Im sure by now everyone knows the problem that is happening with the Steem dollar. Basically the Steem dollar is supposed to be pegged at the dollar, but it has, for some reason or another, been pushed to a bit over $10 per Steem dollar. What ends up happening is the dollar values per post are all out of whack and it shows darker sides to a market trend.
I have seen some suggestions on what we should do to address the problem, for example change the value amount pegged, increase the amount paid out ect. In my opinion there is a simple option that needs to be coded in to make sure that if this happens again, it will easily be dealt with. I personally wouldnt want to mess with the power down algorithm, but instead focus directly on the payout algorithm.
If the price of a Steem dollar is over an amount of lets say $1.50 to $2, the payout algorithm will start paying in all SBD and no Steem power. People are going to unload it very quickly and it will push the price down. A bonus is that many people will also go and buy the Steem they missed out on and it will push the value of Steem up. This, in my opinion, is the best way to handle things. The second the price goes back to normal, which will be broadcast by witnesses, the payouts go back to normal.
Many people might say that this is no big deal and there is not a problem with a Steem dollar at $10, but I disagree. In my opinion this shows a deeper market trend of people having no idea what they are investing in. Allowing the Steem Dollar to get that much investment ends up hurting Steem holders because it is lost investment. We need to put disincentives to push the price past the pegged value in order for the system to hold for the long term.
We should be incentivizing people to invest into the ecosystem and ultimately make the platform more valuable. Letting the Steem Dollar go that far past the peg while the actual Steem currency only slightly increases in value, is the wrong way of treating this. Ultimately even if we didnt make any changes, the situation would probably cease after many people stop speculating, but still if we want a quicker snap back to normal, we might think about implementing an alternative method.
-Calaber24p