...the interest is a cost, but it is short term. Eventually...
I'm highly skeptical of this, and like Tony believe the worst thing you could do is penalize holders of BitUSD or BitWhatever.
From "The greatest thing on the face of the crypto-loving planet - interest bearing BitUSD" --- experiment BitShares 0.X - 0.9 RIP
to "Our BitUSD is so worthless it has build-in inflation - the longer you hold it the less value it has" --- Gee, where can I buy some of that?
This is why I have said all along that the real innovation is not bit-fiat but bit-physical commodity as I described
here. For some reason you guys are hung up on bit-fiat, whereas bit-physical commodity is a completely vertical market with no competition in the crypto space. I have shown that people are willing to pay a premium for physical commodity derivatives in legacy markets. Its a hard sell to tell someone they need to pay a premium to own a completely flawed and inherently inflationary digital currency such as bitusd. However, people will pay a premium to own things of real value such as physical commodities in a digital (derivative) format.
Smartcoins are a radically new concept and there is a huge learning curve in understanding these things. For example, if you buy bitusd, then you will pay a premium, but you are guranteed a price floor. Most users will say that is reduculous and they do not want to pay a premium for usd. However, they need to understand that they will be able to sell that usd back at a premium close to or at the original premium that they paid (in a conveniently liquid market of course). There is no difference in buying nubits at $1.00 and selling it back at $1.00 as there is in buying 1 bitusd at $1.10 and selling it back at $1.10. With bitusd you are guranteed a price floor, with nubits you are not.
The design is probably very close to being accurate and I don't foresee any real progress being made by tweaking parameters with separate smartcoin assets. Liquidity is the hurdle that needs to be crossed to achieve mass adoption and its only been a little over a month since 2.0 was launched, so we need to have a little patience. What is needed is a profitable market-making bot that can take advantage of spreads and premiums in markets that provide the best opportunities, although getting this right would be much easier said than done. This bot could be funded by a UIA that could distribute profits back to investors or possibly it could be done through a worker proposal. Nubits has so far gotten this to work, so it can be done. The only difference is if there bots fail, it causes systemic failure. If SmartCoin bots fail, no systemic damage is caused. I think this is the route to take.