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     6 years ago (edited)

    Yes, there are currently three ways to convert between SBD and Steem:

    • Use some external market place having both SBD and Steem (but you wouldn't want to do that)
    • Use the internal market place for buying or selling steem towards SBD. This way you get it converted immediately.
    • Use the "convert" function, that will actually burn your SBD tokens, and new Steem tokens will be printed for you. You should get steem worth approx 1 USD for each SBD converted - but the conversion period is set to half a week, to prevent too much speculation. I'm not sure where the Steem value is derived from, neither if it's the steem rate at the point you order the conversion or if it's the steem rate at the point when you get the steem that applies. One exception: if the "debt rate" is too bad (typically because the rate of Steem has dropped a lot), there is a haircut rule saying that you may get less than 1 USD worth of steem back. I think we're still far from that haircut limit (?)

    The idea behind this is to keep the SBD roughly pegged to the USD. If the SBD would fall below 1 USD in value, people would buy up SBD on the internal market (hence pushing up the price of SBD), and convert it to steem, possibly using the newly printed steem to buy up even more SBD ... and hence keeping the value of the SBD from falling significantly below 1 USD.

    The conversion works only one way, hence protecting the SBD from falling too much. There is no protection against the SBD growing beyond 1 USD in value - and we saw it being worth quite much more than 1 USD just some months ago! That's the reason why the "convert"-button was removed from steemit.com, people was throwing money to the wind by using the convert-functionality. Now that the market price is below or on par with 1 USD, I think the functionality should be restored.

    (Is it kosher to give myself an upvote on this one?)

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