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RE: Why is SBD well below USD?

in #steemit4 years ago (edited)

Thank you for your response.

You can still profitably buy and convert SBD into STEEM if you can buy it for less than about 64c (conversion rate at time of writing, ignoring future price and supply changes, etc.)

It was meant in the way that you will not get STEEMs worth of 1 USD for 1 SBD. You can profitably convert, but you will most likely get less than 5% more than what you would get by selling. Market principles are still functioning and if it is very profitable to convert, some people will convert making it less profitable for slower ones. So it is pointless for minnows to convert. That's what I was trying to say. But it is true that for some whales, (for example) 3% profit may be a lot.

If REAL STEEM PRICE / IMP > PRICE OF SBD, then it is profitable to convert.

This is an unintended UI bug with steemit.com and is being investigated. Some of the other UIs are working on correcting it as well.

However, it must be caused by the higher IMP price. Take this article as an example.

109$ is shown. If you multiply it by the Real Steem Price (0.258) and divide by the IMP (0.4) you will get slightly more than 70$. And that is the real price of the payout of the article... let's count the payout. 99.3*2 (author) + 64 (curators) + 5 (beneficiary - I know that there is written 2.5, but Steemworld does not show beneficiary reward in liquid tokens, but @steeveapp will get 2.5 SP + 2.5 STEEMs). The result is 267.6 STEEMs. Multiplied by 0.259 you get again 70$.

This would not be advisable at this time. The maximum ratio was put in place for a reason, which is to prevent enormous unstable dilution of STEEM as its price undergoes extreme declines (which is what we have seen). The flip side is that holders of SBD need to be aware that they too are not immune from extreme bear markets. They can count on a secure stable (at least minimum) value for day to day purposes but must also accept the risk of some losses if Steem's value crashes.

Yes, that is why I wrote about an imaginary situation when there is no SBD Debt Ratio and bigger dump happens. I do not want to increase the maximum of SBD debt ratio either. As I have already written in the article, it would only make the whole blockchain more vulnerable, because a smaller Steem's value crash would be able to dump SBD (in case when SBD Debt Ratio is near the maximum). If there is no maximum, then a bigger dump can kill the whole Steemit.

So I see a solution just in an organic way; waiting for a price increase.

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You can profitably convert, but you will most likely get less than 5% more than what you would get by selling

Sure, but that's typical at $1 as well. Market prices will flucutate but generally only with a small range of "fair value".

However, it must be caused by the higher IMP price

The code was changed some time ago to use the most recent witness update (a reasonable estimate of true market value, albeit up to an hour delayed) instead. However, this isn't working and it isn't clear why. That is being investigated.

So I see a solution just in an organic way; waiting for a price increase.

Both a STEEM price increase as well as declining SBD supply due to conversions could result in recovery. Most likely the outcome will be some combination, although as discussed above, a STEEM price increase isn't actually required. It does need to stop crashing though.

Both a STEEM price increase as well as declining SBD supply due to conversions could result in recovery. Most likely the outcome will be some combination, although as discussed above, a STEEM price increase isn't actually required. It does need to stop crashing though.

Yeah. Now I see it more clearly.

So if I am not mistaken, if I believe in a price correction, then it is probably better to hold STEEM (if the price does not stop right at the minimal IMP). If a price correction is not going to happen and the STEEM price is going to stay where it is, then the SBD will subsequently reach USD in some time. So SBD is now something like BFX coin after hack. :)

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