The whitepaper outlined that pretty well. The way I see this working best is via some governance method as I suggested above. Trusted individuals who's role would be to maintain the peg via conversions... Then again, one would thing any large stakeholder willing to convert large quantities of Steem to sbd would be inherently trustworthy. Would we need to pool Steem together from said stakeholders? Does it all just work because individuals volunteer to "sacrifice" large portions of their Steem for sbd? Would this voluntary system then empower "bad actors" who don't choose to do conversions to have a much larger sway over the rewards pool? Or perhaps Steem itself might volunteer to convert a large portion of stake, thus allaying investor concerns of a disproportionate control over Steem?
Current market cap: $49,144,061 USD
Minus Current supply of SBD: 7,099,445
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41,840,540 % $6.4 (price of steem)
Steem required to convert to peg : 6,537,584.375
likely much less as market reacts.
help me out if I did that wrong
I don't agree that it did.
It assumes that a trader who 'sees a big spike' not only knows that the price is going to go back down but that it will go back down in precisely the right rate and timescale to line up with the 3.5 day price averaging window that is built into the conversion process. What happens if the spike was actually the first leg up of a big bull run and is followed not by the price going down, but by another big leg up? The trader loses his or her shirt.
If this were a real issue (it isn't because no one can predict prices that accurately), it would already exist with the SBD to STEEM conversions. A trader who sees a big spike down could convert SBD to STEEM at the low prices and profit as the price recovers. That doesn't work either.
The mechanism of not setting the price for some time in the future is quite effective in combating these schemes.
No, it is assumed (reasonably) that people would buy up STEEM to convert into SBD. It is a good bet when SBD is worth more than $1 that converting $1 worth of STEEM will be profitable. Is it guaranteed? No, because SBD may not be worth $1 by the time the conversion finishes, or because the STEEM that was converted might then be worth more. But it is a good bet and people able to take the risk will do it.
Not necessarily. Prices fluctuate and it doesn't necessarily translate that way. Today when SBD fluctuates from $7 to $6 or from $7 to $8 that does not mean that millions of dollars were poured into it or drained out of it. That could be a much smaller amount being exchanged among traders to set the new price.
Shifts in supply and demand are what moves prices, not necessary a set market cap difference being spent. The actual amount needed is impossible to predict. The best we can do is have the right mechanisms in place and give them an opportunity to work.