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RE: Do Your Part to Restore the SteemDollar Parity.

in #steem8 years ago (edited)

many people get confused about the main purpose of price feed mechanism.

Let's make it clear:
The present of price feed is NOT to mimic the STEEM/USD price at external market,
but to give a suitable STEEM/USD rate that could help maintaining the SBD-USD 1:1 peg:

The primary concern of Steem feed producers is to maintain a stable one-to-one
conversion between SMD and the U.S. Dollar (USD).

This sentence is not mine, but an excerpt from the White Paper. (page 14).

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I think you are interpreting too much into this.

It is impossible "to maintain a stable one-to-one conversion" in the strict sense only by adjusting the price feed and interest rate.

For example, if one reason for the current difference is the 7 day conversion delay in combination with the steem price downtrend, we'd have to adjust the price toward the expected median in 7 days. That median however is computed from the price feed - meaning you have created a price feedback loop. Which is a very bad idea, since loops have to potential to resonate catastrophically and are not easy to control.

The reasonable thing to do is publish a feed price that matches the market rate. The result will be a long-term stable SBD price that oscillates around USD parity.