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RE: How to "fix" the SBD peg

in #steemlast year

SBD doesn't have any significance at all. If people want a stablecoin, cool, whatever, but it has absolutely no relationship with how valuable STEEM is. It simply does not matter.

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Actually it is significant because SBD can be converted to steem and that has the potential to increase the supply of steem which under bear market conditions exacerbates the sell pressure and ultimately the value of steem. Under a bull market it works the other way.

Yes but that is why when the price of STEEM is low people stop being paid out in SBD, resulting in no issue. Additionally, there are penalties put on SBD conversions to STEEM when the price of SBD is much higher than a dollar or much lower.

The problem is that with the last hardfork the blockchain keeps printing SBD via the SPS. Even if there are penalties people will do conversion if there are arbitrage opportunties. I did it myself last year and so did alot of people resulting in a ton of steem being issued that way and ultimately a portion of it finding it's way to the market adding selling pressure to the price.