And btw the MKR system is broken the same way BTS 1.0 is:
i.e. the stable coin creator has no incentive to pay insurance (even at 0%, say nothing at 2%) or interest on the so called loan, in the case of stable or falling MKR price (or expectation of such price move). Quite the opposite - she will demand interest for creating the product - the stable coin (or whatever you chose to call it). THe nightmare will get even bigger when people realize that MKR system is running with 1.no insurance fund, 2 on top of general purpose (read slow) system 3.
The system supports negative interest rates if the supply and demand ends up moving it in that direction (so you could potentially earn money by issuing Dai if Dai demand is huge). But considering that the interest rate for leveraged BTC trading on bitfinex sits at around 20% APR at the moment..... I don't think that's gonna happen any time soon.
ETH rates haven't really stabilized yet but I'm expecting them to start out a similar level, and ETH margin trading is likely going to be our primary usecase in the short run - so from that I'm expecting a nice yield.
Their only hope of keeping the stable coin stable is by printing even more of the already falling MKR tokens.
I think you might have misunderstood how the system works. MKR inflation only happens in case there is an ETH (or BTC/MKR etc.) black swan event to the point where some of the CDP's (Dai issuing collateralized debt positions) become undercollateralized and have to be bailed out by Maker. We're setting our BTC margin requirements competetively with bitfinex (allowing 3x leverage) which we consider to be a safe level based on analysis of historical BTC price data. ETH leverage will be set at 2x since we prefer to err to the side of caution, and this is a very conservative number when you compare it to well established services like Kraken that are already offering 5x ETH margin. MKR will be set at 2x as well, but with a very low debt ceiling.
We're still working on explanations that are less technically dense than the whitepaper (or rather, a scalable pipeline for outputting such material), so these mechanisms become easier to understand. I really appreciate anyone giving the system a critical look - it will be vital that any potential pitfalls are discovered early.
Here's the most updated version of the DCS whitepaper:
https://docs.google.com/document/d/1UPMEd407jT6zyvxZRH3N6ay_rjlO4SVKPiaxCgVUIbc/edit#heading=h.33vkknjnanfuAnyone can add comments directly on the page if you have critique, suggestions or something that needs clarification.