Does any sort of collateralization requirement denominated in XCP limit the total amount of assets that can be traded on the exchange to the market cap of XCP? How do you work out the margin requirement? Or is the idea that any asset in one's possession can be used as collateral, but represented as an XCP equivalent?
In a world with XCP backed assets,
one way I could imagine this working would be that the current market price of the asset (based on a price feed) would be locked away when the asset was created, and the issuer would place a bet to cover future variations in the price, up to a disclosed bet size, and future date.
An issuer could choose the amount of margin they want to put up, and when they run out, the asset would be automatically liquidated. This would have the side effect of dumpling an asset holder back into XCP if a market got volatile, but I think it could dramatically reduce counterparty risk (and everyone would know were they stood).
When issuing a $1 USD token, an issuer would lock away $1 worth of XCP to create the asset, and might choose to commit, say, another 25% to cover variation. So $1.25 worth of XCP might be locked away per USD token. They could sell the token to get $1 of XCP back, so they'd basically be net a long XCP bet.
I can imagine that this kind of usage would increase the scarcity of XCP and push the price up (so in the next round a unit of XCP could back a larger dollar value of assets, and so on).
Something like this could work in parallel with unbacked assets, and I could also imagine having fractionally backed assets, so users would have greater choice.
EDIT: Clarity