Does http://wiki.bitshares.org/index.php/BitShares/Market_Peg contain actual info?
I do not believe that is still accurate. A lot of the wiki is very outdated.
Specifically, I think this part is wrong:
" This happens by behavioural confirmation - all traders in the blockchain expect BitUSD to peg to the dollar, which leads them to trade in ways that reaffirm that expectation. If traders start to see Bitshares rising in value relative to dollars, this will result in lower bids being put in for BitUSD because of the expectation of seeing lower asks from the shorts. "
Back in august/september time frame, this was discussed a lot and it was pretty clear to many that this plan would not work. Specifically, there was no reason for the peg to hold, the price could simply go to 0.
The solution to this was to implement:
* Feeds. Delegates provide feeds to the system, telling the blockchain how much BTS each asset is worth.
* Forced covering after 30 days. In order to prevent the asset price from going to 0, shorts (who created the asset), are forced to cover after 30 days, at the feed price. This assures that a bitasset holder will get fair value for their bitasset with a 30 day or less wait.
* Margin calls enforced by the blockchain. In order to ensure that sufficient collateral always exists in order to pay asset holders, any time a short has insufficient collateral to cover 200% of the value of the assets, they are issued an automatic margin call. This liquidates the asset and gives the fair value of the asset to the holder (in BTS).
This ensures that bitAsset holders can always receive fair value of the asset if they are willing to wait up to 1 month.
The only way this fails is an extreme black swan event which causes the price of BTS to fall 66% in hours, and doesnt recover. (A flash crash with no bounce back).
In the case where demand for a bitAsset dries up and no one wants it at all anymore, all of the asset will end up being liquidated within 30 days, and the holders will have been given fair value worth of BTS in exchange. The market cap of the aset (bitUSD or whatever) will then be 0, with 0 of the asset existing, but holders of the asset will nto have lost their money, they will have sold them for equivalent value in BTS.