Basically a BitUSD30 would be equivalent to a promise to deliver 100 BitUSD in one year which the short side would write and sell for 77 BitUSD (rounded to the nearest BitUSD to make life easier).
Then what would happen? I'm guessing the short would sell the BitUSD for BTSX (you don't borrow money and pay interest unless you plan to do something with the money you borrow). Then of course this needs collateralized, so assuming 2x margin requirement the short would have to put up 46 BitUSD of his own -- which would also be sold for BTSX. So the equity in the initial position is:
- Long: 77 BitUSD worth of BTSX (principal)
- Interest: 23 BitUSD worth of BTSX (interest)
- Short: 23 BitUSD worth of BTSX (margin)
So basically the short's short 100 BitUSD with only 23 BitUSD worth of equity. Assuming a margin call occurs when the short is halfway to being wiped out, the short might go down as far as 11.50 BitUSD equity.
This sounds like an awfully risky high-leverage arrangement.
I think my idea of creating a fixed-interest product by auctioning off network income [1] is way more likely to remain solvent.
[1]
https://github.com/drltc/bitbond-proposal/blob/master/bitbond.md