I’ve had a quick look and it appears that the primary task of the PSM module is to keep the peg at $1, so a way to keep the volatility low or non-existent, so indeed a price stability but in a sense that it basically makes sure that at any given moment 1 DAI equals 1 US Dollar.
So on the currency level it’s a great solution, yet on an investment / lending level, especially while dealing with real-world assets, it does not help much. Let’s take the current 5% US inflation as an example, and let’s assume for easier math that it continues to be at such level for the next 10 years (highly unlikely). Let’s say in the year 2020 we invest 10M DAI into X and let’s say we will get the money back in 2030 - although what we’d get back would still be 10M DAI yet what we’d be able to buy with it in 2030 is just 50% of the goods we acquired in 2020…
Of course there’s some level of stability fee and maybe initially it was thought out as a way to keep the purchasing power in place or maybe inflation wasn’t much of a problem at the DAI’s drawing table (especially while on-chain only) but in the real assets investment space inflation is quite important and has to be accounted for.
Nonetheless, even when some folks don’t pay much attention to it, there’s a certain craftsmanship that might be developed https://twitter.com/Altcoinbuzzio/status/1403870481418133505?s=20