I am sure you have all noticed that payouts come in just two form- steem and steempower, we can no longer claim rewards in steem blockchain dollar.
Some of you may ask why the blockchain no longer distributes sbd? Steem blockchain dollar is a debt instrument.
Steem current market cap is 255 million and Steem blockchain dollar is 16 million.The last time this happened was when STEEM price fell a lot and was around$0.07.Low price means low market cap.
If STEEM has a market cap of 100Million, the system is set up to back a maximum of 5 million SBD (5%) Remember the peg? and a 19:1 Ratio.
But, if Steem market cap falls, the system starts correcting and will increase the ratio of STEEM to SBD.
When SBD price is at its normal peg (~1 USD) this isn't a problem when Steem is higher than it but like in the past when Steem fell very low, it meant that the 19 Steem printed didn't cover the 1 SBD. That is a problem because it means that STEEM can't BACK the Steem-backed Dollar and means the system is going into debt. Debt is bad, OK?
Now, SBD has a market cap of about 16 Million Dollars but Steem has only 255 Million. This means that SBD market cap is about 6.3% of total STEEM market cap. At 5%, ALL SBD stops getting printed but (apparently) between 4% and 5%, the system starts reducing the amount of SBD it prints and increases the amount of Steem.
SBD has been consistently above STEEM prices for several months but it is getting printed as if it is pegged at 1 dollar. This means the Market cap is increasing faster than it should be and even though Steem has also been rising, the ratio between the two has been closing. Now that STEEM price has fallen fast and SBD is still above it and there is a lot of high priced SBD on the market, the mechanism is kicking in to try and not go too far into debt.
Ok, so printing more STEEM per SBD means that there is more STEEM to back the SBD, right? But, if SBD keeps rising and STEEM keeps falling, it is going to keep being a problem as the system still treats SBD as 1 US dollar (This is one reason why the peg is important by the way). So at 5% debt ratio, the Steem blockchain says, nope, and cuts ALL SBD printing to try to make sure that Steem is able to back the SBD that is already out there.
The steemjet basic fuel is liquid steem, with the low price of steem we are going to be burning more fuel.
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