You are viewing a single comment's thread from:
RE: Fairer Price Calculation
In the comment thread of this post, some users mention that with sbd conversion inflation rises. I don't understand how they come to that. Maybe they mean, with each sbd conversion sbd is burned and extra steem is being printed. That's in my opinion not inflation, but dilution.
Inflation is a percentage of the Virtual Supply including steem and sbd. This inflation is fluctuating as sbd is being printed or burned but is in my opinion negligible.
After all who is going to pay down excess sbd debt? This designed way is the least of all evils. We are all in this together.
Maybe @smooth could acknowledge this inflation thing.
Your comments on this thread are correct including the part about the peg working to restore itself even if the STEEM price doesn't go up. @rycharde is incorrect, it does not take external action to restore the peg, only the passage of time (though perhaps a lot of time) and STEEM not continually declining to zero.
As far as the inflation or dilution, that happens when STEEM is created to fill the reward pool. Then it goes from the reward pool to payout, possibly being converted into SBD (which moves it, likely temporarily, to virtual supply as you stated). Conversion of SBD then moves it back to current supply.
People looking at conversions as inflation or dilution are focusing on the proximate cause but not the root cause (paying rewards).