Analysis: Theories for why Steem Backed Dollars cost more than $1

in steemit •  3 years ago 

Earlier today SBD on Poloniex was trading at 2.5X the value of a actual US Dollar.  So in effect people were willing to pay $2.50 worth of BTC for 1 Steem Dollar (a synthetic asset).

Why?

Perhaps as according to the whitepaper the community is willing to extend more credit to the Steem system?

The primary concern of Steem feed producers is to maintain a stable one-to-one conversion between SBD and the U.S. Dollar (USD). Any time SBD is consistently trading above $1.00 USD interest payments must be stopped. In a market where 0% interest on debt still demands a premium, it is safe to say the market is willing to extend more credit than the debt the community is willing to take on. If this happens a SBD will be valued at more than $1.00 and there is little the community can do without charging negative interest rates. (pg 14, Larimer and Scott, Steem An incentivized, blockchain-based social media platform)

Or perhaps it is just people overly excited about trading Steem Backed Dollars?

What are your thoughts?



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Really interesting post. One thing I do not understand about the system is how does one shuttle the SBD from Polo or Bittrex over to the internal market? Maybe I am missing something but I see no way to deposit it.

SBD can be transferred using "Transfer" "poloniex"/"bittrex" and the memo you get from the deposit address at the exchange

the delay of transfers between exchanges and wallets led to a supply/demand imbalance.toss in trollbox fomo, mix in traders who are trading the symbol without knowing anything about it other than its chart -> overbought or oversold conditions nowhere near theoretical value. it happens

Nice! Thanks for sharing this :D

I wonder why steem dollars can be directly converted to steem, but steem cannot be directly converted to steem dollars. if so one just could convert their steem to steem dollars, sell them again for example for bitcoins and then buy with that more steem and therefore lower the steemdollar price back to one dollar and at the same time increase the steem price. so steem price would go up and steem dollar price would go back to one dollar.
also i dont understand why the conversion needs one week time? for the price feed i understand, but why the conversion itself is that slow?

The current price at poloniex is clearly due to hype, and most likely misunderstanding from buyers who don't even know what SBD is.

IMO it is idiotic and not helpful that most witnesses are still publishing 10% interest rate. We don't want steem to end up like nubits.

This happens way too often on first day trading of any new currency on Poloniex.

"most witnesses are still publishing 10% interest rate" - where do you see this info? Still a bit new to Steem.

I was wondering the same the Decrypt.. Is it valuable to hold Steem Dollars?

Will they go up in value like STEEM or Steem Power..

Here was that link I was telling you about in the Steemit chat..
https://steemit.com/new/@stealthtrader/steemit-vlog-2

Will you check it out please and let me know what you think.. Im new at the vlogging scene ;D

Market need time to find the stability, actually there a non equilibrium in the order book, probably in some days we will se it again around one dollar

I have been there when the coin was launched. So much guys in the trollbox asked about the steem dollar and that you will get 3 Steems with one steem dollar. This is so stupid. Where did they get it from ?

Great post :)

Thanks! Seems like that the price is still quiet high as well as is the volume. No one has a really good explanation beyond what is in the white paper.

it's because people don't understand sbd and how it works and i hope they won't for a while so i can profit :)

Is it related to the fact that cashing out of sbd takes 7 days and therefore it is a European option on steem on the one hand vs cash today on the other. It makes sense there would be a difference based on expected price rise in steem before "option"exercises.