Okay this idea came to me after checking out the Maker platform. If you haven't ever seen or heard of it, the idea is actually rather simple. In order to pull out a loan of Dai (Maker's Stablecoin), I have to collateralize the loan with some ether. If the price of ether drops too low, bots will sell the ether I collateralized. If I return the Dai I borrowed from the Maker platform, I must buy some maker to pay the "stability fee", but afterwards all the Ethereum I've collateralized will be returned to me. The idea is that if the price of Dai goes to high, the platform will print more Dai for each ETH collateralized, if it's too low the platform will print less eth for each ETH collateralized.
I propose we take this idea and implement it on Steemit. To do this would be no small task but I'd like to paint the picture of how it might work. To create an SBD one must first collateralize their steem. This means locking it up in a contract on the platform. While the steem is locked up it can't be spent until all the outstanding SBD is returned to the contract and converted. This is as opposed to collateralizing SBD with all of steem, it's collateralized against individual contracts. In addition, if the price of steem drops too low while the loan is still outstanding, block producers and others can run scripts to auto-liquidate the contract in the event of a price drop. This results in the stability of the SBD. Because the steem backed dollar is automatically converted before the price goes to low to pay off the debt, SBD would be more stable. As opposed to our current system where the APR and price are the only tools witnesses have to control the price.
In addition to this mechanic, MKR implements a maker fee. Every Dai is charged ~1% each year for stabliity. This fee is paid when you convert Dai back into Ether, but it can only be paid by buying Maker token to pay. All proceeds from the fees are used to autonomously buyback and burn the Maker token of which there is a finite supply. If this mechanic was implemented on steem, steem would replace the MKR token for fees and stability. Loans of SBD by the blockchain would be collateralized by Steem, and paying off your loan would result in ~1% of the steem collateralized would be burned each year.
The net effect of this change would be allowing steem blockchain to issue loans in a fairly similar way to the Maker platform. These loans would be backed by steem, and denominated in a stable token called Steem Backed Dollars. Steem Backed Dollars can be accepted and converted back into steem for a 1% fee each year. All 1% of the fee is used to buyback & burn steem. I believe this technology could be a huge boon to steem. We already have a stablecoin, lets collateralize it. What do you think of my idea Steemit?