Wouldn't there be a single point that marks the percent interest people are willing to buy bitUSD at? This point would shift dynamically as BTSX is trending up or down.
I just had the same thought. The x in BitUSDx should equal the percentage BTSX is thought to grow per year which fluctuates. Then we would not have a market peg anymore (?).
In fact, the bitUSD here only works as a stable value. A superior stable value would be a value combined out of many different stable values. If you allow it, the market will find the most stable value - least risk of volatility - and figure out the interest rate this value deserves.
what do you mean by "many different stable values"?
Well, I just thought if we combine like USD, Gold, Yen, whatever is most stable, into a single value, then we begin to approach the most stable value. Such stability is often what people really want. So given this ideal, most stable, non-volatile value; what percent interest does it pay? If the interest is too positive, nobody will sell it, if it is too negative, nobody will buy it.
In the case of bitUSD we already know what the price is, it is 1 USD worth of BTSX. In this case, do I trade my BTSX into 1 USD? Depends on what interest rate I get. Perhaps I accept a positive interest rate, perhaps I accept a negative interest rate. But overall, in the free market, these considerations will reach an equilibrium interest rate, which means I know what interest rate
I should be getting. Similarly, the market would decide on an interest rate for holding a zero risk, perfectly non-volatile value.
But I know nothing of economics so this may all be nonsense. Think of it as a question.