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RE: STEEM backed Dollar (SBD) is back to one USD. Is it time to apply reverse peg to make SBD stable for ever?
The conversion tool wasn't meant to be the way to peg SBD to $1. The main ways of doing this are the Bias and APR by manipulating supply. The Bias alters the rewards ratio given to the users who choose 50/50, either increasing or decrease the influx of new SBD. The APR gives an interest payment to people who hold SBD, encouraging people to hold instead of sell, decrease the supply of SBD on the markets. Also, giving users the option to get 100% SP as a reward would also decrease the supply of new SBD if it falls below $1.
When SBD drops below one USD, bias and APR manipulation works along with choosing 100% SP reward. However, keeping the upper cap is the hurdle since there is no such mechanism right now. That's why reverse-peg comes in. Moreover, increased supply of SBD has low effect on price, since high speculation can overcome it. But STEEM blockchain has a mechanism when total SBD supply crosses 10% of total STEEM supply's, SBD production will stop. At some stage, with very high supply of SBD (20% debt), SBD can only be converted to 0.5 USD equivalent of STEEM.
https://steemit.com/steem/@timcliff/re-bacchist-re-timcliff-re-bacchist-re-timcliff-i-submitted-my-first-hardfork-pull-request-to-the-steem-blockchain-updates-to-the-sbd-print-rate-20180528t211227510z
However, it would be interesting to apply a negative APR when SBD trades higher than one USD.