So a bitUSD loan with BTS as collateral would probably require 200-300% as BTS has been very volatile against the US Dollar.
A bitUSD loan with bitGOLD as collateral would require less collateral, is that correct?
The interest rate defined by the lender would also reflect on the perceived risk, right?
I still don't understand what you mean with the combination between loan and option. You said in another thread:
The lender may purchase an option separately (not implemented yet). If a lender has an option and the interest covers the cost of the option then there is no risk to the lender. For now the lender must provide the option themselves and thus is exposed to option risk.
How does the option make the process risk-free for the lender? Can you please elaborate?
Maybe example will be the easiest way to explain it.
Allice has 100 bitUSD and wants to lend 100 bitUSD and is ready to accept bitGold as a collateral. Price of bitGold is 50 bitUSD/bitGold .
If a call option for 100 bitUSD @ 50 [bitUSD/bitGold ] exist and is priced at 2 bitUSD/option - This means a contract giving you the right to buy 100 bitUSD at 50 bitUSD/bitGold, and it costs 2 bitUSD to buy this right to purchase 100 bitUSD.
Alice can lend 98 bitUSD with say 5% interest, accept 2 bitGold as a collateral; and buy 1 call option [as the one described above].
In the case that the borrower does not repay the loan she will receive the collateral orf2 bitGold. She can now exercise her call option - i.e. buy 100 bitUSD with the 2 bitGold at the 50 bitUSD/bitGold
Voilà - she finished with the 100 bitUSD she started aka no risk and this is the worst case scenario -the loan was repayed and the price of gold did not go up in bitUSD terms.