Target Price for ARTH
Because stablecoins are almost always pegged to a target price, it is ideal for them to revolve around that price. Most stablecoins are pegged to 1 USD or another fiat currency (like Japanese Yen, Chinese Yuan, etc).
ARTH, however, is price pegged to the Global Measurement Unit (GMU). For simplicity purposes, ARTH's initial price was set at 2 USD worth of GMU, signifying the rise in inflation amongst other things
Most stablecoins provide nothing more than just a USD stablecoin that competes with the utility of existing stablecoins like USDT, USDC, DAI, etc. ARTH is different: it is not just a stablecoin, it is the world’s first valuecoin.
ARTH's goal is to achieve stability whilst at the same time slowly appreciate in value.
As of now the peg for ARTH is fixed to 2$ and is not set to change until the GMU oracles are implemented.

Who pays for the appreciation of ARTH?

The appreciation of ARTH is paid for by those who deposit collateral into the protocol. Which means whenever ARTH appreciates against the US dollar, collateral providers who have opened loans and deposited collateral need to ensure that they are able to payback their loan with the principal plus the appreciation (which behaves a bit like an interest fee).

Is the appreciation of ARTH similar to an interest fee or tax to borrowers?

Yes.
While loans and lending protocol for ARTH is set to have 0% borrowing fees, the appreciation of ARTH behaves like an indirect interest fee or tax.
But since ARTH only appreciates if the underlying collateral appreciates, borrowers (in most cases) don't have to do anything if they are already exposed to the underlying collateral. Because ARTH appreciates at a fraction of how much the underlying collateral appreciates, the borrower still realizes a net gain even after paying for ARTH's appreciation.
Please note that for borrowers who borrow ARTH with stablecoin collaterals (like USDC, BUSD) which means the underlying collateral does not appreciate relative to the US Dollar, the appreciation of ARTH becomes an indirect tax for these borrowers. Which is why we recommend borrowers to use cryptocurrencies that have a long term scope of appreciation to be used as collateral (eg: Bitcoin or MAHA) However this exposes the borrower to the volatility of these collateral which may force them to get liquidated if there is a sudden market crash.

Can the peg be influenced?

The peg can be influenced by only two major factors
  • Incentives via Governance: Governance can decide to incentivize users who deposit a certain type of collateral thereby influencing the collateral compositions of ARTH.
  • Appreciation of the underlying collateral: ARTH's price is influenced by its underlying collateral. Hence each collateral based on how much it appreciates, plays a role in ARTH's peg.