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RE: Addressing the Steem Dollar Situation
I'm still trying to get my head around how the system here works so pardon my ignorance. But can someone please explain to me how the value of Steem Dollar went so high despite the peg. Is it pure speculation or is something else at play here?
The peg is a minimum price peg maintained by interest rates, not a hard peg of $1. So the bottom is supposed to be constrained, but there is no way built in to control upswings.
That explains things. Thanks professor :)
In my opinion (although I have no proof) purely people speculating and having no idea what they are buying. Theres not much of a reason to buy a peg and think it will go up in value, the purpose is to make sure it is $1 at all times.
See prof-pieters's response down below. It seems the peg is just a floor on the value of Steem Dollar but there's no ceiling and the value is allowed to go up according to demand.