SBD Haircut rule is about to activate (do not convert)

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While the blockchain is still showing a 100% print rate, we are about to see the SBD haircut rule activate. This means you should not use the conversion function anymore as you will start to get less return on your conversion.

What is the haircut rule?

When our debt ratio exceeds 10% the blockchain will no longer honor the conversion of 1 SBD for exactly $1 USD worth of Steem. The blockchain will slowly offer less than $1 worth of Steem as our debt ratio climbs.

What is the debt ratio?

The debt ratio is the ratio of how much SBD is in circulation compared to the market cap of Steem. As we print more SBD and Steem price falls, our debt ratio climbs. As the price of Steem has been falling fast, our debt ratio has been climbing fast.

Do not use the conversion function

While any conversions you have out there now should be fine and will be only a minor difference, as time goes on and the internal price catches up to the market price, the haircut rule will create a larger penalty on SBD conversions.

The conversion function is not on the website currently but many users know how to use it via other methods (some of which I recommended a few days ago). The goal was to reduce the circulation of SBD and help lower the debt ratio. With Steem below $0.40, the debt ratio climbed past 10% quickly making the conversion less efficient.

You can still sell your SBD on the internal market for a really good exchange to Steem but in the end, someone needs to buy that SBD and hold on to it, and it does not remove it from circulation.

Until we see a recovery on Steem I don't suggest anyone using the conversion function anymore. It would be nice to get some SBD out of circulation when the price of Steem recovers to lower our debt, but right now is not an optimal time to do it.






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