RE: Beyond SBD: A Stablecoin for the World.
True. SBD is not pegged by any mechanism from the US dollar. The US dollar is only a reference value to determine how much STEEM to pay during a conversion. The floor comes from the backing from STEEM (the ability to pay the debt). There is no upper ceiling and thus no upper peg. High price is a good thing as debt can be issued at a lower cost. Essentially the STEEM economy is getting a discount on issuing SBD with high SBD price (more bang for the buck). Witness manipulation of the peg has weakened the ability to cover this debt by overprinting SBD and preventing conversions (SBD burn when we could afford to do it). We could have had a conversion of 1 SBD to 1 STEEM if it was made available. But since witnesses and Steemit Inc refused to reinstate SBD conversions (to artificially inflate SBD supply), now we have 3.3 STEEM creation to every 1 SBD conversion. I wrote a post on bringing back the SBD conversion long ago.
https://steemit.com/steemit/@socky/should-we-bring-back-the-sbd-convert-to-steem-option
Yes, I was really mad about making SBD print to 9% debt, it is a terrible idea. How did that ever get accepted!
A witness suggested it and Steemit Inc accepted it. Just that simple. No consulting economic experts. I argued that it was not a good idea, but no-one listened to me.
Keep in mind that I don't blame the witness for suggesting the concept. We need new fresh ideas. Some of them might actually be good.
However, I blame all the witnesses that accepted HF20 and Steemit Inc because they didn't bring in an economic expert to evaluate if this would work.
Edit--
Actually, I believe it was discussed on GitHub and then announced before HF20 release. The problem about discussing economic decisions on GitHub is that it is the wrong forum for such discussions. GitHub has plenty of programmers and tech experts, but it is not the place where economic experts hang out. You get a bunch of devs on GitHub discussing what they think is a good idea for economic changes, but they might all agree that it is a good idea because they don't have the economic experience to know that it is a bad idea.
wow.......
One thing to remember from this change is that SBD will continue to be printed FOREVER. This is because the price feed will keep steem price at under 10% of the market cap no matter what, and SBD stops printing at 10%.
It is almost at a standstill now. There are more dynamics. When people were selling SBD in the internal market instead of converting it since that option wasn't readily available to most people, guess who was buying up all that SBD? Whales. All you had to do is look at their wallets. They have been buying and hording that SBD for a few months. They collected so much it is staggering. Now they are selling. They are smart enough to spend all this time to collect SBD in anticipation of the STEEM price drop, you can bet that they are smart enough to slowly convert that SBD so not to cause a collapse of the SBD. They are not dumping all at once to trigger that haircut. As long as they don't trigger that haircut, they can profit.
What was really disappointing is that steering people to the internal market by making the internal market link available in each wallet while not allowing conversions in the same wallet only benefited the whales. People sold their SBD on the internal market at a fraction of the price that whales are now getting for that same SBD.
Enjoyed your replies on this post immensely, thanks for insights! When you say whales, how many people are you approx. talking about? that's a dismal goal, sheez...;(