RE: Will HERO work? Or, can you brute-force the free market?
I don't disagree with this analysis in any technical sense.
However, since people pay different amounts for bonds with a fixed value depending on how interest rates fluctuate and don't try to say that the 5% bond is not a 5% bond, I still think we have a valid financial product. True that bond may wind up yielding some other number than 5% net gain, but it is still called a 5% bond.
In its normal use, a saver buys one (perhaps at a premium she finds acceptable) and then holds it for a "savers normal holding period" during which she gets exactly 5% APR. When she sells, there may still be a premium in which case she recovers some of her original buy-in cost. There may be a discount in which case the net premium was higher than she had planned.
Even with bitcoin you have to consider the fees incurred in manipulating it. When you do, you could say you didn't get all the appreciation everyone is bragging about.
I choose to keep the explanation of the HERO clean and acknowledge that there may be a few premiums and fees that whittle away at the 5% gain you got from holding it.
Absolutely, I agree. HERO will be a fascinating experiment. I write what I write because I haven't seen anybody else writing it (other than in your replies to my posts), and your enthusiasm needs a counterweight.
For what it's worth, I think you should launch another one soon after you launch HERO. Call the new one SUPERHERO, and price-feed it to double annually. With HERO, maybe 5% is low enough that you'll actually get it to track 5% pretty well. With SUPERHERO, 100% is totally obviously way too high - so you'd end up with it trading at a huge premium to the price feed. It would be really interesting to see how its volatility, effective rate of return, and popularity would compare to HERO.
I'm serious about this - I think it would be an extremely valuable experiment.
I encourage folks to experiment, but I personally have only one mission: Doing things to grow BitShares to be all that it can be. We paid the price to start the HERO because I believe it can drive demand for BTS and therefore grow its price and attract attention and liquidity to our ecosystem.