Very helpful response! Unfortunately I somehow missed your reply in my reply list :-(
I just happened on your post again after you up voted my recent post and got lucky to see what you said. Is it true that SP fluctuates with the value of Steem, but SBD doesn't? If so, then I think I'm seeing how the SP getting liquidated to cash out isn't necessarily problematic for SBD in the way I thought it was.
Also, going back to the post you just up voted for me about Business.com promoting Steemit (here is the post again if you need it (https://steemit.com/steemit/@nathanbrown/business-com-promotes-steemit-com-encouraging-businesses-to-join-as-early-adopters-to-cash-in-on-the-new-blockchain-based-social), do you know any other whales or dolphins that would be interested in voting on it? Getting them to vote on it will certainly improve your curation rewards.
Also, I'm curious to know how you got all your SP if you are willing to share.
The amount of SP is not related to the price of Steem. The value of that SP is though, as SP is simply vested(non-tradeable) Steem.
SBD is always worth aprox. $1 worth of Steem regardless of the price of Steem.
For simplicity, let's assuming that steem isn't appreciating in value. Under these conditions steem inflates primarily through interest paid on SP, which means the real value for SP holders doens't change since they are all having their SP inflated at a similar rate. I get this part.
The part I don't understand is this...
Doesn't the steem that is used to back SBD need to be inflated at a similar rate to keep SBD from losing value?
The steem backing SBD doesn't exist yet. SBD is a contract that guarantees enough Steem to equal 1 dollars worth of steem. When\If the contract is executed the steem necessary to make this happen are freshly created. So with a rising price the steem obligation to SBD is deflating; with a falling price it's inflating. Check pages 12-13 of the whitepaper for more info on "Sustainable Debt to Ownership Ratios"