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Orthogonal to the circular notion that the price of SNX will be whatever is required for the system not to become undercollateralized. Otherwise we would just collateralize DAI with MKR. Fwiw I am fairly sure that

@kaiynne

agrees with this point and has said as much many times.

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and

There is literally no difference between a ‘“decentralized” stablecoin’ and any other synthetic other than the choice of the price feed.

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and

This is true of.. any synthetic exposure, ever? Anyways, in practice Maker _is_ the best way to get ETH leverage, as evidenced by the functional negative interest rate on DAI.

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and

Wait, isn’t the implied negative interest rate indicative of the fact that Maker doesn’t / can’t actually follow market rates, but instead is subject to wonky human governance? Also, dominance of perps suggests they are the best way to get leverage

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and

No, it doesn’t. It implies that they prefer not breaking the peg and taking on that excess purchasing power volatility to implementing true negative interest rates. See:

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Charlie Noyes

@_charlienoyes

Aug 3, 2020

Replying to @PhABCD @hasufl and 4 others

Not actually targeting the Market Price to the Target Price is equivalent to running a system deficit; not opining on that path but Lev explains why well here: forum.makerdao.com/t/mip20-target

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and

The humans are choosing one set of values over what the market would otherwise prescribe

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and

No, this is wrong.

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A few notes: 1) redeemabillity is HUGE. If I have 1 USDC, in 30m I can have $1. If I have 1 DAI, I have to hope someone will buy it. 2) this means DAI can blow out on moderate timescales. USDT takes a day-week to redeem and sometimes moves 5%; DAI is 10x worse.

11:00 AM · Aug 7, 2020Twitter Web App

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Sometimes we see OTC quotes of 10m DAI floating around. The quoted market is basically "fuck off" @ "no fucking way".

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3) if the collateral can blow out that's scary; it threatens the safety of the assets. SNX collateral is terrifying compared to ETH collateral. 4) Perps are super liquid b/c they "expire" in ~1 day, so you don't have to worry about premiums persisting--funding makes you whole.