I support this change. I also believe we need to shift the paradigm even further:
1. The old CFD metaphor is obsolete and will only confuse things going forward. Smartcoins are no longer brought into existence by BTS bulls wanting leverage. They are brought into existence by
borrowers of the asset, who simply offer BTS as collateral. They can then sell the asset and use those funds for
any purpose they desire. Buying BTS for leverage is just
one of those many uses. Perhaps we should be promoting SmartCoins in a more relevant way.
What is a bitUSD? Its a transferable token that represents a collateralised USD loan to a set of borrowers.
2. A primary use of such borrowing should be making markets in the Smartcoins. By self-creating the Smartcoin, the user can switch their long position between the Smartcoin and the real underlying asset as relative prices move, without
ever changing the number of BTS they hold (and now use as collateral). Their only requirement is to ensure their collateral remains sufficient.
I've previously commented on each of the above, for example here...
https://bitsharestalk.org/index.php/topic,16427.msg210011.html#msg210011There are some further possibilities this approach opens up. For example:
3. There is scope for much greater flexibility on collateral, given it is controlled exclusively by the shorts. That is, the collateral is completely independent of what the Smartcoin trades against in the free market. It could be BTS, or a BTC or USD substitute, or even a portfolio of collateral tokens. This would open up the architecture of Smartcoins, increasing the potential range of users on both sides of the coin. For further comments on the concept of Flexible Collateral, see:
https://bitsharestalk.org/index.php/topic,16326.msg208798.html#msg208798, and
By the way starspirit, I don't see how the BitAssets backed by a mix of collateral types would be fungible unless a fixed mix ratio was specified as part of the BitAsset definition that all shorts of that privatized BitAsset had to satisfy. And in that case, I would imagine the only practical way to short new BitAssets with mixed backing collateral into existence would be through a self-short. The logic for margin calls would also get more complicated with mixed collateral.
Correct. With self-shorting and self-cancellation, shorts get to control the mix of collateral they want. I've been working on just such a structure. Collateral can then be completely independent of the markets in which the token trades. Also margin calls could be satisfied by applying each collateral token in sequence to covering the debt until it is satisfied, and then returning the residual collateral tokens to the short. This sequence could even be determined by the short.
Also, in case it wasn't clear in my answer, no, you don't require a fixed mix ratio. The shorts could change the mix of collateral as they please, as long as they met the minimum coverage conditions.
[Edit: Offering collateral flexibility like this admittedly comes with some complexity though, notably in dealing with settlements and covers].
Bottom line - the OP is the right way to go, but there is a lot more possibility than you are thinking yet.