I will describe how I understand new idea.
Let's say, 1 BTS costs 0.05 USD
I want to buy a 1 bitUSD with USD. To do that, I give that 1 USD to CCEDK.
Next, CCEDK checks what is a price of BTS in DEX. With price 1 BTS for 0.05 USD, CCEDK can buy 20 BTS for one dolar. But it is not enough to issue a 1 bitUSD. To do that, they have to add their own 20 BTS.
Then with 40 BTS collateral , 1 bitUSD is created. Then they send this 1 bitUSD to me
What can happen next?
Let's
@bytemaster will say that he has to go for 6 months long vacations. Then some BTS shareholders suddenly sold a lot of BTS, and price drops from 0.05 USD to 0.04375 USD per BTS
In that case 40 BTS collateral which were used to create my 1 bitUSD is worth only 1.75 USD. Then "margin call" are initialized. The automated order is created, and network tries to sell these 1 bitUSD (actually the loan is going to be sold). Because the initial collateral in that case was 200%, network has to take care to retrieve enough funds to keep collateral.
(this is the part, when I don't know what will going to happen... I am improvising. Please correct me!)
Because 1 BTS is now worth only 0.04375 USD, that means that with 1 USD network can buy ~22.9515 BTS (let's say ~23 BTS). But because 200% is required, ~46 BTS are needed (6 BTS more than before). Those 6 BTS are taken from collateral of issuer (in that case CCEDK) and 40-26=14 BTS will be given them back. Because CCEDK not adjusted collateral, they loose ~6 BTS from their 20 BTS of collateral (~30%). In that case loan was paid from CCEDK funds.