At this point, I decided to withdraw my support from witnesses to that feed BSIP42 to bitUSD. This will happen later this week so there is sufficient time for witnesses to
evaluate their individual situation.(
https://bitsharestalk.org/index.php?topic=27203.msg322845#msg322845)
My thinking is quite easy, I (as a proxy) gave an approval to BSIP42 in the premise that it would be limited to bitCNY for now (in fact I wanted it to named explicitly in the BSIP - which unfortunately didn't happen).
The reason is that I can only acknowledge the fact that the Chinese community apparently wants to experiment with bitCNY which is "their native token" - they know their own markets much better than I do
and I have mostly seen support for BSIP42 from the chinese community so far.
bitUSD is a different beast though. There are many opponents (me included) about running BSIP42 on bitUSD. Not only because there is no real on-off-ramp for bitUSD into fiat USD but also because
it is a less liquid market. I am not convinced it would work well there.
Also, BSIP42, to me is a short term "patch" at best. It forces a price onto the markets instead of providing incentives to the market. Knowing how nuBits failed with such an approach
I would argue that we should do better.
That said, i still support the BSIP42 worker because it want the Chinese community to continue their experiment on bitCNY and chose to instead withdraw my vote
from witnesses that push BSIP42 onto bitUSD.
How to go forward (IMHO):
While BSIP42 is a rather harsh approach that seems to work well (for bitCNY), I would try another experiment and allow witnesses to leverage the "maintainance
collateral ratio" (MCR). In my (and other people's) mind, when there is a premium, we see too little supply and reducing the MCR would allow
"cheaper" creation of bitUSD. While if there is a negative premium, there is oversupply and the MCR could be raised to reduce the supply (potentially through
margin calls).
The only drawbacks I currently see are:
- shorters need to watch their collateral more actively because their position could be called even if the price is not moving
- there is a backend issue that currently prevents this approaach from being effective/fair
The fact that MCR cannot be lower than 100.1% is _NOT_ a drawback because bitassets are supposed to always be backed
by at least 100% reserves. Removing settlement would not make sense here. Removing black swan/global settlement would
not be required (make sense) either.
To further improve bitassets, I would recommend to lose then limits of the "short protection ratio" in case a call position goes
below a collateral ratio of .. say 130% to force the margin call to buy into the entire market not just up to 10%. This would be an
additional penalty to those that don't even bother keeping their collateral ratio sane.