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RE: Thoughts on a Proposal to Buy and Burn STEEM using the DAO
Yes, the interest rate is determined by us witnesses with the property sbd_interest_rate.
The interest rate contained in dynamic_global_properties.sbd_interest_rate is calculated as the median of the props of the 21 witnesses who validate the blocks in the respective round.
The SBD paid as interest are additionally produced. So even if no SBD are printed. This would of course be counterproductive (currently) .
The inflation rate would be increased by this measure (at least in the current situation), as the current SBD supply would increase and thus also the virtual supply.
There may be "sweet spots" where printing SBDs causes STEEM prices to rise enough that the virtual supply goes down, even though sbd supply goes up. But, I have no idea how to predict where they are, if that's even possible.
Yes, if the price rises above the printing threshold, things can look very different. The mechanisms in this situation are not quite clear to me either... but who really understands the market :-)