A lot of users are converting their SBD to ($1 worth of) STEEM over a period of 3,5 days.
With SBD trading at 85 cents. It's a steal to buy it at 85 cents from the markets and convert it to $1 worth of STEEM.
There are good things and bad things about this.
A good thing is that finally the amount of SBD's (or outstanding debt) is going down because in this process the SBD's are destroyed.
The downside is that right now we are at an optimum for conversion. Which means you get the max amount of STEEM for your SBD adding a lot of STEEM to the total supply.
This explains why the amount of liquid STEEM is currently growing even though the powerups have been increasing a lot in the last couple of days.
The conversion is not without risk though it only works if things stay the same for a while.
Here's why:
An SBD is always worth a dollar worth of STEEM through conversion as long as the market cap of SBD is less than 10% of the market cap of STEEM.
Right now we are right on the edge (9%).
Markcap SBD = $11,661,954 USD
Marketcap STEEM = $126,392,004 USD.
In conclusion:
If STEEM drops a little lower (or SBD goes up) we go over the threshold of 10%.
When that happens the blockchain will give you less than a $1 worth of STEEM for the conversion.
It's very well possible that you come out at a loss (vs using the internal market right now).
If STEEM goes higher you will get $1 worth of STEEM but you will get less STEEM because the price went up.
If SBD stays close to the 10% marketcap of STEEM in the next 3,5 days you will have an optimum conversion!
Good luck converting if you choose to!
Hopefully you are aware of all the risks and benefits now.
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I knew there had to be some downside of using the convert feature, thank you for the info!
Do you have any inside information on why the convert command is hidden from Steemit Inc webpage? Or is that relative to the possibility of coming out at a loss vs the internal market?
My next purchase of crypto is just 14 hrs away common hold out just a little longer so I can destroy that SBD 🔥
Posted using Partiko iOS
The option to convert SBD was removed from steemit.com when the SBD was worth a lot more than $1 some time ago. Back then it was a bad idea to convert SBD, hence it was better to hide the option.
Ahhhh thanks dude, I knew their had to be a logical explanation. I haven’t been here quite a year yet so still catching up on many of the finer details.
Posted using Partiko iOS
I wonder how many people who bought SBD knew about this little detail? Kind of important to know but nobody talks about it. With this in mind expanding the SBD print limit to 9% of the market cap now seems to have been a fairly wreckless move. We will literally still be printing SBD right until the point where we hit a mode of partial-default on SBD.
I wrote about these things before:
https://steemit.com/life/@exyle/vlog-331-will-the-current-outstanding-sbd-debt-become-a-problem-for-steem-when-the-price-of-steem-goes-lower
and
https://steemit.com/steem/@exyle/a-reversed-conversion-to-peg-the-sbd-to-usd1-is-a-bad-idea
It's also in the white paper. Although sometimes it's a bit of a cryptic read.
I made a bit of a longer post on this topic two days ago. While it is clearly not risk-free, conversion might still be profitable even if the peg breaks.
https://steemit.com/steemit/@rondras/why-i-am-converting-sbd-into-steem-now
Great info in this :-)
I guess way too many people don't know about it indeed...
Posted using Partiko iOS
excellent timely commentary, thank you @exyle !
You are welcome!
I converted some excess SBD, hope it gets back to me in time before be haircut hehe
Posted using Partiko Android
You inspired me! Not quite part of the big boys yet but I just purchased my biggest amount of steem might even give steem monsters a go have no excuses really as I'm off work :)
I will not do it but I we might reach the 10%.
Posted using Partiko Android
You are smart 🍻 to good info
Posted using Partiko iOS
Wow take risk sometime it changed the whole situation
.
Yup, I agreed with most of the points that you mentioned. People are converting sbd to Steem in an over limited amount which is not the good thing. If this happened continuously it will affect sbd very badly. Steem price runs according to the btc price so, this thing will not affect Steem but for me Sbd is more important than steem. So, it should get stopped as early as possible
With some big rewards comes big risks along we will see its result in future hopefully not worse than this
In fact I had some SBD and decided to double it, converting to STEEM.
Right now I feel weird with this prices, because I can easily triple the size of my account with just a small amount of money...
you got my witness votes for blockbros, happy turkey day.. or whatever u do in holland, haha (-: ty
The moves in price were so abrupt that this wasn’t on my radar as I pulled the trigger. I had a great conversion last week before it was so close so I actually bought SBD this week to convert as an experiment. I did the first day the debt ratio exceeded 10% so still waiting for it to go through to see if the discount I bought SBD at is enough to offset whatever the haircut will be as I am not sure how it works. Ultimately, there will be more Steem Power for me so net positive.
Great info in this :-)
I guess way too many people don't know about it indeed...
Posted using Partiko iOS
Where is the convert option? I think it's not there anymore, how you convert it then?
https://steemit.com/sbd/@themarkymark/good-time-to-trade-sbd-for-steem
Great, didn't know about this. I appreciate.
At Www.steemworld.org there can you also convert. Now i know also what it does I did it with blocktrades.
Thank you for this explanation! I've been reading many post of people who went crazy with the value of their accounts and believe that it is best to take all that money, others believe that the best thing is to wait for the situation to change but I really do not know what to do, so what would you do?
I converted for the first time last week and I was very lucky to get it right at the perfect spot. If I had waited just a little longer I don't think I would have gotten the return that I did. I was able to get over 20 STEEM for only 10 SBD. I don't think I will be risking it again any time soon though :)