interest rates and market indexes.
That's exactly what smart tokens are. BitUSD, BitCNY and the like are already derivative assets. And bitshares DEX can already be used to trade them, if it weren't for the lack of volume making it unusable ... For now .
It would be very easy to trade stocks and national debt in bitshares, if the interest ever came to that. when you create a Market Pegged Asset, a derivative asset, also known as a smart token here, you are required to have a number of price feed publishers,witnesses whose job is to track the price. These feed publishers are also required to implement the Maintenance Collateral Ratio, which has a minimum of 175% and the Short Squeeze Protection Ratio, minimum 110%, which is the point where your collateral will be forcibly sold without conditions. The price feed is against bitshares always.
With that in mind, and getting trustable feed publishers who use at least more than 1 method to determine the price, we can now move on to create our derivative asset. So we create apple stocks. As an example. And we name the token Apple-dev . Tracking the cost of a share of apple. But we have not created any . How do you create them? Very easy. In the margin trading section of the bitshares wallet you can add bitshares as collateral (as long as it is higher than the MCR). Now you are actively backing a apple share with at least a 175% of its value in bitshares. And anyone who buys it will pay that as the minimum. Because there is always a premium in value when you print (Collateralize) an asset, which depends on the market situation. When there are a large amount of people selling bitshares for that asset the asset price grows relative to bitshares on the DEX even if the real price of bitshares relative to the real price of that asset is lower. But it will never fall below that value in a significative way. Why? Asset Settling.
The bitshares networks allows you to settle assets at the price indicated in the price feed for bitshares. Which has a delay and it usually loses money so its very rarely used. but it means that 1 BitUSD will always be worth at the very least 1 USD of bitshares. It may get to be worth 1.30$ (it has done in the past) , but it will never be worth $0.80 because if it did you could "burn" them to get a 30% of profit in bitshares. This of course has huge applications for bitshares.
Not only does that means that you can trade anything in the bitshares DEX, but the value of it will always be bigger than its real value, so printing them using bitshares as a collateral is extremely attractive.
If we ever get the public interested heavily in decentralized exchanges, i hope this will be one of bitshares greatest features.
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