SBD Stablecoin? To Be Or Not To Be

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As we know, in the current implementation, the SBD (STEEM-backed dollar) is half pegged to $1 on the lower side. This means that theoretically the price of the SBD should never go below $1, but nothing prevents it from flying to the moon.

The Steem blockchain achieves this half-pegging capability by providing a one-way SBD → STEEM conversion feature. All users can convert their SBD to STEEM worth $1 at any time.

So if the price of SBDs in the market falls below $1, users can buy them at a discount and convert each SBD to STEEM worth $1. This puts pressure on the market to buy SBDs and bring the price up to $1.

However, the Steem blockchain does not provide a conversion feature in the opposite direction, that is, STEEM → SBD. Consequently, the price of SBD can freely rise well above $1 when market demand increases. Thus, a half-pegging.

What are the pros and cons of this half-pegging feature?

• Pros:
  1. Since the price of SBD never drops below $1, the payouts to the authors are protected from the price drop. (But in fact SBD went below $1 when the price of STEEM was very low.)
  2. And since the price of SBD can be much higher than $1, payouts to authors will skyrocket when demand in the market increases.
• Cons:
  1. When users convert SBD to STEEM, it increases the amount of STEEM in circulation and lowers the price. Consequently, STEEM holders (mostly whales) will lose out in the process.
  2. Because there is no pegging mechanism on the upper side, SBD does not become a stablecoin, which is very important for doing business.

So, what do you think is best for SBD? To become a stablecoin or not?

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