You are viewing a single comment's thread from:
RE: Below the haircut threshold - SBD Supply does not affect inflation
Brief reply 'cause I'm using a phone.
Example:
- The debt is 10% of the total value.
- Convert 100,000 SBDs
- The debt is 10% of the new, higher total value.
- new STEEM were created, remaining SBDs gained in value because the transaction raised their conversion value.
Because the value of SBD loses the peg, conversions can only reduce the debt when the STEEM price is above the haircut price. Otherwise, it's more like a debt transfer to the SBDs that remain. It's just the way it's designed.