In theory SBD is supposed to stay at $1, while STEEM moves according to supply and demand. In practice SBD is not perfectly stable at $1 and is susceptible to these sorts of pumps, only returning to $1 after some delay.
We have internal market makers who are assigned the task of providing liquidity and meeting demand when necessary, correct? Or is that something the witnesses are responsible for? Or is it a combination of the two? What are the mechanisms to keep SBD "pegged"? Would be a great article. 😉
SBD is what one might call 'half-pegged'. That is, pegged from falling much below $1 but not particularly from rising about $1. If it falls below $1, then market makers (or anyone) can profitably buy up SBD, and convert it into STEEM, both raising the price of SBD and reducing its supply. However, if it rises above $1 then the only mechanism to get more SBD into circulation and satisfy that demand is to wait for more posting rewards. There are both advantages and disadvantages to this system. A proposal was made by @timcliff to allow conversions in the opposite direction which would make it more of a real-time two-way peg.
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Looks like they began trading on the Korean Exchanges today. I made a post about it:
https://steemit.com/steem/@freeforever/breaking-news-steem-and-steem-based-dollar-is-skyrocketing-steem-sbd
so China and Korea pump coins based on Graphene ;)
is Xhina doing investment secretly? Becasue they banned many ICO fund raising.
If the money is already in crypto...
on which exchange you trading
I try to mainly use COSS but I’m invested in it.
Awesome! Gonna read your post now. Thanks!
Anyone know why the price between SBD & Steem are so different?
I'm guessing it has something to do with the supply.
In theory SBD is supposed to stay at $1, while STEEM moves according to supply and demand. In practice SBD is not perfectly stable at $1 and is susceptible to these sorts of pumps, only returning to $1 after some delay.
We have internal market makers who are assigned the task of providing liquidity and meeting demand when necessary, correct? Or is that something the witnesses are responsible for? Or is it a combination of the two? What are the mechanisms to keep SBD "pegged"? Would be a great article. 😉
SBD is what one might call 'half-pegged'. That is, pegged from falling much below $1 but not particularly from rising about $1. If it falls below $1, then market makers (or anyone) can profitably buy up SBD, and convert it into STEEM, both raising the price of SBD and reducing its supply. However, if it rises above $1 then the only mechanism to get more SBD into circulation and satisfy that demand is to wait for more posting rewards. There are both advantages and disadvantages to this system. A proposal was made by @timcliff to allow conversions in the opposite direction which would make it more of a real-time two-way peg.
Thanks so much for helping me to better understand SBD. Very interesting. I think I kind of like it as it is.
SBD can be used differently right?
Supply is the thing but demand also plays a role
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To the readers of the post: Short links are provided by url shortening services. The short links they provide can be useful in some cases. Generally their use is benign. But as with all useful tools there are dangers. Short links can be used to hide all sorts of things. Quite frequently they are used to hide referral links for instance. While not dangerous this can be deceptive. They can also be used to hide dangerous links such as links to phishing sites, sites loaded with malware, scam sites, etc. You should always be extremely cautious before clicking on one. If you don't know and trust the poster don't click. Even if you do you should still be cautious and wary of any site you are sent to. It's always better to visit the site directly and not through a short link.
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To the author of the post: While short links may be useful on some sites they are not needed on steemit. You can use markdown to format your links such as this link to steemit. It's as simple as
[steemit](https://steemit.com)Unlike short links this allows the reader to see where they are going by simply hovering over the link before they click on it.