Create a bitasset that can only be created by placing one BitUSD in collateral.
No margin calls are possible because the maximum outcome is 1 USD and the min outcome is 0 USD.
At the end of the match, the issuer will trigger a "black swan" at a price of either 1 or 0 USD. If you win you get $1 if you lose you get 0.
If you buy at $0.1 and win, then you get a 10x return. If you buy at $0.50 and win you get a 2x return. If you buy at $0.90 and win you get a 11% return. Likewise, if you sell at $0.1 and it goes to 0 then you make $0.1.
This is very neat
I think it speaks well to the flexibility of a system that follows few strict rules which provide the boundaries a potential-well of innovation.
Once people are in agreement of a few ground rules they are free to cooperate and collaborate as they see fit, likely supported by profits gained from serving public need
Ooooh okay
But doesnt that mean that there is a much higher incentive to buy in an opposite 'user issued asset' than to short if you know a team is going to loose.
The way I understand it, is that if you know a team is going to loose and you take out a short position you can double your money. But if you buy a user issued asset betting that the other team is going to win you could make a lot more than 2X.
So shorters would never sell below $0.5, right? and the most anyone can do is double their money?