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RE: Why not peg SBD at $10?

in #steemit7 years ago

The platform would have to eat the loss, much like central banks do when they try to maintain a peg.

Hmm. I don't know if that's healthy or not for the system. Seems to me, the more controls you try to implement to get the desired effect(s), the more points of failure you now have to deal with. More factors, more complexity, more likely to have problems down the road.

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That is the correct sentiment. However, SBD is a peg that has already been introduced, and therefore it demands controls to obtain the desired effect.

There are very few ways to maintain a peg. Now, the good news is that SBD is a minimum price peg, which is an easy peg to maintain (as opposed to a strict must-equal-$1-all-the-time peg). Given the minimum bound peg, you have to implement controls. The question is, which ones? The interest rate route, which the platform has taken, only works under very specific conditions of credibility. The problem is that the exact time you need the SBD to be a peg and provide inherent value to the platform is the time the interest rate peg is most likely to fail (i.e. during a massive crypto-market crash). Granted, you could have a dual interest rate + guaranteed buy-back system ... but does that level of complication improve the system or weaken it?