This was written by an academic economist after reviewing bitUSD as a stable coin.  Please join in as I consider how to eviscerate this criticism.  The Dismal Science be damned!

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"Not a fan.

> Anyone with BitUSD can settle their position within an hour at the feed price.

I was assuming seconds at most. Is an hour at all competitive with other currencies?  I know that at most times there will be market-makers buying and selling much faster, but in volatile markets the prospect of being locked up for an hour should really scare traders, particularly shorts.

> In practice, the only way new BitUSD enters circulation is if there is someone willing to pay enough of a premium to convince a short to provide guaranteed liquidity at the price feed on demand, while also covering the cost of exchange rate risk.
...

> the only people to whom the premium matters are those who are looking to enter or exit the ecosystem.

This is correct, but the premium does provide a disincentive to adopt.  Historically premium seems to have typically been -2% to +10%, but as the economy grows I think it has to grow to compensate shorts for tieing up their collateral.  At first sight it is quite clever to have this margin set by a competitive market but it also means margin will be set too high for rapid growth, I think. Part of the Saga and Basis stories is raising pump-priming capital to get a nice, stable, solid-looking economy off the ground so trust can start to develop and we need to do the same.

The central problems though are that you can only get 1 BitUSD by paying $1 + margin for it and you are not even guaranteed to get $1 back because the collateral is not held in $.


The way this will all collapse is though a fall in crypto collateral values.  As this starts to happen some shorts will want to cover their BitUSD positions so they can sell the collateral and cut their losses, so BitUSD may even spike up, but the collateral sales will further depress prices.  Soon some short position will fall below $1 collateral triggering forced settlement on all contracts within an hour.  I assume collateral would fall further during that hour because this is how crises always work, so the end settlement price may be quite a lot lower than $1.  In theory this should be good for shorts but in practice they have lost too much on their collateral that they won't really notice, so nobody winds up happy."

Today I formally announce my intent to join the BitShares Committee. 

As a reminder: the Committee is approved by stakeholders and formally tasked with setting policy for the BitShares blockchain including:

Transaction and trading fees;
Blockchain parameters, such as block size, block interval; &
Referral and vesting parameters such as cash back percentage and vesting periods.

I discovered the Graphene-based chains last summer.  I was hooked.  I watched every public video with Dan Larimer talking about the potential for BitShares to revolutionize finance (BitShares TV: https://www.youtube.com/channel/UChtICzF0ZEhhgoMA8YWhULw/videos is a great resource for those new to the platform or interested in its beginnings).  For months I could not shake the question of why BTS had yet to have a bigger impact.

This lead me to become more active in the community.  Joining the Discord and Telegram channels where I met great individuals like Kimchi-King, Fav, and Fuzzy.  On BitShares hangouts and in the chat rooms I listened to the community and began taking more upon myself to contribute.  I identified two areas where I could bring value: network infrastructure and legal perspective. 

As many of you know Bittrex, halted trading in BTS in the fall of 2017.  This opened my eyes to the serious challenges facing a DAC like BitShares.  In many ways BitShares is vulnerable to adversaries in the real world who have not the time nor interest in understanding what we are doing here.  I believe this network can thrive and prosper within the current system of national boundaries and jurisdictions.

My platform principle is the support and sustainability of smartcoins on the DEX.  Native trust-less assets with autonomous and sound collateral ratios (e.g. bitUSD) remains one of the core advantages BitShares holds over the rest of the crypto world.  I will strive to foster innovation for new smartcoins and collaboration and support for existing smartcoins.

I hope to join the Committee and help the community make the most of every person working to make BitShares realize it’s full potential.  Thank you.

I think the bitshares holds great potential if the community recognizes it as a protocol layer that can support gateways to organize their own exchanges and limit order books.  I think the term "Federated Gateways" is a very appropriate way to describe the economic relationship between the bts protocol and third party service providers.  The value of bitshares grows for every new user these third-parties bring to the DEX.  On the other side, because of their association with Bitshares, the stakeholders should have a way to monitor and issue public statements on governance issues when it comes to third parties and dispute resolution.  That can come in due time.

To start, what are your favorite gateways for the Intergalactic Federation of Gateways?  Any ones you see as providing something unique or particularly valuable?
- Open Ledger
- GDEX
- Crypto Bridge
- RuDex