Cancel the 2x collateral ASAP – The economic unsustainability of paying to sell

[bytemaster]

I thought shorting was borrowing to sell?

Exactly

[Riverhead]

I thought shorting was borrowing to sell?

[Mysto]

I agree with this. 
It doesn't make sense that they have to pay interest.

[zerosum]

Cancel the 2x collateral ASAP – The economic unsustainability of paying to selling put options.

The problem can be explained in several ways. I chose this, as the more clear way to explain the issue. I will try other ways if this does not go through…

V 1.0


A short position is buying a call and selling a put option. When you require 2x collateral, you have - buy 1x call and sell 1x put + 1x collateral. Everything above 1x collateral is fine and good … BUT you just cannot expect the person providing the loan to also offer interest for that privilege…  In other words at 2x collateral (anything above 1x, for that matter) should receive not pay interest! *

The system can work (and barely at that, but still by very screwed-up economic logic [i.e. relying on bitUSD holders to be stupid]) only in strong uptrend of BTS.

 
* The time constrain -rebuying the position each month – btw, turned this extra collateral in full blown  ‘sell/short put position’, which only means that such seller expects not only interest but also a full risk premium...