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Wait this doesn't make sense. If a debt position is < 100% CR, lets say 80% CR, then this new account will take the 80% CR BTS and buy the bitasset and burn it? But the problem is that an extra 20% of the bitassets was issued by the blockchain. Effectively, the blockchain is "printing bitassets" out of thin air?
No, the new account will try to buy the 100% debt for the available 80% CR. This is probably to far away from the market price, so the order will stay on the book. As soon as the price recovers, the order will be filled and the full debt will be repaid.
(In reality, with MSSR > 0, the account will try to buy 100% debt for 110% CR. For large positions this will result in the same premium that we have had with the old margin call rule, at least temporarily until the feed price adjusts.)
No matter if bitUSD holders convert their bitUSD to BTS via margin calls or via forced settlements, the BTS are (forced) paid by debt positions with least collateral ratio, aka by bitUSD borrowers/creators, so what's the difference? IMHO there is no difference.
bitasset value = max(market price, settlement price)
If you take out settlement, this means bitasset value = market price.
The former formula gives a relative minimum price to the feed, but the latter formula looks exactly like UIAs.
So effectively, taking out settlement will make bitassets the same as UIAs in terms of value.
Thoughts?
Essentially you're saying that if you sell some amount of PMA and nobody will buy, its trading price will be pushed lower than its value.
Actually, you ignored how MPA supply is created and who are on the market. Not like UIAs, PMAs are created with debt positions, this means you won't have unlimited amount to sell. In addition, debt positions are always on the market, with BSIP42 or a dynamic MCR-based mechanism, if you place an order to sell some PMA below its value, there will be margin calls appear to fill your order, thus the trading price would be guaranteed. Force-settlements aren't in this process at all.
actually BSIP42 is already active on bitUSD, otherwise bitUSD would have a big premium as before.
BSIP42 is irrelevant to MCR adjusting, the new MCR-based solution should have its own BSIP.
yes we need metrics to evaluate the feed price, as a base I think we need a chart that involve feed price from all witnesses, median price, latest price and some other reference price, seems someone began working on this?
No matter if bitUSD holders convert their bitUSD to BTS via margin calls or via forced settlements, the BTS are (forced) paid by debt positions with least collateral ratio, aka by bitUSD borrowers/creators, so what's the difference? IMHO there is no difference.
* MSSR: at 100% if premium >=0%, else (100-premium*penalty)% if premium <0 (feedback) - this way, we cause margin calls to raise the price in case there is a discount - "penalty" would cause the margin call to pay a premium
For instance, according to Peter Conrad, the current situation may well
be achieved by using the actualy/fair price feed and a short squeeze
protection ratio of 0%. That would lead to margin calls to execute at
the price feed instead of additional penalty of additional 10%. The only
drawback (that might not be one) is that the short protection ratio
cannot be negative. That means that in case there is a margin call
pending in the books, people that want bitUSD will provide a "premium"
to the market to snatch bitUSD from the margin calls.
If this becomes a problem, the price feed could still be "modified", but
at all other times, the price feed would reflect the fair price.
BitShares has been around and around trying to come up with a SmartCoin algorithm that strikes that balance but I fear due to differences in economic principles there will always be a strong tension by one camp or another to change the rules to their advantage. Remember, before the promise of redeem-ability through forced settlement people were creating sock puppet accounts and draining the reserve pool. That problem is no more.
Your logic is sound except for one point:That said, if we want a fixed exchange rate, we need to "break" the promises somehow, or to limit capital movement somehow. This sounds unacceptable for some people, but unfortunately it's the fact.
You don't need to break promises. You don't need to continue making the same promises while you're actively breaking them.
The original design of our SmartCoins favours free capital movement and independent policy over fixed exchange rate.
You prefer fixed exchange rate over independent policy. Fine. You can have that without breaking any promises: create a new type of SmartCoins.
