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RE: Steem post promotion: Past, present, and future
As I understand it, the usual argument in favor of burning is the assumption that overall market cap represents the total valuation, so eliminating some tokens from the supply should increase the price because overall valuation won't change.
That's my understanding too. The market cap remains unchanged but the number of tokens in circulation decreases, therefore increasing the unit price of each token.
Yes, I would say that too.
But it improves the ratio to the STEEM, which then has an impact on the debt ratio.
The best thing for the debt ratio would probably be for the price of SBDs to drop below $1 USD so it makes sense for people to do conversions.
If SBD falls under $1, there would be bots buying SBD from the open market, wait for the 3-day conversion window and repeat the same. Like, no one would let the opportunity like that pass. I think we need to get it to be stable at the dollar price.
Regardless of the source, when there is buy pressure what happens to the price? This is the mechanism that keeps the price near $1 (from below, at least): SBDs priced at <$1 are valuable, so people should want them (slight caveat: the haircut rule is also a factor). It is a distributed, decentralized mechanism. It doesn't work when the price is >$1 because there's no reason to do conversions. Doing conversions would take the SBDs out of circulation and the debt ratio would get better.