I said sbd is usd backed... That was stupid of me! Don't repeat my mistake
@darth-cryptic said:
SBD isn't kept stable because it is secretly backed by the USD. It is a stablecoin by design whose production depends on its value (it's more complicated than that but that is what is essentially happening). If it's value starts to drop too much, less is produced and authors who get a 50/50 split start to get steem instead of SBD. The idea is to moderate production such that the value of 1 SBD is always close to $1 worth of steem. So no, SBD not going down is not a coincidence, it is by design but that design has nothing to do with USD backing.
But it didn't make sense to me so I kept insisting sbd really is usd backed. Maybe someone could make me understand. @darth-cryptic was right about everything, though! The convertion function fits in as the last piece of the puzzle. Using it through steempeak was what made me realize this.
Moderating production while allowing STEEM/SBD to get locked away for a few days during the convertion process are ways to stabilize the economy from a fiat perspective.
How popular is this? Well, if noone converted SBD, we'd only get STEEM since the cap had been reached long ago. So it's popular at least among major stakeholders.
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The way SBD works is confusing. It is backed by $1 of steem or upto 10% of steems market cap, what ever is LOWER. So if steems market cap is $100 and there are 5 SBD they are worth ~$5 (Personally I find them worth about 0.98cents and never more). Equally if market cap is $100 and there are 10SBD out there they are worth ~$1 each.
Now, the tricky part. If there are more SBD in circulation than 10% of the market cap (say 12 SBD and a $100 marketcap) They are worth 10% of the marketcap combined (so 10/12 ≈ $0.83 each).
Effectively, 1 SBD is worth a maximum of $1 and a has no minimum, so if steem is doing badly, SBD will follow suit.
Cool stats: https://steem-supply.john-at-me.net/
Although consufing, I find that very attractive. Basically it's worth buying sbd when it's reached more than 10% of the market cap, then wait.