So an exchange closes and I lose 10BTC trading there. I file a claim and get back the equivalent value of UBTC but no BTC.
So I guess I would sell the UBTC for BTC to get back my BTC and move on.
Oh but wait. Not only I but 300 other people lose a total of 5000BTC on that exchange. We all get UBTC
We go to an exchange and trade our UBTC for BTC and UBTC price collapses and makes UBTC near worthless.
So who would really buy UBTC then. If everyone would be selling it after claims why would I ever invest in it as a long term holding it would be a huge risk.
Dunno this whole secondary asset coin thing is already proving to be a failure before it even launches.
Again, this remains to be seen as something like this has never been done before. Multipools dump mass amounts of currency daily. Some argue this destroys the coin, others say it creates liquidity and is needed. Umbrella is a risk management strategy, if the asset fluctuates in price, this needs to be taken into consideration if you are holding it. Obviously we would all love if it maintained a secured ratio, but given its architecture is not possible.
In my opinion it boils down to mitigating my losses. If I get wiped out by an exchange collapse, at least I didn't loose everything. Oh, and by the way it didn't cost me anything because I was already mining Litecoin.
We took into account large claims, this is why we made the coin scarce and it's supply slow and steady. Hopefully the work the CDIC plans on doing with the exchanges helps weed out the shady ones and claims remain far and few.
Edit: Just read your post again. You can only file a claim for what you had or lost (UBTC). So if 300 people were all holding Umbrella and lost it, that would be the claim.
