Discussion | algorithmic stalbe coins

Smart Contracts
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1

Hey guys! With the crash of Terra and UST I thought a bit of these stable coins and I asked myself why giving the arbitrage traders an incentive? I mean you could just set the ratio of liquidity to 1:1. You may ask how and it's simple.

function rebalance() public {
        (uint256 res0,uint256 res1,) = LP.getReserves();
        require(res0 != 0 || res1 != 0);
        
        if(res0 > res1) {
            _mint(address(LP), res0-res1);
        } else {
            _burn(address(LP), res1-res0);
        }
        LP.sync();   
    }

This function sets the amount of tokens same to the amount of WETH. Now you can either implement this functions into other functions so that users are calling this function whenever interacting with your project or you create a bot that always calls the function.
This method would mean that whenever a sells happen that tokens out of the LP will be burned so that there will be far less liquidity BUT the price is still 1:1. And on Buy tokens are being burned to keep the price 1:1.
To give people incentive to keep the ratio 1:1 you can also give out a reward whenever the function is called.
Tell me your thought about this simple method or even show me project where this failed.