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RE: Steemd Version 0.19.3 Spotted In Witness List - HardFork Imminent
Why is the feed price variance so big?
Can it be arbitraged?
How does one buy or sell from or to a witness?
Why is the feed price variance so big?
Can it be arbitraged?
How does one buy or sell from or to a witness?
Each witness set up his own price feed and the final value is a median across all price feeds, so some of them are trying to arbitrage it by publishing big deviations.
You don't buy or sell from a witness, you can buy or sell from anyone in the internal market. The price feed doesn't represent the price at which the witness is selling his stake, just a price proposal, more like an oracle.
What prevents a witness from publishing an extremely exaggerated price feed?
What is the final median value used for?
What do you mean in your last sentence?
nothing, other than potentially losing the support of those who delegated him (it's DPoS, not PoS)
For setting up the internal price of STEEM
From your question I understand that you think witnesses are publishing price feeds for the STEEM they own, like an offer for selling their stake, and that is not true. Also, there is no price difference in buying from a witness or buying from a normal persons. Price feeds are like oracles.
Much of this information is in the white paper. I highly recommend to read that a few times to familiarize yourself with the ecosystem.
So the internal price of Steem is not determined by buyers and sellers like in Exchanges where a buy order price limit has to meet a sell order price limit?
Internally, price is set up by witnesses. Of course, witnesses are weighing in what happens in external exchanges when they publish their price feeds. But there will always be an arbitrage opportunity if you follow the internal market closely. I saw gaps up to 30% between SBD/STEEM internal vs external, in both directions.