No one wants to short. Without shorting there is no bitUSD supply. Unfortunately I think with the new design we will have the same result.
Balance is the key. Not favoring one side or the other. Modern CFD contracts are balanced. Parties agree on settlement days and price feeds. The current system is unbalanced in favor of bitUSD longs.
This is the problem that needs to be solved one way or the other. Lots of demand and very little supply:
I believe the problem is a bit more complex than this. Markets largely move based on human emotion and can trend in one direction or the other for long periods of time. During a bts bear market, which we are having now, there is more demand to be long USD and less demand to be short USD, and we are seeing this right now. During a bull market, like what was seen last summer, there is more demand to short USD and less demand to buy USD. I believe this is where rules favoring longs were erroneously put into place. Once the market turned from bull to bear, then demand to buy USD increased and demand to short USD decreased. Consequently, USD buyers could not find sellers. During the bull market, short sellers could not find USD buyers.
IMO, too much emphasis is put on a 'stable' cryptocurrency. All assets, including fiat currencies, are not stable by their very nature. They fluctuate in value relative to other assets, but some assets such as bitcoin fluctuate much more violently than other assets such as the USD. However, this can change over time. In fact, there may become a time where assets such as bts or bitcoin fluctuate
less violently than the USD, if faith is lost in the USD.
Guaranteeing liquidity at the expense of the shorts will not fix the problem. Shorts simply will not short if they are unfairly disadvantaged and you cannot have a 'stable' cryptocurrency if no one is willing to short it into existence. Perhaps a floating market order at the price feed could be used for longs who want to redeem USD as close as possible to USD. In other words, if there are no sellers at the price feed, then the order will track the price feed until someone places a sell order exactly at the price feed, and then the order will be matched. In a highly liquid market, this should only take seconds, even for a whale, but even in a very illiquid market the order should be filled within a few hours. The same can be done for shorts. Liquidity will come from traders and market makers, who will not require instant redemption of USD.
I know many solutions have been proposed including the use of interest rates. Also, interest rates that float between positive and negative have been proposed and this could potentially be
the solution. However, I am a bit skeptical because many legacy markets, especially futures markets which bitshares seems to be more like, don't use interest rates for most assets. Also, I don't think time constraints such as forced covering should be used because that would prevent the function of currency for these assets. The market should be as free as possible with the only requirement being that orders have to be executed within X% of the price feed. Orders can be placed outside of that X%, but they won't be activated until the price feed comes within that X%. If buyers want to buy, they buy. If sellers want to sell, they sell. If short sellers want to short, they short. If not, then no trades take place. To 'nearly' guarantee liquidity for asset holders, a floating market order at the feed price can be used. In this scenario, I believe the risk of systemic failure would be greater than the risk of no liquidity. Eventually liquidity will enter the system as users become more comfortable and believe it will work, but this will take time.