RE: How the Steem Dollar Peg Works by joelkatz

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steem · @joelkatz · Aug 10 '16 (edited)

I think it is a combination of two things:

* Discounting due to the risk that the Steem economy will not have enough value to pay for all the Steem dollars it has issued or will collapse entirely.
* Discounting due to the volatility in the price of Steem and the time it takes to convert Steem dollars to Steem.

If you think people are pricing it wrong, buy up Steem dollars and convert them to Steem. But the fact that this price discrepancy remains shows that nobody is willing to bet a ton of money that the price is wrong.

👍 pigeons

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@biophil · Aug 10 '16

I'd do this, but the 1-week delayed feed puts a lot of uncertainty into that conversion because the conversion price lags the real-world price by about half a week.

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@joelkatz · Aug 10 '16

Exactly. And it's possible that most of the "discount" is the rational pricing of that risk.

👍 paws1t1veev, pigeons

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