been brainstorming, what if
Bob has 100 bitUSD on his account. He wants to take a loan of 50bit USD from Alice.
Alice makes a loan to Bob, 50bitUSD.
They must share a multi-signature (secondary) account.
This (secondary) account holds Bob's collateral.
Date X is agreed upon. Funds must be paid back by this date.
Collateral from the secondary account can't be moved until the loan is paid back to an Alice's main account.
Once funds are paid back to Alice's main account, collateral is automatically unlocked and sent back to Bob's main account.
If funds are not paid back, until date X, collateral is automatically unlocked and sent to Alice's main account
Problem: We go back to the initial stage, Bob has his collateral locked to ensure he pays back to Alice. However, if the collateral is the equivalent to 50bitUSD, he still only has 100bitUSD, which he already had in the beggining. Meaning this would be useless unless the value of the collateral is inferior to bitUSD. However this puts Alice in a risk situation.
So, we either find a way to make it safe for Alice to issue a loan (Solution A) or we find a way to punish Bob for not paying the loan back (Solution B).
For Solution B, we would need a reputation system. It can be target of Sybil attacks but I guess we can work around that and avoid it.
But for Solution A I don't have any ideas. Anyone would like to discuss this?