RE: Is SBD a good investment now?
The time factor here is designed for a certain reason that I won't get into details here. But obviously it is the factor behind the loose under-pegging
No, the primary reason for the current underpegging is the low market cap of Steem relative to the outstanding supply of SBD. The latter being capped at 10% of the former. When the SBD supply is >10%, the peg target is temporarily reduced below $1 to bring the ratio back to 10%.
So for the peg target to get back to $1, the market cap of STEEM has to rise and/or the supply of SBD has to fall (or both).
In practice, the SBD supply is steadily (if slowly) falling. This means that SBD will eventually repeg at $1 assuming STEEM doesn't fall to zero. That may be soon or not so soon.
Once the peg target gets back the $1 then there will still be some deviations due to the time factor you state, but the track record is pretty good, and these deviations will likely be pretty small. Looking at a long term price chart, apart from situations when it has gone well above $1 (another set of issues there), as well as the current situation where the market cap of STEEM is too small, we mostly see a flat line about about $1.
Good to see your input here, master of SBD, smooth! ^_^
What you said indeed sounds convincing, but I still have some questions:
key word: the peg target. I always thought that SBD pegging is maintained through market mechanism by providing Steem/SBD conversion, so I wonder what this term refers to? Is there such a parameter inside the blockchain?
Furthermore, if this is the case, do you have roughly a formula for calculating the ideal/desirable SBD price? I imagine that would be something like SBD price = 10% x (Steem Marketcap) / SBD total supply, and from the data in coinmarketcap, SBD price should be around $0.96 but it's 0.85 now... I am confused...
Last, can you provide me a link that explains the past SBD overpegging the best? So far, I am still looking for a good answer to that. Thanks! ^^
The peg target is how much you get when converting 1 SBD. Normally you get about $1 worth of STEEM (delivered 3.5 days later as you noted in the post). However, you currently you get about 85c worth of STEEM. That's because, if every SBD is viewed as worth 85c, that brings us to the enforced 10% cap.
It is in the blockchain code and also discussed in the white paper.
MIN(1,STEEM supply * STEEM price / 9 / SBD supply)
Be cautious about coinmarketcap, especially their overall price. They can sometimes include some nonsense prices from questionable exchanges, including as their assumed Bitcoin price which affects all the other prices (since STEEM and SBD trade against BTC). Look to only prices from reliable exchanges. That's mostly bittrex and binance (for SBD and STEEM) and coinbase/gdax, gemini, bitstamp (for BTC).
I'm not sure but if you want to look for some posts and discussion on the topic I would suggest blogs from @timcliff and @buggedout
Damn, they promise $1 for 1 SBD and now something like that.
No, it doesn't "promise $1". It promises $1 only when the STEEM price/market cap is high enough. This is written up in the white paper.
okay... wow, seems I need to go back and check the WP.
thanks! it's nice to start my day (in taipei) with something I didn't know. :)