The SBD conversion will give you $1 worth of Steem for every SBD you convert
Except, as may be the case very soon, when outstanding SBD is more than 10% of the STEEM market cap (this has happened, or may happen, in this case due to STEEM's price and market cap shrinking rapidly).
In that case SBD's conversion amount is reduced proportionately. So far the reduction looks to be small, and the low price of SBD provides a buffer, but if STEEM continues to drop the reduction may become significantly larger, and the conversion could come out at a loss. It is definitely something converters need to consider very carefully (and one reason conversion was considered an "advanced" feature and removed from its prominent position in the steemit.com wallet).
Conversion may still turn out to be a great play if STEEM recovers quickly. We will see.
Proportionately to the STEEM market cap which mostly means STEEM price (since STEEM supply only changes slowly). So, in effect, SBD becomes pegged to STEEM once it passes 10%. So if STEEM then drops 10%, then the conversion rate for SBD would drop 10% as well (and vice versa). This assumes a constant SBD supply. There won't be printing so SBD supply can only change (decline) via conversions or burning. If it does then the reduction in conversion rate from a STEEM price decline would be correspondingly smaller, but that's probably a much smaller factor than movements in the STEEM price.
Yes, it is good to reduce debt in this situation and not good to dump (if you don't want prices going down, but on the other hand, if you dump and then prices do go down, it is good for you that you dumped).
I just wanted to make clear that thare are additional risks to doing conversions at this point since the conversion target declines along with STEEM once all SBD exceeds 10% of the total STEEM market cap.
We did convert SBD per your instructions and got a couple more STEEM for each SBD after the conversion... We're considering buying more STEEM but not sure if the price is still good after Coinbase releases the funds.
No one can answer that. Will it go lower? Likely. When will it stop, and will it bounce back, and how fast? Who knows. Long term, I see this as a faded memory.
Thanks, @themarkymark!
I have taken your professional financial advice, sold my house and bought STEEM. I also reduced the debt ratio by converting 3.5 SBD :D
Lastly, I do not own a house.
Cheers,
OFI
Or could bounce back, who knows. I've been doing it for the last 3-4 days. Starting today would been better than 4 days but no one knows. It may bounce back up, it may hit $0.
It is right around 50c, and STEEM is already below that. There is a delay built into the system so the effect of the 9% and 10% rules won't kick in right away. Another factor is that SBD conversions reduce the amount of SBD and therefore reduce the price necessary to hit 9% or 10%. If STEEM recovers quickly they may never kick in. We'll have to see how it plays out.
Except, as may be the case very soon, when outstanding SBD is more than 10% of the STEEM market cap (this has happened, or may happen, in this case due to STEEM's price and market cap shrinking rapidly).
In that case SBD's conversion amount is reduced proportionately. So far the reduction looks to be small, and the low price of SBD provides a buffer, but if STEEM continues to drop the reduction may become significantly larger, and the conversion could come out at a loss. It is definitely something converters need to consider very carefully (and one reason conversion was considered an "advanced" feature and removed from its prominent position in the steemit.com wallet).
Conversion may still turn out to be a great play if STEEM recovers quickly. We will see.
Just for clarity can I ask, in proportion to what? Is it a linear reduction within a range like with the print limits? What is the range?
Proportionately to the STEEM market cap which mostly means STEEM price (since STEEM supply only changes slowly). So, in effect, SBD becomes pegged to STEEM once it passes 10%. So if STEEM then drops 10%, then the conversion rate for SBD would drop 10% as well (and vice versa). This assumes a constant SBD supply. There won't be printing so SBD supply can only change (decline) via conversions or burning. If it does then the reduction in conversion rate from a STEEM price decline would be correspondingly smaller, but that's probably a much smaller factor than movements in the STEEM price.
OK, thanks! That's clear.
Good point about the haircut rule, I should have mentioned that.
at any rate, if we reduce debt it's a good thing, right?
What is a terrible idea without a doubt is to be selling/dumping STEEM or SBD into the markets.
Yes, it is good to reduce debt in this situation and not good to dump (if you don't want prices going down, but on the other hand, if you dump and then prices do go down, it is good for you that you dumped).
I just wanted to make clear that thare are additional risks to doing conversions at this point since the conversion target declines along with STEEM once all SBD exceeds 10% of the total STEEM market cap.
We did convert SBD per your instructions and got a couple more STEEM for each SBD after the conversion... We're considering buying more STEEM but not sure if the price is still good after Coinbase releases the funds.
what to do...what to do...
No one can answer that. Will it go lower? Likely. When will it stop, and will it bounce back, and how fast? Who knows. Long term, I see this as a faded memory.
Even @freedom and @blocktrades have joined the wagon!! yussss... time to accumulate peeps! selling is a terrible idea
Thanks, @themarkymark!
I have taken your professional financial advice, sold my house and bought STEEM. I also reduced the debt ratio by converting 3.5 SBD :D
Lastly, I do not own a house.
Cheers,
OFI
I think it's a bit too early to do this, steem goes down a few days later,
Or could bounce back, who knows. I've been doing it for the last 3-4 days. Starting today would been better than 4 days but no one knows. It may bounce back up, it may hit $0.
Didn't realize this. Thanks for the heads up @themarkymark
Thanks man! I was wondering why my conversion disappeared yesterday. 😂
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How low will steem have to get until we exceed 10% debt?
Also, I know you’re not a financial expert, but where do you think we’re gonna see a bottom?
Market looks like it’s been cut deep
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No idea what so ever. I can tell you what I hope, but I can't even remotely guess what it will be.
The fact it is happening to other coins (namely BTC) is a big reassurance.
It is right around 50c, and STEEM is already below that. There is a delay built into the system so the effect of the 9% and 10% rules won't kick in right away. Another factor is that SBD conversions reduce the amount of SBD and therefore reduce the price necessary to hit 9% or 10%. If STEEM recovers quickly they may never kick in. We'll have to see how it plays out.
I'm sbd poor bro... but I do have cash, bought STEEM
thanks for the heads up! i've never used my feature. i'll see if i can stop myself from buying more @steemmonster packs with my SBDs :) hehe