I Got this from the [Steem.io](https://steem.io/getinvolved/steem-backed-dollars/)
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Earn Interest on Savings
SBD pays users who hold it interest. This interest rate ensures that SBD can be safely held with minimal opportunity cost. The actual interest rate can be changed by consensus of the active miners. This gives STEEM the flexibility to adjust the interest rate to be appropriate for market conditions.

Where does Interest come from?

Steem creates new SBD to pay interest on existing SBD. This increases the debt-to-equity ratio of STEEM. STEEM creates financial incentives for 90% of all virtual STEEM to be vesting for at least a year. The virtual STEEM supply is the amount of STEEM that would exist if all SBD were converted to STEEM at the current feed price. The impact of creating new SBD to pay interest is to increase the virtual STEEM supply and reduce the percent of vesting STEEM. As the percent of vesting STEEM falls the rate of return paid to vesting STEEM automatically increases to attract new long-term capital.

If we ignore the accounting details, the economic impact of paying SBD interest is to transfer value from holders of non-vesting STEEM to SBD holders. This value transfer benefits both parties because holders of SBD are effectively extending credit to Steem. This credit gives STEEM holders leverage that increases their profits when STEEM rises and increases losses when it falls.

Decentralized Price Feed
A price feed is produced by 21 active miners. Once per hour the median published feed is logged. The median of all feeds logged over the past week is used to determine the rate at which SBD converts to STEEM. With this process it takes 51% of active miners colluding for 3 and a half days to meaningfully corrupt the feed. It is safe to say that STEEM holders with a vested interest in the future value of STEEM will be very pro-active in voting for reliable miners to produce feeds.