It's fine. For now we can give it some time to correct itself naturally, now that there has been a constant supply for a bit. If it still trades high, a mechanism like the one @timcliff made a post about could be an option.
For the reasons why it should be kept, I left a handful of comments in this post: https://steemit.com/ned/@krnel/ned-on-sbd-does-the-community-want-to-continue-to-be-paid-out-in-steem-dollars
I've noticed that it's movements are kinda correlated with bitcoin's movements. If it keeps this correlation, a very large and fast drop in bitcoin's value could mean a fast drop in sdb value, which could damage the peg, and harmfully affect the ecosystem.
Of course, this analysis could be inaccurate, as steem's price and the entire crypto currency market's market cap are also correlated in the same way, so it might be connected to other price movements. But it still raises the same fear, could a sharp drop in another currency cause a sharp drop in SBD value, damaging the peg, and thus the site as a whole?
What could be done to mitigate such connections in the future?
Are you talking in terms of USD value or BTC value? Its price in BTC is meant to inversely correlate with BTC's USD value.
The SBD is a token that can be converted (with a 3.5 day delay) to roughly $1 worth of STEEM. It is this guarantee floor that keeps SBD pegged from below. The theory of pegging from above comes from emission of SBD. If over time it's observed that the pegging pressure from above is inadequate, then we can address that with a limited STEEM->SBD conversion option.
But for now, because of the botched reward pool migration in HF17/18 happening concurrently with irregular market conditions, the recent experience with SBD price isn't enough to say "let's kill SBD." We're on track to it normalizing.
I meant it's movements, with respect to the dollar, correlate proportionally with bitcoin's movements with respect to the dollar. As bitcoin rose, SBD lost it's peg and rose above the dollar. Then, as bitcoin traced back, SBD started falling back towards it's expected value.
I guess the peg from below is a lot stronger than the peg from above, that does make me feel better about it.
I doesn't correct itself naturally because the pegging mechanism doesn't work. It lacks a proper feedback loop to print more SBD according to the demand. SBD demand doesn't have any direct feedback mechanism to encourage more supply.
Total SBD amount is directly linked to the price of steem. To fix the mechanism, it should be directly linked to the supply and demand of SBD. That's the way to achieve price stability.
A major factor of why SBDs ended up losing their peg upwards is because the supply was severely restricted for over a month thanks to the poorly implemented transition of the reward pool. That context should not be ignored in the recent price history of the SBD. Now that supply has returned, we are seeing the value of SBD come down closer and closer to where it's meant to be. Have patience :)
Even if we take that into account, the feedback mechanism for adjusting SBD supply is still far from perfect.
If you think there could be a better way to address SBD supply, why jump straight to the conclusion that SBD has got to go?
I gave also two other reasons: nobody is using it in commerce and paying rewards denominated in dollars distorts users perception of their success on the platform.
There are many reasons why this has not happened on a larger scale yet, but just because there isn't a large STEEM/SBD economy right now isn't a reason to scrap the SBD token.
As I wrote in my post about this - we shouldn't be reactionary to short-term issues. We need to think long-term.
Also - there isn't much commerce...yet. I'll have an announcement this week that will hopefully start moving things in the right direction.
So how the long-term thinking is showing right now? I see only dreaming. There is no real vision, no actionable steps towards it.
Long-term thinking means that there is a clear goal and people are working to achieve it.
To the first of those reasons, give it some time. Things happen fast in this blockchain world and it takes time for things outside of it to keep up. Patience is key.
The second issue does exist to some extent but it's not a huge problem and does in no way justify removal of SBD in my opinion. The reasons to keep SBD over this are far and away heavier on the scales.
Patience would be great if there were actually something done. But I don't see anything happening. Nobody is working on anything that would enable/encourage SBD usage in commerce.
I consider it to be wishful thinking to dream about commercial use until I can see some real world results.
And another point that I missed in the OP: To be widely used currency, SBD needs a privacy feature. Very few people are willing to use a currency when all transfers can be seen by anybody. Nobody is working on that, either.
If you're still looking to support commerce, here's something you can get behind. It's what I alluded to a few days ago.
https://steemit.com/steem/@bloggingforbeans/blogging-for-beans-a-coffee-venture
Right on, @timcliff's idea is perfect IMO. It's an elegant solution that doesn't require any huge changes.