BM -
1. I like the idea the bitUSD/BTS price to be included (fed back) in the price feed for USD:BTS.
2.Other than that, I honestly do not like your analyses. They are more like a wishful thinking more than anything else.[and I do like bitAssets 2.0 far more than the current model!]
What I mean is you are saying that "$1.00/bitUSD
should be the floor, and fail in explaining why it
will be the floor. [Actually I believe that about $0.99 will be the floor and that if you set the settlement at 0.99 and all (not only 5% or whatever % can settle in 24h]
Here is one of the main points where it all goes wrong.
The real underlying demand that drives BitUSD:USD to 1:1 is from arbitrage bots and speculators buying BitUSD first as a means to buy the BTS more cheaply than via alternative channels. This means that buying 1 BitUSD for $1.00 should always be the most cost effective means to purchase the underlying crypto-currency, BTS. This realization has many implications for the design goals of BitAssets 2.0.
Actually it does not mean that buying 1 BitUSD for $1.00 should always be the most cost effective means to purchase the underlying crypto-currency, BTS. That means that buying for
as little as possible should be the best price for them! So buying for $0.95 will be better!
Now we come to the next point - is there gonna be conditions at which there will be sellers at $0.95?
The answer is generally 'Yes' - At bull market times it is feasible to short below 1:1 and still profit [*1]
The question then becomes how much below $1.00/bitUSD will such shorting still be profitable?
In the proposed system "0.99*feed price settlement with no restriction on the % of bitUSD longs that can request a settlement" the answer is about 0.99 adjusted for 1day volatility.
So in other words the bitAsset 2.0 will effectively put the floor on bitUSD on a number directly proportional to the chosen settlement price compared to the feed price [other factors such as - margin requirements, % of all longs that can request settlement, as well as all other market rules that shift the risks for the short/longs - will also influence the exact floor of the bitUSD]
[*1] There is a very simple explanation why it is so. Will try to explain if anybody interested.