Still trying to wrap my head around bsip18 after reading: https://steemit.com/bitshares/@haruka/detailed-mechanism-of-global-settlement-black-swan-and-reviving-of-bitassets
Please correct me if I am wrong about the following:
-By bidding for the settlement fund we are essentially bidding for a position at a specific bitusd/bts price?
-If enough bids happen and this revives, we essentially skip the step of having to sell bitusd for bts in the open market after borrowing bitusd into existence?
-If the above is correct and we had enough BTS backing, we could essentially open a position at $0.01 with 1k debt and 100k collateral?
End of the day I want to borrow bitusd and buy more bts with it by using existing bts as collateral. Since that is not available at the moment, is the above method correct to get a position when this revives?
Attempt at a quick and easy explanation.
Right now , there is X amount of bitUSD in existence in the wild backed by Y amount of BTS collateral (the settlement fund)
Assuming no bids,
at some point , if BTS rises enough, Y will be 1.75x the value of X. At that point, the asset owner (committee-account) would acquire a position of X debt backed by Y collateral at 1.75 CR
(you can imagine that the asset owner has an implicit bid at 0 ratio if noone else bids).
Now , every bid someone makes takes the form of Y' BTS for X' amount of debt.
This lowers the price at which revival will take place (since backing collateral is increased by Y') and bidders acquire the relevant position until debt is covered (ordered by descending ratio). If debt is not covered, the owner implicit-bid picks up the rest.
To try with numbers:
Assume 100 BTS (settlement fund) is backing 10$ (bitUSD in circulation) and current price is 10 BTS/$.
Asset would be revived when BTS price rose enough so that 100 BTS = 17.5 USD.
At that time, committee-account would acquire a position 100 BTS collateral tied up , 10 USD debt and 1.75 CR.
Now...if instead you placed a bid for 75 BTS for 10$ of debt, total collateral would reach 175BTS for the total 10$ fulfilling the 1.75x requirement and teh asset would be revived instantly.
You would then acquire a 175 BTS /10$ debt position , essentially "gaining" 100BTS (albeit tied up in a long position).