The term "compensation" implies that there is some damage caused by the settlement, which is often the case in "real-world" finance, but not in BitShares.
If the shorter sells BitAssets with a 1% premium he achieves the same effect for himself as with a 1% settlement penalty, only with the premium existing holders are not hurt.
Very good point ... and part of the problem as this results in the premium we can see on the bitassets/BTS markets.
I think the question we need to answer to ourselves is this: Is a bitUSD worth $1 or not? Then we need to think about WHO is asking the question! A merchant who wants to exit bitUSD would say, YES because he can settled at the feed price (currently without penalty). A user however may say that he cannot enter bitUSD because it as a premium (at least in terms of BTS).
However, the latter argument is only true when people want to *enter* bitUSD, if they instead get paid in bitUSD already, then it's all a wash and we can say 1bitUSD=$1.
Thinking about it I actually prefer it that way, because it supports MERCHANTS and those that want to use it can accept a small premium because bitUSD is WAY WAY more flexible than real cash.
We need to support MERCHANTS and thus it (IMHO) makes sense to keep the 1:1 settlement
I don't know how many MERCHANTS are there accept bitUSD, seems a lot? anyway let's focus on bitCNY here.
AFAIK there are no MERCHANTS in China that accept bitCNY, I don't expect there will be some in the future. even btc38 accept bitCNY mainly because transwiser play the role of gateway.
you may ask then why we need the supply of bitCNY to grow up?
the answer is: DEX
let me tell one plan of transwiser: to introduce ANTSHARE to DEX for trading.
antshares is a famous blockchina project in China(see more in
www.antshares.com), which focus on company register and share management, last year it get 2100 BTC in crowdfunding, now it is still under development, maybe will be launched in a couple of months.
ANTSHARE is already in trading as pre-sales in DEX, after the launch of antshares, more than 10M CNY worth ANTSHARE will be issued and traded in DEX, so we have a problem, to make which one the main trading pair?
maybe transwiser also need to issue TRANS.BTC and TRANS.CNY for this, but why not use bitCNY here in DEX?
now seems in DEX OPEN.BTC is most wildly used in trading, I know there's some difficult to overcome to make smartcoin wildly used in DEX trading, however, if we cannot make smartcoin wildly used in DEX, how do you think we can make MERCHANTS accept it?
that's why I focus this problem mostly: how to encourage(or at least do not discourage) shorter to supply bitCNY, with less than 1M supply bitCNY is just a toy.
don't care too much on the MERCHANTS problem in China, in China MERCHANTS do not care whether it is 100% or 99% force settlement, they only care if there is a reliable gateway service.