Ethereum

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So I have spent decent amount of last months in stablecoin space, and ultimately for the perfect economically sound one it always points to something like RAI or Checker by Arthur.

But liquity while secure hard floor of $1 usually go above peg due to their collateral ratio thing where anyone with the least CR can be redeemed for their collateral. Now, that can create buy pressure for LUSD pushing it above $1 but then there’s no way to bring it back other than relying on market forces and arb

And you keep decreasing the MCR incrementally. Ofcourse you set bounds like maximum can be decreased till 110% or so but this does solve that problem and make LUSD somewhat more stabilish. I don’t have data but intuitively as stabilish as DAI.

Now, what if you basically observe that if for a certain amount of period, no redemptions take place, you decrease the minimum collateral ratio, enabling users who already have their vaults to mint more debt. When redemptions don’t happen for long time lets say 5-7 days that means peg is above $1