Yep, the steem is burned and SBD is printed instead.
Fun fact you can do this now yourself with the convert operation, it used to be available on the steemit wallet but got disabled when sbd was above a dollar, because the convert operation always assumes that 1 sbd = 1$, so people were converting and losing money.
Now is actually a good time to convert though as sbd is below a dollar ;)
Thx for your answer. But how will it operate when we are at 10% Haircut Debt Ratio?
SBD is stopped being printed?
It will be printed regardless as far as I know.