Given that stability fee is 0%, and cap is $120M, but peg is still 2% above $1, what else can be done other than introducing new assets? Should we entertain the idea of a negative stability fee to encourage borrowing?
My long term concern about Maker is that the demand for a stable-coin is always going to be higher than the borrowing. Currently, most ETH is sitting idle because there is no way of staking it. If it becomes heavily staked (e.g Tezos is 75% staked), then I fear we will have even less supply.
The point about ETH 2.0 when ETH could be staked is excelent. Probably You are right that it is going to increase problems with a peg.
My minority opinion is that we should distinguish two values and do not consider them being equal:
Amount of collateral backing up each DAI
Price of DAI
and we should stabilize second by lowering first (by minting unbacked DAI and selling them off for MKR), or under opposite circumstances (high SF, dai below the peg) buying it back.
For me it looks like MakerDAO hopes to fight laws of economy with the idea that price of DAI can be allways 1$ under various market conditions, when it is backed by 1$ of collateral. In my opinion utility of DAI and on the other hand opportunity cost of holding DAI will allways fluctuate DAI price around 1$ if collateral amount backing each dai is allways fixed at 1$.
We need uncorrelated collateral types with 0% stability fee. Keep in mind that right now the only collateral type uncorrelated with ETH is USDC and it has a 6% SF, which is a huge barrier to minting DAI from USDC.
Do you consider LR<100% also an allowed value (“improvement”) of a system parameter? If you limit the changes only to changes that you are comfortable with, then maybe there exist no combination of system parameters that can restore the peg.