STEEM vs. SBD
SBD or STEEM dollars are pegged to the US dollar or USD. This means that each SBD is treated by the system like 1 USD. When you choose 50/50, 50% of the SBD payout will be treated like USD and will convert to STEEM based on the price feed of the witness that picks up your transaction, and will then power up into your account. The other 50% will be paid in SBD or liquid dollars which can be traded either in the free market or converted through the platform with 1 SBD = 1 USD rate.
100% Power Up
If you choose the "100% Power Up" option, 100% of the SBD payout will be powered up and each SBD will be treated like 1 USD. Currently, the price of SBD in the free market is about 80 cents which means it's 20% undervalued as opposed to how much it's valued by the platform itself.
WHAT CAN BE DONE TO RESTORE THE PEG?
What we can do to not only take advantage of this situation, but also help restore the peg, is to choose the "100% Power Up" option when we post and choose the built-in convert option in the system, to convert our SBD into STEEM rather than buying it directly in the free market(including our own internal market).
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I think if people were to hedge some of their portfolio over to sbd, it would drive the price back up. In the end, it will recover anyway because that's what it's meant for. I honestly thing sbd is a better hedge than usdt. Although I've read trading on the internal market has higher fees than the free market. Do you have xperience with it?
Hell ya on 100% power up
This is completely incorrect SBD is not a 1 dollar peg. It's a peg that says you can trade this SBD for $1 worth of steem.
I'm sorry. I don't think you know what you're talking about. The system treats each SBD like 1 USD. If you use the convert option for example, no matter what the price of SBD is in the free market, it will treat each SBD like 1 USD.
The steem system doesn't treat steemdollars like 1 USD. See below.
Another Updated Source
You just contradicted yourself and confirmed what I said. :]
This was a very helpful post for me. Thanks! I resteemed it :)
Thanks Kate! :]
I can see your good intentions behind it but just wonder how many would actually do that since one of the deadly sins of humans is greed. Will resteem it to get more to follow.
I'm not sure why they wouldn't do that because they will lose money if they don't. The alternative is to sell your SBD for 20% less in the free market!
I thought maybe most people will panic and start selling and many would just buy it cheaply off the market.
There's nothing to panic when SBD drops below 1 USD because it should quickly recover since there are alternative ways of converting it to STEEM at the 1 USD rate such as the 100% Power Up option for new SBDs and the internal CONVERT option for existing SBDs which takes 3.5 days.
Thank for post..
Thanks for breaking this down...
I feel better now :)
I noticed how sbd has dropped in the past few days and I' ve been meaning to post @ 100% power up. I just did on my latest one today...
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Wait.. so let me get it straight. One of the reasons of SBD is losing its value is partly because it is having too much SBD floating around; so to keep the value up there must not have too much supply in the market, and by that you are suggesting to power up to 100% so that more Steem Power is produced and less SBD produced?
So if that is the case the value losing weight just shifted from SBD to Stem Power, is it not?
That doesn't look like a long term solution, because from my observation there are as still a lot of "counterfeit money printing" (as I like to term it) existing in Steemit. People are spamming posts with contents not belonged to them and using whale services to "boost" their values.
I see it as one of the root cause that SBD value is dropping like stone; besides there may be some who are frantically converting Steem / Steem Dollars to BTC (for storage).
That, would be my take.