Steem Dollar Issuance rules lead to weak Steem Dollar

[shawnpringle]

Current Situation

Although for now the Steem Dollar seems to trade at parity. For the last two years it has been well under this value. The Steem DAO has stopped spending dollars. This has lowered sell pressure and let the Steem dollar get back to 1:1. This is a temporary however. Over time more Steem dollar will get to the Internal market to chase buy pressure that isn't there if something is not done about it.

The combined market cap between Steem+Steem Dollar has Steem at just over 90% and often falling below 90%. This means that each Steem Dollar will soon not backed by a dollar worth of Steem yet we continue to issue dollars.

Supply Demand

Price value of an asset comes from two forces. One is sell pressure, and the other is buy pressure. The pegging mechanism adds buy pressure in proportion while the Steem dollar falls below parity, and reduces supply. Sell pressure also comes through creation of more supply of the asset with ever more debt.

The new Idea

I suggest Steem stops printing dollars completely until the the value of Steem marketcap makes up more than 97.5% of the combined Steem+Steem Dollar market cap Instead of creating new dollars without end.

[Benson0224]

will look into it and check with team.