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RE: BTS, STEEM and SBD - Price of All Went Up!
Anyone know why the price between SBD & Steem are so different?
I'm guessing it has something to do with the supply.
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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