I have been attempting to quantify the PEG and compare it to NuBits or other "IOU" based assets and define what success looks like and what a "market peg" really means.
We have proven in another thread that BitUSD will always be sellable at the PRICE FEED within the 30 day forced covering period. In this sense we have incontrovertible proof that BitUSD can be sold for about $1 worth of BTSX within a small percent at all times. But this begs the question: "what is a dollars worth of BTSX"? This value is constantly changing and never exactly defined because the BTSX/USD spread and volume is subject to the BTC/USD spread/volume and the BTC/BTSX spread/volume. In other words the markets ability to value BTSX is only accurate within say 5% and everything else is noise until the system matures.
So I think that viewing the peg on an "instantaneous basis" by looking at the spread between BitUSD on chain and USD off chain is about as accurate as claiming that the USD on two different exchanges (Bitstamp, Coinbase, etc) has broken the peg because they are not trading at the exact same BTC price. We should instead focus the peg over time:
1) Assume USD per BTSX is $1.00
2) Assume BitUSD per BTSX is at 1.05 (ie: BitUSD is worth 95% of a real USD)
3) Assume USD per BTSX fell from $1.00 to $0.80?
4) Did BitUSD per BTSX fall to 0.84 BitUSD per BTSX? YES Did the spread widen... NO
If so then we can claim the PEG is 100% perfect because a 20% fall in USD price == a 20% fall in BitUSD price.
Everything else is nothing but spreads associated with transaction costs:
Anyone holding BitUSD isn't worried about losing their relative purchasing power (it cannot happen).
So when someone from NuBits enters the picture and claims they have a 1:1 instant peg at all times then it means that all NuBits were sold for USD and the USD was held and could be sold back. It is only possible because the "market makers" are not taking any risk *AT ALL* and they have real USD on deposit with an exchange. In fact, they are so clever they hide the interest they charge you for using their NuBits in the spread... 100% guaranteed profit. You buy NuBits for $1.00 and you can sell them back to them for $0.995 0.4% goes to the exchange, .1% goes to the market makers. You are exposed to counter party risk and paying them for the privilege. This might be their whole plan, to disguise a user issued asset as a decentralized trust-free crypto currency.
What if they take the real USD *off of the exchange* and spend it on something (to fund infrastructure).... now the "market makers" have to increase their spread to cover transaction costs *AND* NuBits has just gone fractional reserve. It is the same old fractional reserve ponzi scheme... build confidence by maintaining redeem-ability for a long enough period of time to earn "trust" then slowly remove the backing. My conclusion here is that NuBits will continue to hold with a much tighter spread simply because of how they were issued... "sold for USD" rather than "sold for crypto" the backers of NuBits will not spend much of the USD they received by selling NuBits. So NuBits can be viewed as a "basket of USD" held on multiple different exchanges where the issuers reserve the right to spend the depositors money and not redeem it. As a NuBits holder you are now subject to the combined risk of all USD exchanges that the market makers are participating in PLUS the risk of NuShare holders spending the deposited funds. There is never anything that returns value to NuBits except market maker spreads... only things that can suck value of of it. It is a one way valve.
I would contend that the spread we see on BitUSD is actually a badge of honor and proves we are the real deal. Their "perfect peg" is proof that it is just another uncollateralized "user issued asset" that will pay interest proportional to the credit worthiness of the issuer. At least with other USD coins the issuer is committed to 100% reserve and can hold the funds in a separate account from the exchanges.
Don't want to leave your money on an exchange... don't buy NuBits... it has the combined risk of all exchanges + issuer risk.
I only bring up NuBits because it serves as a great point of contrast to BitUSD and helps us others understand our own system better.