but disdain for idea #1 should not be a reason to write off the other ideas.
Absolutely. Bootstrapping liquidity is very important. And for the DEX to actually be decentralized, we really need something better than OPEN.X assets which have all the counterparty risk that centralized exchanges have.
Exactly.
Multisig sidechains are one way of solving that. Can you explain what the SuperNext and B&C Exchange model for solving the counterparty risk problem is?
They both use multisignature addresses.
Supernet's setup is pretty basic and less secure IMO. The way I understand it, they only use 3 signers spread across 3 servers. They are simply assets on the Nxt exchange utilizing multisignature addresses. Their GUI wallet is super spiffy/lightweight/gorgeous though, and the exchange is functional and works, so they are still a competitor. They need to work on their exchange's GUI, because for now it just runs on Nxt's exchange GUI which is quite ugly.
B&C's design implements multisig addresses as well, except that it uses a reputation-based system in which an arbitrary number of participants compete for blockchain rewards- based on their effectiveness and honesty. I think it is similar to dash's Masternodes... they put up a deposit of B&C tokens to become a signer, lose the deposit if they are not honest, and are incentivized to remain honest. That is just from memory the way I understand it anyways. I am having trouble finding the whitepaper... there has been a lot of drama going on in the Nubits/B&C Exchange camp, but even among the drama there seems to be a realization that B&C has a pretty good design for a DEX using real assets.
There is a 40 page thread on Bitcointalk in the Bitcoin Development section that goes over B&C Exchange in more detail:
https://bitcointalk.org/index.php?topic=1033773.0 and also information on Nubit's forums.
I think we should let the free market decide whether they want to trade Smartcoins, Exchange IOUs, or the real assets. We should not play as puppet master, and doing away with exchange IOUs is one of the huge benefits of DEXs. Don't let the special interests of OBITS/METAX be the death of Bitshares! Someone will come and do it anyways, and it is better to have a piece of the pie. In this industry, you need to innovate or eventually die. There is no inbetween.