I think there's some mixing up of ideas and also mixing up of cause and effect, but I think what you are trying to get at is that the Feed Price confuses short sellers because they can get called based on the SQP rather than the Feed Price. Hence rather than using the Feed Price as a reference for trades, they will use the SQP and the SQP becomes the defacto reference price. We discussed that on another thread a while back and I agree.
Easy fix: Make SQP equal the Price Feed and the premium will probably mostly disappear.
No. I'm going to try and make this as simple as possible to understand. Outside of a systematic failure:
Q) Can you get margin called, when you borrow bitUSD?
Q) Can you get margin called buying bitUSD?
If you hold BitUSD you never get called (except for black swan, in which case you are converted to BTS at the swan price)
If you borrow BitUSD you can get called.
With a few small changes we could make the following safe:
1. Borrowing BitUSD + Holding BitUSD means no margin call (account holdings and open orders can be used to cover).
2. If you have no access to BitUSD then your collateral will be sold.