The reason that it is pegged is the trust that the blockchain will produce "approximately 1 USD worth of STEEM" when users convert SBD to STEEM via the conversion.
Because of fluctuations in the price of STEEM though, users who convert often receive more or less STEEM than "1 USD worth". Because of this, witnesses often use a small 'price discount' to artificially lower the price of STEEM internal to the Steem blockchain, so that the conversions result in a little extra STEEM. With the price discount in place, it helps keep SBD closer to the $1 peg.
Witnesses also influence the peg by setting the SBD interest rate, to encourage users to buy and hold SBD (to gain interest).
Based on all the activity and parameters (set by the witnesses), the market decides what SBD is worth. It is the responsibility of the witnesses to adjust the parameters they have control over in order to influence the market conditions so that SBD does peg as close to possible 1:1 with USD.
The reason that it is pegged is the trust that the blockchain will produce "approximately 1 USD worth of STEEM" when users convert SBD to STEEM via the conversion.
Because of fluctuations in the price of STEEM though, users who convert often receive more or less STEEM than "1 USD worth". Because of this, witnesses often use a small 'price discount' to artificially lower the price of STEEM internal to the Steem blockchain, so that the conversions result in a little extra STEEM. With the price discount in place, it helps keep SBD closer to the $1 peg.
Witnesses also influence the peg by setting the SBD interest rate, to encourage users to buy and hold SBD (to gain interest).
Based on all the activity and parameters (set by the witnesses), the market decides what SBD is worth. It is the responsibility of the witnesses to adjust the parameters they have control over in order to influence the market conditions so that SBD does peg as close to possible 1:1 with USD.
Thanks for putting things into perspective. Following for more insights!