RE: Are you converting your SBD?
The SBD conversion will give you $1 worth of Steem for every SBD you convert
Except, as may be the case very soon, when outstanding SBD is more than 10% of the STEEM market cap (this has happened, or may happen, in this case due to STEEM's price and market cap shrinking rapidly).
In that case SBD's conversion amount is reduced proportionately. So far the reduction looks to be small, and the low price of SBD provides a buffer, but if STEEM continues to drop the reduction may become significantly larger, and the conversion could come out at a loss. It is definitely something converters need to consider very carefully (and one reason conversion was considered an "advanced" feature and removed from its prominent position in the steemit.com wallet).
Conversion may still turn out to be a great play if STEEM recovers quickly. We will see.
Just for clarity can I ask, in proportion to what? Is it a linear reduction within a range like with the print limits? What is the range?
Proportionately to the STEEM market cap which mostly means STEEM price (since STEEM supply only changes slowly). So, in effect, SBD becomes pegged to STEEM once it passes 10%. So if STEEM then drops 10%, then the conversion rate for SBD would drop 10% as well (and vice versa). This assumes a constant SBD supply. There won't be printing so SBD supply can only change (decline) via conversions or burning. If it does then the reduction in conversion rate from a STEEM price decline would be correspondingly smaller, but that's probably a much smaller factor than movements in the STEEM price.
OK, thanks! That's clear.
Good point about the haircut rule, I should have mentioned that.
at any rate, if we reduce debt it's a good thing, right?
What is a terrible idea without a doubt is to be selling/dumping STEEM or SBD into the markets.
Yes, it is good to reduce debt in this situation and not good to dump (if you don't want prices going down, but on the other hand, if you dump and then prices do go down, it is good for you that you dumped).
I just wanted to make clear that thare are additional risks to doing conversions at this point since the conversion target declines along with STEEM once all SBD exceeds 10% of the total STEEM market cap.