As I'm reading through the related threads, we are now discussing about a concern for non-backed BitAssets.
I saw Bytemaster, Alt and other guys raised good ideas/solutions about how to deal w/ the non-backed BitAssests after the non-backed appeared. I think after refinement, the final solution will resolve the small unbacked issuance which is caused by normal market price fluctuating over time. However, we need to consider about the scenario of Market Manipulation attack.
If someone has plenty of one kind of BitAssets, let's say BitUSD, when he want to manipulate the market, he will:
1. sell his BitUSD to clear out all the buy orders in the market
2. use another account to issue (for example) 1,000,000,000 BitUSD at the price 1,000,000,000 BitUSD/XTS which required to
set 2 XTS as collateral in this acount when the price of BitUSD is (for instance) 100 BitUSD/XTS
3. In the mean time, he place a buy order at the same price(1,000,000,000 BitUSD/XTS) w/ 1 XTS.
4. If there is no any other new buy order w/ higher price in about 5 min(block production time), he will get 1,000,000,000
BitUSD by 1 XTS.
5. In next block, price go back to normal, and the acount selled BitUSD w/ extremly low price get forced margin call and lose
about 2 XTS.
In total, it costs him about 3 XTS to get 1,000,000,000 BitUSD (plus the cost to clear out the buy orders in the market). And by the solutions to resolve the unbacked BitAssests, the whole system(means everyone in the market) will pay for this 1,000,000,000 BitUSD w/ a huge amount of XTS and this guy could use this 1,000,000,000 BitUSD just like any other BitUSD.
I know, you may argue that to "clear out all the buy orders in the market" and "there is no other new buy order w/ higher price at the same" is almost impossible. But consider about:
1. he could attempt to do this by any price and scale, for example, issue 1,000,000,000 BitUSD at 1,000,000,000,000,000
BitUSD/XTS w/ 0.000002 XTS as collateral.
2. he could keep monitoring the market and try this(clear out the buy orders and do extremly low price sell-buy) when he
found the depth of market was shallow enough to do the attack.
3. combine above 2 factors, this potential attack will like a ghost above the market especailly in the initial stage of system or
some speciall market situation which will cause market not deep enough to pretect from this attack.
After I write through all above, I still think that the attack just could happen at very small likehood, but considering about the attack could and will cause as huge as amount of backed BitUSD, if the attack occurs successfully, it could destroy the system or deeply harm it (considering about it may happen again and people know this factor so the system may destroied at the end anyway if not destroied by just one attack immediately). And the person could have his reason to do it because he will be the first one to know this information so he could leverage this advantage to spend out BitUSD before other people realized the situation or he just want to destroy the system by some other reason with or without direct financial benefit to himself.
So I think to elimate this risk, we need to resolve the root cause - the unlimited freedom of BitAssets issurance price.
After discussion with Alt, Alt and I think we may need to do this:
Set some limitation to issurance price, even a very loose limitation like 10% ~ 1000 or 1% ~ 10000% vs. current market price will benefit to the system risk level control.
request additional "waiting time" for a trade with an issurance involved, for example, 2 block time or more. Or just to request the addiational "wait time" for the "big deal" w/ huge amount BitAssets issued(it may be not a good idea since we do not know the actual value of BitAsset or XTS and/or BitAsset/XTS in future).
Either of above solution could reduce the risk of this issue significantly. And notice that it's just the limiation for issurance instead of for all trades so the impact to market freedom should be acceptable.
By the way, I think this limitation makes sense to the philosophy of the system - BitAssets is designed to pegged to real assets and in the "real world", the trade(and traders) is always w/ some limitation in price setting(or some factor could be converted to) at least by now and in near future..