OK it took me 3 days and I still have not found a simple way to put this. It has so many aspects that I do not even know where to begin.
So I just start somewhere...
Draft 1.0
1. 'Firmly Pegged bitUSD Fund' asset is the first user issued asset - that is non-for-profit fund. (Later on it can also become a Dapp on the BTS chain as the logic of its inner working are not too hard to put in rules easily code-able).
1.1. Non for profit is intended to mean that it main goal is to achieve a idealistic target first and foremost - namely much tighter peg of bitUSD. And provide profit for the donors to that fund second.
1.2 Firmly pegged bitUSD is a highly desirable for the BTS. The fund will greatly enhance the tightness of the peg by :
1.2.1
a.buying bitUSD at $1 and selling bitUSD at 1.0075 - by selling (offering to sell) VirtualbitUSD (also an user issued asset) @ 1.0075 bitUSD/share - the amount of so offered shares is the max/reasonable amount that satisfies the 'Firmly Pegged bitUSD Fund's' inner working criteria and ratios.
and
b. offering to by all of its outstanding VirtualbitUSD at $1.00 in BTS (per current fair peg price*) *might be slightly deferent that the peg price!
c. The fund can also buy any available for sell (aka in open sell orders) bitUSD at below the peg price at any moment. Those operations are envisioned to be true and fairly regular occurrence at the early stage of the fund.
1.2.2
Selling bitUSD at (or insignificantly below) the feed price. In other words placing its order just belolow the short sellers price so the funds orders are executed before the shorts. And securing that it will fill all its sell bitUSD orders in 30 days or less.
// The Above is pretty obvious stuff for any slightly complicated investor somewhat familiar with how BTS market works, but I just
//needed to put it out there for clarity
2. Inner workings of the fund (also answerers partly to the question 'why donate to this fund')
//here is another point that I do not know how to explain best...
The general business modal is simple - buy bitUSD if it is undervalued (enough under the peg) or from people willing to pay 1.0075 for a dollar, and sell it in 30 days or less for 1.00 dollar.
The problem of course arises when BTS moves in unfavorable for you direction in the meantime (before you sell the bitUSD bought)
And we here we come to the core of the idea:
-If the investors/donors to the fund do not care about returns (as their #1 goal)
-Or they are ready to accept position in BTSX and a put option at the current price - we can use the funds provided by such donors/investors and give the they return that they desire...
/// I will keep it simple for this draft as I am getting tired.
Underlying asset + put option = synthetic call option.
synthetic call at the underlying asset is a 50% of the underlying asset
==>up to 50% of all proceeds from the sell of 'Firmly Pegged bitUSD Fund' can be used to purchase bitUSD at the peg price from all willing sellers and the return for the 'Firmly Pegged bitUSD Fund' investors will be as promised or better
.... end of Draft 1.0
Topic: Proposal: Fast Firmly-Pegged Virtual bitUSD (Read 3467 times)
