RE: STEEM DOLLAR Will Fall To $1 USD : Here’s Why

[eonwarped]

You raise a good point, but the problem with this line of thinking is that the demand needs to keep up with supply. Right now we are printing steem at 5 times the rate that we did before (proportional to STEEM feed price). I really don't think we've seen the effects of this just yet, as this is a recent phenomenon.

Even if we were to do nothing, you need to keep this demand increasing, no? Where do we expect this demand to keep coming from? The population is finite, but SBD supply grows without anything else changing. The only way demand has a chance is if STEEM price goes back down, which I admit is also a possibility.

Comments

[dana-edwards]

I agree that for now it doesn't look like it will hold. I just don't know the long term value of SBD. It could be worth much more than $1 but I don't know exactly what. It depends on how SBD is used and whether it gets locked up, burned, etc.

[eonwarped]

With current parameters and nothing else changing, assuming demand does not keep up with supply (I know this is not a widely accepted assumption) this is what happens:

1. SBD price keeps decreasing until we hit 1 USD
2. It goes under, but it now becomes desirable to use the conversion instead of a market swap, people will start burning SBD for STEEM.
3. If this isn't enough to keep propping the value up, witnesses implement interest rates to encourage holding.

The reason 1 USD is the threshold is because of the conversion rate of 1 SBD to 1 USD worth of steem based on price feed.

Note if the witnesses change the price feed to be against some other asset, the peg would then be towards that asset instead.

[buggedout]

Nailed it. Good job :)