We are told that SBD are supposed to be analogous to corporate debentures. Unfortunately, being unbacked, they are economically unsustainable.
Essentially, Steem releases two infinite-supply tokens, namely STEEM and SBD. In this scheme, SBD is supposed to track USD in this way: We measure an external feed of STEEM/USD and we adjust the release schedule of STEEM/SBD to match that.
This plainly cannot work, because the only mechanism available consists in increasing, never decreasing, the montetary base of SBD:
- SBD value goes up: release more SBD to dillute it.
- SBD value goes down: release even more SBD, in the form of interest rates (which are actually a debasement, not an interest).
I already showed a chart of SBD's instability in my previous post. But, OK, it is still in the beginning, an maybe it has not stabilized. So let us see bitBTC instead, which is a long-established very similar pegging for BTC. As you can notice, it very roughly tracks BTC price, but with huge swings and no stability at all:
Steem "backed" dollars are not backed and are not pegged to dollars. The last to cash out would be left as bagholders.