The liquidity reward program is broken by logicwins

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markets · @logicwins · Jul 14 '16

The liquidity reward program is broken

In capital markets, you are not allowed to trade against yourself for a number of reasons.  Steem is slightly different but allowing someone to trade against themselves  to gather the liquidity rewards allows the person with the biggest pot to be the only real winner.  

If this is the intending effect, then I am all for it.  As it stands, the volume of trade is extremely  misleading because of this.  

Just look at  these transactions:  https://steemit.com/@adm/transfers

He is just trading against himself and painting the tape.  Again this is fine except that it means that 90%+ of transactions are just him trading against himself.

👍 grey580, geoffrey, thisisgentleman, logicwins, cryptorune, davman, darwinfofai, heltiko, riscadox, regex, cmorton

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@davman · Jul 14 '16

What is exactly happening there?

👍 thisisgentleman

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@geoffrey · Jul 14 '16

By sending Steem between two accounts, he inflates transaction volume.  People like coins with a lot of transactions, since it suggests there is a very active community who actually use them, not just hoard them.  I think there's no fee to send coins with Steem, so it costs him nothing to "juke the stats".

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@logicwins · Jul 14 '16

@davman - So basically he is posting huge orders for 1 minute so the liquidity rewards apply.  Then he buys his offer or sells his bid.  The Steem system registers this as a legitimate transaction but it is not (unless this was by design?). 

You can see how @adm and @alittle are at the top of the reward queue constantly.   https://steemd.com/tools

A simple fix would be to not allow someone to trade against themselves.  In every market around the world, this is a rule.  I have been a professional trader for 10+ years.

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@davman · Jul 14 '16

Thanks for the explanations. Wouldnt then they can make two account and cross trade between them anyway?  I guess nobody could prvent that, right?

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@grey580 · Jul 14 '16 (edited)

Like a friend would say. Welcome to the world of unregulated markets. 

If the effect is that the price keeps rising. It's not a problem. 

I've heard speculation that it's almost a Ponzi scheme here. But I'm not so sure.

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@logicwins · Jul 14 '16

You know, if they wanted to keep the currency rising they could make actual trades count more towards the total..

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