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RE: The return of SBD, or there is no magic money.
So what is the problem with convert ? AFAICS, as long as we can liquidate 1 SBD for $1 worth of STEEM, SBD low pegging is protected by STEEM, that is, SBD can't really crash hard, it can pull STEEM way down though through mass liquidation.
The bigger question though IMHO is: are we safe/saver now from the insane pumps we have seen this year. Stability must go both ways if a services ecconomy is to ever found solid grounding in SBD. A pump to $10,- is just as deadly as a crash to $0.10 would be. So personaly I am a bit disapointed that they didn't just implement a reverse_convert that for example would allow us to liquidate $ 1.50 worth of STEEM for 1 SBD. Well, maybe something they could consider for HF21 ;-)
I think an inverse convert is a great tool when the debt ratio is low, but allowing inverse conversions when it is high is just asking for trouble.
I disagree that a 10$ SBD is as bad as a 0.1$ SBD. The reason being the marketing of SBD. When SBD is 10$ everyone will know that this is a risky investment. It is marketed as roughly 1$ of steem, clearly something has become strange. But people believe that the lower peg will hold and with HF20 that lower peg is in real danger. When people buy SBD at 1$, the trust that it will still be (at least) 1$ in a month. By secretly changing the way SBD works we are betraying that trust of the people.
A peg always needs a collateral, one party that will loose and one party that will win. In Steem one party is set up to be the chain and we dont want the chain to loose big time, so we introduce a haircut.
But when the debt ratio ever reaches 10%, the peg is not a little broken, it is completely gone! Lets say as above 100$ market cap for steem and 10SBD. If steem crashes to 50$ then 1 SBD is only 0.5$ according to the haircut rule. So SBD can crash as hard as steem. At that point the peg only exists in our fantasy and SBD could go to any value it likes.
The peg only works as long as debt ratio is significantly away from the 10% haircut. By printing SBD up to 10% the peg is in serious danger.
But there are alternatives. For example bitUSD which is privately collateralised. That system could be ported to steem and implemented for SBD. Now we have 2-way conversions at rates found by the market and the peg remains safe as long as there is no complete collapse of steem. Also if people use this SBD that will support the steem prices because steem is looked up as a collateral creating more scarcity.