Welcome!
Thank you for introducing yourself. I hope you become part of the community
Now for a few questions (feel free to tell me to go bugger off and read the docs):
The DEX seems to eliminate counter party risk for trades, but it seems to me that most of the smartcoins being issued by a gateway mean that risk is reintroduced if I ever want to take value out of the platform (say to buy something). I understand that the contracts that back the coins don't rely on a counter party to peg the value, but what happens if the gateway runs off with the underlying peg coins? How would I then turn my OPEN.x or TRADE.X into X?
OPEN.X are what's known as 'UIA's or User Issued Assets.
These assets are backed/guarenteed by a third party. OPEN LEDGER who issue OPEN.X make every effort to "self insure" and protect the assets backing their tokens.
They use multi-sig wallets, employ staff and do whatever it takes to convince the market that they are solvent and secure.
It is up to the individual investor to decide if any UIA meets their demands for security.
A Smart Coin is an asset backed by the BitShares blockchain. SmartCoins come into existance as the result of a short-trader locking up collateral (in the form of bts) to the blockchain. In return, the blockchain lends the trader the corresponding amount of bitUSD/bitCNY/bitX....
The price feeds for SmartCoins (so that the blockchain knows how much to lend with the collateral provided) are provided by BitShares Witnesses.
Of all the prices quoted by Witnesses for bitUSD (for example) the median-average result is taken.
This is to prevent Witness manipulation. If the mean-average was taken, then a malicious Witness could publish a slightly-too-high price, and skew the result in his favour. This cannot happen with median-average.
What happens if the value of BitShares goes so low (or a specific coin so high) that there is no longer a way to satisfy the smart contract that keeps the peg?
Can someone give me the TLDR on witnesses?
Same for forced settlements?
The peg is not static.
The price feed given for SmartCoins is not binding. The price feed provides the forced settlement price.
SmartCoins can trade anywhere
above the price feed, but are heavily incentivized not to trade
below the price feed. If a SmartCoin is being offered for sale at the pricefeed minus 5%, then a rational trader will buy up the asset for that price, and then immediately 'force settle'.
This means that the blockchain will pay the trader the price-feed value of the SmartCoin that he is re-selling.
The blockchain funds this sale by closing the position of the lowest-collateralised short position on the SmartCoin in question.
Forced Settlement takes 24hrs to execute, but the force-settler will receive the full amount. 24hr time lag is to prevent manipulation and front-running.
Force-Settlement ensures that short-positions monitor and maintain the minimum level of collateral required by the blockchain to trade.
If the shorters get lazy and the market moves away from them, they risk the blockchain selling their collateral to repay their loan.