there is no practical reason to have interest on loans. why would it be dangerous? loans have more value to the platform without interest. everyone would want to use our platform.
You are viewing a single comment's thread from:
there is no practical reason to have interest on loans. why would it be dangerous? loans have more value to the platform without interest. everyone would want to use our platform.
Without interest how would you "force" the price of the token to go above $1? Maybe on Hive you can by adjusting the issuance rate and the conversion to HIVE, but on a normal blockchain without the sort of mechanisms that Hive has, not sure if it's possible.
The value of a stable coin doesn't need to be forced anywhere except to a single stable value. That value could be 50 cents or 98 cents, less volatility is better. Why would anyone ever want to "force" the value of their stable coin to a non-stable value?
The interest rate has little affect on the stability of the coin. Real demand comes from actually using the stable-coin for its intended purpose: avoiding volatility.
However, I can see what you're saying here... what's to stop people from speculating on the stable coin and pushing the value lower to margin trade instead of using it as the stable asset it was intended to be? In this case the network raises the
required_collateral_percentinstead of a needless interest rate. By increasing the collateral needed to create HBD, this will limit the supply and further push up the value of Hive by locking more coins.This is exactly why it was foolish for the MakerDAO to combine the variables
required_collateral_percentandliquidation_percent. It's impossible for them at the moment to raise this bar without also raising the bar of liquidations. They are stuck at 150%. We could raise that level to 200% or even 300%. And we could do it on the fly and not punish users who took advantage of a lower level because theliquidation_percentremains unchanged.