Vlog 331: Will the current outstanding SBD debt become a problem for STEEM if the price of STEEM goes lower?
life·@exyle·
0.000 HBDVlog 331: Will the current outstanding SBD debt become a problem for STEEM if the price of STEEM goes lower?
https://youtu.be/Z7EBZyWz_mo -------- As far as I understood it every SBD needs to be backed by $1 worth of STEEM. At lot of SBD's were created on the recent high STEEM price. (50% of the payout). We now have 15 million SBD's outstanding. When STEEM was $5 that meant that only 3 million STEEM was needed to back the debt. But now STEEM is $1.20 so that means that 12,5 million STEEM is needed to back the 15 million debt. It's easy to see that when STEEM goes lower in value more STEEM is needed to cover the outstanding debt. The blockchain recognises this and you can see it in the payouts: More STEEM is created and less SBD. ------  --------- I currently use SBD as a hedge against the lowering of the STEEM price. My reasoning was that when STEEM would hit 10 cent I could convert 1 SBD to 10 STEEM. But that would mean 150 million STEEM would be needed to cover the debt. That seems like a lot so I read through the white paper once more. Reading through the whitepaper there seems to be build in limitations in the blockchain to prevent my reasoning from happening. ------  ------- So the way I understood it is as follows: if SBD market cap reaches 10% of the market cap of STEEM it will automatically start to convert SBD to STEEM. Current market cap STEEM = 345 million @ $1,20 Current market cap SBD = 15 million @ $1 Currently that would happen at a STEEM price of around 52 cents, the market cap of STEEM would than be 150 million. I talk about it more in my vlog. ----- https://steemitimages.com/DQmdWG7QanG3ZEgJQ4SiLkyQ5BKtxGU7jrrnwDTqsz3r177/Logo_Side-by_side_1000.png ------ #### I am part of witness @blockbrothers. Please consider us for your witness vote if you think we deserve it [here](https://steemit.com/~witnesses): ---- https://steemitimages.com/DQmd4uuke7jSGrYPZvWBaXYtfaupBWCkSNSx4gdVrQdjVcs/witness_vote.gif ----- #### We are the creators of Steemify a notification app for your Steemit account for iOS. Get it Here: <a href="https://itunes.apple.com/app/steemify/id1290154477"><img src="https://steemitimages.com/DQmWPdFqXkrRZZ9xFnVjkfoNmYEXQRXd6FesJ1kAPFjkfmc/appstore.png"/></a> -----
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