Okay, so this is most of the comment from smooth that I based my previous comment on:
The intent of SBD is not that it be 'open to speculation' other than speculation within a narrow range and relatively short time period due to liquidity considerations (with enough volume, a speculator can make a large amount of money betting that SBD at $0.99 will rise to $1.01 or vice versa). Instead of a speculatively determined price, increased demand for SBD should result in more SBD being circulated and decreased demand for SBD should result in less SBD being circulated, in both cases pushing the price back toward $1.
The current mechanism doesn't fully implement this but that is the intent, and the proposed change gets a bit closer while removing an odd quirk how the thresholds are currently set: between 5% and 10% there is literally nothing being done by the system to control or even influence either the supply or value of SBD (none of it being created nor destroyed, backing ratio not affected, etc.). No one really intended to create a market cap ratio 'window' for fully-free-floating SBD with no controls at all; it seems to have been an accident.
Based on what is said here, I would agree that the conversion feature is independent, but for some reason "the mechanism" smooth refers to does not exist when we get into the 5-10% range.
I'm not trying to contradict, but I am trying to get to the heart of the matter here. If what they're doing is going to make things worse rather than what they say it's going to do—rein things in a little more—either way, I'd like to know that.
I have respect for smooth as he at least will engage and offer some explanation, but if you read between the lines even he admits this is a half-measure. You might not get him to admit this is a band-aid solution but it is definitely implied.
I disagree with him on this though. Between 5% and 10% something IS being done - printing of SBDs is being halted, thus allowing the system some time / grace to recover. Under their proposed solution we will go from full 100% SBD print (at 9%) to haircut (at 10%) literally overnight. The next bust is going to be hard and it will catch a LOT of people out....but the insiders who know the complexities of how the system works will be fine and I am sure they will profit handsomely.