@tonyk
A. You simply cannot make BTS untradable on centralized exchange. This proposal will simply give one exchange, or a small combination of exchanges, a stranglehold on the exchange of BTS. The first exchange that puts in the work to develop the backend for BTS exchange will gain a quasi monopoly. Thus, Bitshares could end up worse off from this proposal... going from traded on many exchanges to one or a few exchanges.
B. You cannot simply make bitUSD the "main" smartcoin that is traded against BTS. Some people, specifically China and Euros may prefer bitEUR or bitCNY. This proposal effectively fragments the main BTS/BTC market into several (possibly many) smaller markets.
Thus, each market separately will have a smaller amount of liquidity than if we were to continue BTS/BTC being the main market... possibly much less depending on how many smart coins are used in this manner and the popularity of other smart coins other than bitUSD. It is a possibility that to get the best price on BTS you would have to buy 3 different smartcoins, then trade all of them for BTS.
C. It is unclear to me how you plan to pay worker proposals and such in bitUSD without autonomously shorting bitUSD into existance or printing unbacked bitUSD. Several community members are vicously against such practices, as I found out when I brought up my proposal.
D. Even with creating a separate asset, and not freezing BTS, I still see a lot of issues arising from the transition period. What would be the value of the original BTS tokens, if anything? What happens when people purchase these tokens after the transition period thinking that they are receiving equity in Bitshares ecosystem?
There are other issues that I can think of that may arise, as mentioned in my first post, but I don't have have time to explain.
A. Yes, we can make them non-tradable on exchanges! What we cannot prevent is the exchanges coming with derivatives on top of BTS to trade. And while in the current state it seems unlikely an exchange to go through the hoops to do that, it will mean something if they go through that trouble one day, doesn't it.
You continue to think of the exchanges as something more powerful (or important) than they really are. But the true trading of the real thing will happen only in the DEX.
B. 1. USD just seem the best choice all things considered, but this is not the main point here. The main point is - it should be one currency where the effort is concentrated. I think this is needed, at least at the beginning. CNY seems the second best, but we might as well end up going with it when all pros and cons are wighted.
2. Your idea about the need to buy 3 smart coins to get the best price is simple incorrect
C. This is my favorite misconception of yours
Read the OP post again. The portion of new BTS coming into the active pool dedicated for witness pay (the same way they do now) is put in a collateral and bitUSD is shorted(created). The witnesses get those bitUSD. The short order is auto (immediately) called and it starts 'searching' to buy the bitUSD to close itself. it is using the mechanism described in the OP.(by offering decreasing BTS price by 1% each N blocks)
D. 1.It is not new asset on BTS, it is a new chain called dShares. If somebody mistakenly thinks they are buying BTS, when they buy dUSD and they go on the dDEX to buy dDEX Shares ? They need other help.
2. The value of BTS? I honestly have no clue what the price of BTS will be (and dShares for that matter) at the beginning. The good thing for current BTS holders - they will have substantially similar stake in both, kind of win-win no matter what and how happens piecewise.