I understand market mechanics, trading, supply/demand etc very well, but I’m a bit confused by this:
STEEM FAQ’s
Will 1 Steem Dollar always be worth $1.00 USD?
The market value of a Steem Dollar is dictated by the supply and demand of the token. Therefore it is possible for 1 SBD to be worth more or less than 1 USD depending on market conditions. However, the network's SBD conversion feature serves as a mechanism to hold Steem Dollars within a small margin of the value of USD.
The networks SBD conversion feature serves as a mechanism to hold Steem Dollars within a SMALL MARGIN of the value of USD?
Is a small margin 200% over the value of a $1?
What is the so called conversion feature mechanism that is obviously not working?
Not that I give a shit. . . Just oftly strange. .
Peace!
Yeah, I was wondering the same thing. Glad you posted the question. Here's a ten cent upvote for that. Apparently I'm the first to reply so there's no answer yet and I sure don't know the answer. Does anyone know what's going on with the Steem dollar?
SBD trades like any other crypto so it can fluctuate, but the fact that the FAQ's state there is a mechanism in place to keep it near a $1. . .Which is what I am questioning? Not a big deal because you can just swap your SBD for Steem, but if there is something in place to regulate, then it is obviously not working properly. . not complaining one bit as the ratio is almost 3/1 now.
I found out my own question by searching around Steem land. . .
SBD is 'half-pegged'. Pegged from falling much below $1 but not particularly from rising about $1 as we have in the current case of SBD.
So apparently the "mechanism" to keep SBD around a $1 is working as intended.