bitUSD black swan possiblity

[yvv]

Theres obviously an issue with lack of BitUSD/BitCNY when looking at those margin calls that were coming in.

Yes, there is an issue with bitUSD/bitCNY. This issue is an inherent flaw of bitAsset model, which was pointed out million of times by different people in crypto community. When BTS falls and bitAssets are in high demand, nobody in good mind wants to issue them by locking BTS collateral. This is the same as giving money away. 

[yvv]

This crash proves to me that we need a base supply of both BitUSD and BitCNY.

If whales like @bitcrab need to exit their positions we need more BitUSD and BitCNY in the system.

We need a massive dedicated account used exclusively for creating BitUSD and BitCNY. 
This account should have all of its BTS as collateral at all times and hold no other assets.
It should be funded by a rolling worker proposal.
The BitUSD and BitCNY created would be used to purchase any BTS below the settlement price.
The BTS purchased would just get added to the collateral.
The account would never pay back its borrowed BitUSD and BitCNY because that would destroy the supply.

I really think this is needed for BitShares to be successful.

You are proposing to give money away.  You are welcomed to do this, but with your own money. Go ahead, create bitUSD and bitCNY during BTS crash using your own funds, I am very sure many people will be happy to buy them at a good premium.

[pc]

Bailing out margin calls with reserve funds is like bailing out banks with taxpayer's money.

Nobody complained about bitassets while BTS was going up. AFAIK nobody sent the profits from going short to the reserve pool.

If a black swan damages the reputation of BTS, then the solution is not to spend money on preventing black swans. The solution is to educate traders about the risks involved with bitassets.

[JonnyB]

We need a massive dedicated account used exclusively for creating BitUSD and BitCNY. 
It should be funded by a rolling worker proposal.

We have discussed this more than once. It is not the purpose of the reserve pool to take the risk away from traders.

Yes, and everytime it is discussed most people agree that something like this needs to be done.
Worker proposals are for anything that helps bitshares grow and improve and having a large supply of well collateralised BitUSD and BitCNY would reduce the chances of a black swan.
Theres obviously an issue with lack of BitUSD/BitCNY when looking at those margin calls that were coming in.
If either BitUSD or BitCNY did black swan how do you expect bitshares to recover from the the damage in reputation it would suffer if the peg failed.

[pc]

We need a massive dedicated account used exclusively for creating BitUSD and BitCNY. 
It should be funded by a rolling worker proposal.

We have discussed this more than once. It is not the purpose of the reserve pool to take the risk away from traders.

[JonnyB]

This crash proves to me that we need a base supply of both BitUSD and BitCNY.

If whales like @bitcrab need to exit their positions we need more BitUSD and BitCNY in the system.

We need a massive dedicated account used exclusively for creating BitUSD and BitCNY. 
This account should have all of its BTS as collateral at all times and hold no other assets.
It should be funded by a rolling worker proposal.
The BitUSD and BitCNY created would be used to purchase any BTS below the settlement price.
The BTS purchased would just get added to the collateral.
The account would never pay back its borrowed BitUSD and BitCNY because that would destroy the supply.

I really think this is needed for BitShares to be successful.

If they are exiting bitUSD/CNY, they are in need of BTS. If they are heavy in the bitUSD and nobody is willing to buy it from them for their BTS then they are screwed and have to wait. That is the risk of taking on so much of an asset in low liquidity environment. Why would this be bad? They will get margin called as the price drops. Why is that a problem?

The other way around, they need to acquire BitUSD/BitCNY but can't because theres nobody selling it.

[Bitshiz]

This crash proves to me that we need a base supply of both BitUSD and BitCNY.

If whales like @bitcrab need to exit their positions we need more BitUSD and BitCNY in the system.

We need a massive dedicated account used exclusively for creating BitUSD and BitCNY. 
This account should have all of its BTS as collateral at all times and hold no other assets.
It should be funded by a rolling worker proposal.
The BitUSD and BitCNY created would be used to purchase any BTS below the settlement price.
The BTS purchased would just get added to the collateral.
The account would never pay back its borrowed BitUSD and BitCNY because that would destroy the supply.

I really think this is needed for BitShares to be successful.

If they are exiting bitUSD/CNY, they are in need of BTS. If they are heavy in the bitUSD and nobody is willing to buy it from them for their BTS then they are screwed and have to wait. That is the risk of taking on so much of an asset in low liquidity environment. Why would this be bad? They will get margin called as the price drops. Why is that a problem?

[JonnyB]

This crash proves to me that we need a base supply of both BitUSD and BitCNY.

If whales like @bitcrab need to exit their positions we need more BitUSD and BitCNY in the system.

We need a massive dedicated account used exclusively for creating BitUSD and BitCNY. 
This account should have all of its BTS as collateral at all times and hold no other assets.
It should be funded by a rolling worker proposal.
The BitUSD and BitCNY created would be used to purchase any BTS below the settlement price.
The BTS purchased would just get added to the collateral.
The account would never pay back its borrowed BitUSD and BitCNY because that would destroy the supply.

I really think this is needed for BitShares to be successful.

[yvv]

Check

http://cryptofresh.com/a/USD

for debt positions. In order for global settlement to be executed, total collateral ratio should go below 1. Right now, all debt positions are collateralized well above 150%. Unfortunately, cryptofresh does not show you the total collateral value.

[lakerta06]

How far away are we from a global settlement for bitUSD? 2.7 million dolars worth of margin call waiting to be executed. Somebody with a grasp of the economics behind this, please enlighten us.