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.

Im skeptical that this solution is feasible, or acceptable to most people. But even if it was, its far more complicated than the best solution, which is simply to allow SBD to function in the manner that it was likely originally intended.

Make it redeemable, on demand, for a dollar worth of steem. ANd purchasable for the same amount. No wait period required. This would mean that it would not trade against steem because, since its redeemable/purchasable instantly for a dollar, it wouldn't trade on markets at all.

The reason outlined in the whitepaper for the wait period is patently absurd. The "vulnerability" they describe, the idea that someone could buy SBD when the price of steem was high, then redeem it for more steem when the price was low is a vulnerability of every fungible assett. I could do precisely the same thing with USD.

I have a whole post about this shit half written maybe youve inspired me to finish it.