So with the fall of the last few hours, we're now on the verge of seeing the SBD peg break when the total supply of SBD becomes more than 10% of the market cap. When that happens the system will (or should) stop trying to hold SBD at $1 US and start holding the value of SBD at 10% of the Steem market cap.

That won't actually happen until the 3.5-day moving average price gets to that point, which will be at least three days from now, and still might not ever happen if Steem starts crawling back up. And we're also seeing some nice rises in SBD-to-Steem conversions, which could lower the Steem price necessary for the peg break. Over the last few days the magic number has fallen from 49c Steem to 46c Steem, and could be falling farther as many of us holding SBD convert them, buy more, and repeat.

It's hard to predict what will happen to the market price of SBD if the peg breaks. As Steem hit that last step down to 50c, the price of SBD fell substantially, which suggests we might see a panic drop from people who were expecting it to travel back to $1. One the other hand we may also see a rise (at least relative to Steem) from speculation that it will make its way back to $1 eventually. As long as Steem has some positive value, that should happen in time, as we'll stop printing SBD until it can be re-pegged at $1, but conversions will still be available.

We could even see both, with a quick price drop and then a gradual rise. It doesn't seem like the buy SBD -> convert -> repeat cycle should be able to continue indefinitely on the backs of people selling SBD below its nominal value, but I thought that two months ago.

The important thing to remember is that SBD doesn't lose any value at the moment the peg breaks; it just stops being pegged to USD at that value. It starts being pegged to Steem instead, with the value being based on how many SBD there are vs. how many Steem. As SBD gets converted the value of each remaining SBD, denominated in Steem, will increase. Whether that's an increase when denominated in anything else, who knows. We could have a ways down to go yet.