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RE: Why It Makes Sense To Pay A Premium For Steem Dollars
Let's say today you have 1 SBD and you convert it to STEEM. The system doesn't take into account the market price of SBD, it only uses the market price of STEEM.
Therefore, if over the next 3.5 days, the average price of STEEM is $2, you'll get 0.5 STEEM for your 1 SBD. It doesn't matter if SBD is trading for $0.70 or $1.90, you'll get 0.5 STEEM either way.
If you want to minimize your risk due to STEEM price fluctuation, you can break down your conversions into smaller increments. If you have 10,000SBD, instead of converting all 10,000 at one time, you may want to convert 500 per day for the next 20 days.
That is an important detail.
You get the amount of STEEM depending on the price in 3.5 days. But always $1 dollar worth.
This delay is not a bug, it's a feature!
This feature does two things:
It gives you one dollar worth of Steem, which can be traded.
But also limits the possibilities for day traders to speculate on the price of SBD.
In this way, the system has a built-in robustness.
That's real innovation, from where I'm standing.