One thing to keep in mind is that originally the rule that limited SBD conversions to 10% of the STEEM money supply didn't exist, so the system described in the white paper does not correspond to the system as it is today.
In the system as it existed then, with SBD already being for example 10% of the money supply, whales could potentially convert another 10%, and then if STEEM drops 75% (not even that huge a drop; we saw 95%+ last year), convert back, obtaining 80%! Obviously this is hugely unstable.
In the system as it exists today, if someone were to convert STEEM into SBD and produce a large amount of SBD, it would no longer be fully convertable into STEEM, either immediately or after a price drop. The whales in the above-described situation would end up with 50% less STEEM than they started with, obviously not a very attractive 'exploit'!
I think @timcliffs proposal bears consideration, but for now I think wait and see is okay. You mentioned that it has been 5 1/2 weeks of SBD overvaluation, but due to the effect of the hard fork, rewards (and therefore SBD supply) were minuscule for the first few weeks. It is only in the last two weeks or so with the reward pool stabilizing and the STEEM price increasing that we've seen more SBD produced. And even then it still takes time for people receive rewards and eventually decide to cash them out.
Would increasing the default payout to 75% SBD instead of 50% eventually put downside on the SBD price? Or am I thinking bass ackwards?
It could help by increasing the supply, but in my opinion, I think we still need to wait a little longer to see what the effect will be from the recent price spike and SBD creation. If prices are still high in a month or so, then we should probably start discussing the options. But even then, we would need to look at the market conditions in general to get an idea of what the causes are. If it's simply a matter of strong market trust/confidence instead of supply/liquidity, there's not much that can be done about it.
That SBD doesn't hold the peg almost at all during a price spike is a problem that could use addressing. There will always be price spikes. We shouldn't expect them to break a pegged asset.
That said, this issue started before the price spike, so it is more difficult to characterize the underlying causes.
I don't agree there. We can create a trillion SBD. It can always be a matter of supply if that's what it takes (though not exclusively that)
It could, but I think the idea of offering a higher SBD option (75% or 100%) to authors would be better. It would make the supply responsive to demand because people would tend to choose more SBD when SBD is above $1 and less SBD when it is below $1.