Which exactly follows the prediction my model suggests, based on my understanding of the pegging mechanism. The demand for SBD rose, which kept pushing the price up on the market, and thus downwards also on Steem. Nobody would demand to hold SBD if it had an interest charge instead of a dividend.

Also, the accounting is only done when transfers are made, which makes it more unpredictable (the latent interest requires transfers to manifest).

There needs to be a way to continuously burn it, having it revert back to Steem and diminishing the denomination of the Steem Backed Dollar tokens, where currently they go the other way. Otherwise it compounds its effects, because the growing amount grows by the same percentage each time period. I think if we can just set an interest fee on it instead of an interest dividend the witnesses can really have a positive effect on steering the Steem economy, slowing or speeding up the rate at which SBD decays in value to keep balance between Steem's needed $1+ price point and sufficiently low fees on holding SBD.

I think after this, almost overnight SBD will become considered a payment asset and Steem a saving asset (with power boost by locking into time delay withdrawal for SP). It would be such a neat fit with retail markets who would be able to lock their Steem assets during payments and escrow and fulfillment periods then they pass it on, like a hot potato (because it is eroding before your eyes, a fraction of a percentage per day. This will encourage spending and it will end the compounding effect that is threatening the viability of operating the network.