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RE: STEEM DOLLAR Will Fall To $1 USD : Here’s Why

in #steem7 years ago

The issue is not securing the value, it is providing enough supply quickly enough that it does not de-peg to the upside, as has happened twice now. Yield will not help, it only makes SBD even more valuable to hold. What is needed is more supply, exactly what this post explains is happening, but it does not happen in a manner that responds dynamically to demand, so can easily fail (as it has).

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I thought this way too when this first happened but now I'm skeptical that it can ever hold a peg. If it ever goes below $1 people will buy it as free money. If it even is at $1 people will buy it up as free money. How will it ever get below $2?

It will (probably) get below $2 because at $2 (or even in principle at $1.01) supply will keep being produced essentially without bound as the graphs in this post illustrate, until there is just no more incremental demand to keep buying more of of it, and then the price will fall.

Look at the price chart for last year. Just as it has proven that it doesn't reliably hold a peg, it is also proven that it is possible to return to $1 after being too high (once supply with its slow-but-relentless climb catches up).

It all sort of works, but not consistently.