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RE: The Coming STEEM DOLLAR Purge : Why it Needs to Happen and How
At the end of the day Blockchain technology is just a "Public Ledger" so when you convert from one to the other you are just creating one and destroying the other by changing numbers on the ledger. It's part of the code. Just like you create STEEM when you mine a block, you create STEEM (and destroy SBD) when you convert SBD to STEEM using the code.
Thanks.
However, the question was how the automated SBD/STEEM creation/destruction are kept on par with fixed yearly inflation rate. If SBD/STEEM are created for conversion purpose for supply and demand, it can a case where abundance of STEEM if SBD's demand remains high.
However, STEEM supply is kept to a fixed rate (i.e. with 0.5% decreasing rate per year, currently at 9%). Is that emission/creation or burn/destruction of both STEEM and SBD due to conversion will be on per with inflation rate.
What happens to fixed inflation process if more STEEM/SBD are created on conversion process? Or, effects (e.g. slight increase or decrease) are negligible to fixed rate of inflation.
Currently, more liquid STEEM are created since SBD (i.e. 1USD pegged SBD) ratio of STEEM market supply crossed 2.5%, at 5% SBD production will be stopped.
What understand total reward pool (both SBD and STEEM) is generated on the base of inflation rate.