what is pegging ?
First you have to ask "what is price" ?
Price is the equilibrium point between supply and demand as illustrated in this graph:
"Pegging" is fixing the price using artificial market control methods to move either the supply curve or the demand curve to the left or right, thereby moving P* to a higher or lower valuation.
BitBay proposes to deploy a mechanism which moves the supply curve to the left by restricting access to markets of coin holders who wish to sell. (Incorporated from NuBits).
https://www.cryptocoinsnews.com/nubits-market-cap-holding-steady-first-week/To see how well the peg works, go to marketcap and check the dollar price of NuBits...
http://coinmarketcap.com. It actually works pretty well. Once you've checked that, check the volume.
Although I'm promoting it here, it actually sticks in my throat that this mechanism works. The reason I don't like it is because it only controls the supply side which is the easy bit. It's a bit like living in a desert and controlling the supply of sand. It would be better to be able to generate demand rather than restrict supply (which is what Bitshares does), but hey, I can't deny that I've been confounded. Nubits seems to have both volume and stable price which amazes me. I can't understand how they achieve that, but it may be that there now is emerging demand for cryptocurrencies that are stable against a fiat currency.
My original criticism of the Nubits approach (restricting supply) was that price was substituted for volume. But again, I was confounded - look at the volumes here...
