Thank you for the answer! If this is the case, if everybody expects that bitUSD will be strong against BTS for a while, nobody will issue bitUSD and the market will suffer from the lack of liquidity. Then the market will respond and the price of bitUSD will become more expensive up the point the short positions become profitable, which could be critical for bitUSD based payment services. Is my understanding correct?
Pretty much correct. Many MPAs, including bitUSD, have liquidity issues because people hesitate to short them. Right now bitUSD is traded about 4% above the peg, which indicates a deficit (it used to be worse than this in the past). The way to bring it back to peg is to issue and sell more, if you are brave enough.
Thank you for sharing the knowledge! I really appreciate it.
Now I think there should be a mechanism to reward 'market maker's to achieve the original goal of market pegged assets. I have read bsip 19 and 20, and those may be the best way to handle this problem at the moment. However it may be better to explicitly state those are rather rewards for providing liquidity than dividends...
Also, it may be better to have a mechanism to 'lock in' the assets for a fixed period and receive a better reward.
Anyway, I will just wait for bsip 19 and 20 for now!
Regards,
Gloine