TSD also benefits from less direct mechanisms for USD parity — called "soft peg mechanisms". One of these mechanisms is parity as a Schelling point. Since Teddy Cash treats TSD as being equal to USD, parity between the two is an implied equilibrium state of the protocol. Another of these mechanisms is the borrowing fee on new debts. As redemptions increase (implying TSD is below $1), so too does the
baseRate — making borrowing less attractive which keeps new TSD from hitting the market and driving the price below $1.