Starspriit what's your thoughts on the new market mechanism for 2.0. Do you have any concerns? what are the biggest weaknesses that will hinder it from working?
This is off-the-cuff, so I might miss a few things.
Positives:
(a) Recently proposed mechanism that Smartcoins are self-created by shorts and then sold into the market, rather than shorts selling directly to create them. Big simplification of market mechanism.
(b) Removal of you-get-what-you-ask-for pricing to approach external market standard. This was an unnecessary cost on users.
(c) Removal of expiries on shorts. Recognition that settlements against shorts can be queued in other ways.
(d) Simplification of collateral rules for shorts, only need to meet minimum.
The biggest areas I still think we need to work on are:
(e) A mechanism to target parity rather than a floating premium. This would be more consistent with what traders are familiar with on competing exchanges.
(f) Option of a direct fee/yield mechanism between longs and shorts to mediate supply and demand. In some cases shorts may need incentive to support the issue.
(g) An ability to define the asset as a function of other inputs, with adjustments for dividends, carry costs, yields, asset replacement etc (as per this this thread).
(h) More diversified collateral, which I suspect the wider market would prefer to forced reliance on BTS (with early stage risk), or a derivative of BTS.
(i) Alternatives to full market liquidation in black swan events. Currently even minor losses could trigger these and impact on the bitShares brand. I've started a discussion in another thread.
(j) Re-assess the method of feed production. Currently there is reliance on a small set shared models for feed production.
(k) Expand the design flexibility available to issuers of privatised Smartcoins to accommodate a wider range of entrepreneurial solutions. Ultimately this is the final solution for most of the challenges (and possibly others) above - let the free market determine the best designs. I'm looking forward to the path toward flexibility that will be opened under 2.0, though its only the tip of an iceberg, and my goal is to keep promoting this direction. In fact, then we can all agree to disagree on the best approach and let the market prove what's most effective.