I think a lot of people are hoping BitUSD may track USD fairly close to 1-1 most of the time.
However because people are so bullish on BTSX and shorting BTSX lets you take a leveraged position on BTSX. BTSX bulls may be willing to short still at $0.70, this trading range will be so far from the peg that it could damage the credibility of the peg. This could make people sell BTSX. This will mean less BTSX bulls willing to short below the peg and the situation will correct itself.
I don't mind a BitUSD like that but it might not appeal as much to retailers and savers.
It seems to make it stable you should introduce free market interest rates.
Then you still short 1-1 but when most people are bulls like now you will pay a higher interest rate to short BitUSD as opposed to shorting very far below the peg.
I made this prediction before BitAssets started trading.
While not as low as $0.7, the first part essentially came true. (Too many people willing to short below the peg.) Enough to warrant introducing price feeds.
The second part has been implemented (only shorting @ 1-1) but without interest rates...
The third part, interest/incentive rates are needed I think BM has a great solution here -
https://bitsharestalk.org/index.php?topic=8235.msg108444#msg108444My new predictionDespite claims that the peg is working BitAsset creation will be minimal. (The share price will languish below $80 million CAP) Over the next few weeks the voices will get louder asking for interest.
Within a week of interest/incentives being added to BTSX the CAP will surpass Litecoin.If interest/incentives is not added for say a month from now you should also see BitAssets already in circulation starting to fetch prices >2% below the peg on average.
(No economics degree or prediction market understanding, novice trader, don't understand options, contracts etc.. So take it with a pinch of salt but that's my prediction...)