RE: Steemit For Investors #2 - How Steem Dollars Hold Their Peg to US Dollars - By Leon Fu Dot Com by cryptomarket

steem · @cryptomarket · Jul 23 '16 (edited)

Yes, if there was a sudden collapse in the price of STEEM, and no recovery in price, the peg may break. Quote from the white paper:

>For every SMD Steem creates, $19.00 of STEEM is also created and converted to SP. This means that the highest possible debt-to-ownership in a stable market is 1:19 or about 5%. If Steem falls in value by 50% then the ratio could increase to 10%. An 88% fall in value of STEEM could cause the debt-to-ownership ratio to reach 40%. Assuming the value of STEEM eventually stabilizes, the debt-to-ownership ratio will naturally move back toward 5%.

Leon Fu

👍 cryptobarry, robok

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