The risk/reward for users who generate bitassets and then sell those bitassets doesn’t currently work.
Example: Suppose bitusd is trading at 300 bts/usd. I think this price could go to 100 bts/usd. I create 1 usd with 2x collateral, or 600 bts and sell it for 300 bts – I now have a total of 900 bts collateralizing 1 usd. If the price goes to:
No trader in their right mind would take those odds – max gain of 50% and a max loss of 100%. That is why you see the premium charged. Also, the guaranteed forced settlement at parity makes it worse.
As we have seen, bitasset buyers are reluctant to pay these high premiums. A lending market can potentially alleviate this discrepancy. The bitasset creator can generate bitassets and lend them instead of selling them and earn a risk-free rate of return. This will put the bitasset creator in their true role as a lender, not a borrower (which they have been forced into). Any bts holder could target markets with the highest loan demand and highest interest and create bitassets to loan in those markets to earn a risk-free return on their bts.
Also, reducing forced settlement to 99% of spot universally would help. Combining this with the lending market could potentially bring trading to near parity.
IMO, this will bring the dex into a more typical leveraged derivatives market where incentives are aligned between all parties - lenders, speculators, and investors.