Basically, the need to rise the debt-to-ownership ratio from 5% to 9% was due to the low supply of SBD. If you have only 20-30 mil USD market cap for an asset, that is very easy to be gamed in crypto (or it was, when BTC was at $20,000). So they want it to double it. As for the very narrow threshold, that is to react faster to supply variations. Before that, the threshold was between 3% and 5% if I remember well.
Why have the metric be the debt-to-ownership ratio? If the goal of SBD is to, essentially, be a stable coin with the value of $1 then why not peg printing to the market price of SBD?
SBD is not hard-pegged, meaning there isn't a fiat supply in cold storage mirroring the supply of circulating SBD. So there aren't as many physical USD somewhere in a Steemit controlled bank account as they are SBD on the market.
It's a soft-pegged token, which translates as 1 SBD = 1 USD worth of Steem, which makes SBD a debt instrument. So if the debt of that instrument is too high, the system may engage in a spiral down to complete collapse. That's why the debt-to-ownership is a trigger for printing / not printing more SBD.
That's exactly what happens, only the trigger is not the price in fiat, namely more or less than $1, but the 9% debt-to-ownership ratio, because that's to what SBD is "pegged to".
The ratio ties the SBD to Steem in a way. Ratio = SBD / Dollar Value of Steem. A doubling of the value of Steem would allow a doubling of the supply of SBD. That could happen today and put downward pressure on the value of SBD, despite it already being below $1. Is my understanding correct?
Basically, the need to rise the debt-to-ownership ratio from 5% to 9% was due to the low supply of SBD. If you have only 20-30 mil USD market cap for an asset, that is very easy to be gamed in crypto (or it was, when BTC was at $20,000). So they want it to double it. As for the very narrow threshold, that is to react faster to supply variations. Before that, the threshold was between 3% and 5% if I remember well.
Why have the metric be the debt-to-ownership ratio? If the goal of SBD is to, essentially, be a stable coin with the value of $1 then why not peg printing to the market price of SBD?
SBD is not hard-pegged, meaning there isn't a fiat supply in cold storage mirroring the supply of circulating SBD. So there aren't as many physical USD somewhere in a Steemit controlled bank account as they are SBD on the market.
It's a soft-pegged token, which translates as 1 SBD = 1 USD worth of Steem, which makes SBD a debt instrument. So if the debt of that instrument is too high, the system may engage in a spiral down to complete collapse. That's why the debt-to-ownership is a trigger for printing / not printing more SBD.
Yes. But why not simply print less SBD when the market price falls below $1 and more when it rises above?
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That's exactly what happens, only the trigger is not the price in fiat, namely more or less than $1, but the 9% debt-to-ownership ratio, because that's to what SBD is "pegged to".
Doesn't the dollar value of that, by definition, fluctuate based on the dollar value of Steem?
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Not necessarily. SBD is traded as a separate asset, so it's subject to demand and supply rules.
The ratio ties the SBD to Steem in a way. Ratio = SBD / Dollar Value of Steem. A doubling of the value of Steem would allow a doubling of the supply of SBD. That could happen today and put downward pressure on the value of SBD, despite it already being below $1. Is my understanding correct?
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