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RE: CONVERT TO STEEM FEATURE - aka "The Haircut"

in #steempeak6 years ago

If the SBD experiences downward market pressure on external exchanges pushes the pice down (to say 95 cents) but the SBD/STEEM debt ratio is still less than 10% the conversion feature will make you some arbitrage. This is what keeps SBD In the peg. In the recent run down this was quite profitable. Once the steem price collapsed such that the 10% debt ratio was hit the conversion rates were lowered and some people lost money converting. It is important however that this function is available as it keeps the SBD supply lower though conversions and limits the chance of future debt hangovers.

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