Would a reverse conversion not simply create more supply of SBD which makes the peg even harder to hold when the crash eventually comes ? I thought the SBD print rate is set by the steem price rather than the SBD price so it was the STEEM pump which caused the over supply ?
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Technically yes, the STEEM price caused an increase in SBD Supply. However it was the SBD pump which led to the conversion feature being disabled in the Steemit UI, it removed any chance of incentivising SBD conversions (which were happenning steadily pre-pump) and attracted the speculators and HODLers who saw an opportunity for profit. If we had reverse conversion we could have killed off the SBD pump before it got off the ground and the speculators and HODLers would have looked elsewhere (probably somewhere like Bitconnect LOL). We would never have had the demand to support a massive oversupply of SBDs that now poses an existential threat to the platform.
It is the same speculators and HODLers who are now dumping the oversupplied SBDs at sub $1 USD and bringing the excesses of the pumps crashing down.
If you look carefully at the justifications for the increased debt thresholds you'll see they are argueing for more supply of SBDs to meet demand as a way of dampening the price pumps. Reverse conversions could achieve that result in 3.5 days rather than allow for a 9-12 month pump and dump cycle to play out.
Yes. My concern with reverse conversions is that you would need to cap them also at the 10% debt ratio and then they would become less effective. But probably better than the alternative.