RE: The Value of stable SBDs to me
I am not against an upside peg. I am against implementing it via inverse conversions.
Crypto is still new and a lot of things are not know, but it is not a wonderland where we can simply wish what we want.
Stable coins need a working collateral. In the case of sbd that is the chain printing the steem via inflation. This is fine when the debt ratio is low, but creates a out of controller spiral when debt ratio is large. And are converted causing inflation. As a result steem prices fall and the debt ratio does not recover. This describes the fact that an ecosystem can never collateralised more than its market cap.
To avoid this catastrophic effect the 10% haircut was introduced. Meaning that the downward peg of the sbd is broken when debt becomes large. This case is however unlikely since sbd is only issued by the cabin when debt ratio is low. The 2018 crash so far caused and to be no longer issued, but the peg remains in place. It might however be temporarily be broken if we crash further.
The problem of private sbd creation ist that we may very easily reach 10 or more % of debt. Then only small downward fluctuations will cause the peg to broken with sbd < 1$.
This means that by trying to enforce an upside peg, we have softly broken the downwards one. The simple reason being that the colleteral is not strong enough. By sending 1$ of steem there is no way to guarantee conserving taht a 1$ value independent of the price of steem. Sending 2$ with forced settlement maybe.
If we allow free printing of sbd I think it is only a matter of time (next bear market) until sbd will be less than a $ combined with a massive loss of confidence in the steem economy.
Therefore if rather not go that way. People trust sbd to be a safe haven and not a speculative investment. It should stay that way. Instead why not create a second user issued stable coin on top of steem? Maybe this could even be done via a SMT? Have not thought about that yet
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You made some great points.
I dont think inverse conversion would be a problem if it came with a fee that is set by witnesses.
If the amount of sbd is at $1 nobody would use this feature as it would be cheaper to just buy at the market.
However if the sbd proce hoes above the fee it would push the proce down.
Comversely if steem crashes people would convert sbd and thus resuce supply which also would fix the issue.
If however thwre is no way to keep sbd at $1 it looses all of its utility and value.
At the same time if sbd demand is high there needs to be a way to convert this energy into the steem price. Incerse conversion with a fee that is burned would create that. As a result i think inverse conversion is best way to fix sbd.
Are you aware of a better way?