Thanks for the explanation. Looking at the 3 months chart of BNT/ETH, it would appear that BNT is not very volatile, but the price stability of BNT has not yet been achieved.
In my view, while theoretically the reserve should dampen both upward and downward movements equally, the sentiment of investors is dampened when the price stays down (as with BNT) and so they pull out causing a further fall in price.
In simple terms, tens of thousands of BNT need to be bought from the smart contract to push up the price. This is a way too high expectation from the market unless there is some real benefit offered for the investor.
Essentially, it appears to be the case that there is no intrinsic economic benefit to holding BNT. Depending on the smart tokens to shore up the reserves only pushes the problem further down. Algorithmic pricing and smart contract arbitrage are good features but the core economic incentive is lacking.
The incentives mechanism plus other features are what we propose to add to Bancor using our solution, Massiv. We are in our pre-ICO planning phase.
We are looking at enhancing Bancor for launching our token Massiv (MASS). I sent an email with our whitepaper to Eddy@bancor few days back and look forward to getting a response from the Bancor team if you would like to collaborate with us.
I can be reached at firstname.lastname@example.org.