Some of the media reports that have come out of our 5% campaign have suggested that the claim that you can earn 5% on ANYTHING is "too good to be true" and "must be a ponzi". I would like to take an opportunity to address this very issue.
1) You can earn 5% on anything if you are able to find someone who will borrow from you at 5%. This should be self evident and is clearly not a ponzi scheme.
2) Our software will hardcode a 5% borrowing cost and and pay the interest charged to the lender. This is a clear, net-zero transfer of value from borrower to lender.
3) What remains is whether or not anyone will borrow or lend at this interest rate. If the interest rate is too high then no one will borrow (go short), if it is too low then no one will lend (go long). That is all true unless trades occur at a price other than parity to create either a discount or premium to the intended peg.
The fact remains that assuming the real interest rate is relatively stable, the premium/discount to parity should also remain relatively stable. This means that BitUSD will be highly correlated to USD rather than being pegged to the USD perfectly. Changing the interest rate merely moves the relative premium or discount.
In effect, you can still put $5 worth of BTS into BitUSD even if it is at a premium(or discount)... wait 1 year... assuming the interest rate didn't change the premium(or discount) will not change and thus you can pull out $5
at the end of the year.
In future versions we can decrease the volatility of the premium/discount built into the market peg by implementing a variable interest rate that is unique to each asset. For now the market will merely adjust the premium to achieve the same effect.
In conclusion the fact remains that BitShares X will allow you to earn 5% on anything someone is willing to short by borrowing at 5%.