My logic is that for conversions to be happening (to reduce supply of SBDs) then Market Value needs to be lower than Par Value. In this scenario a regular Steemian is still better off converting to STEEM than HODLing SBD - even though the underlying value of SBD might creep up due to the debt reduction.than HODLing SBD - even though the underlying value of SBD might creep up due to the debt reduction.

If you are performing conversions yourself, then the comparison between holding SBD and holding STEEM is irrelevant. Go ahead and convert.

But if you aren't converting (say because there is no discount at the moment, or because you just don't want to), then holding SBD is very likely to outperform holding STEEM because the conversion/peg value will creep up to $1 (as conversions occur when the SBD price dips below par) even if STEEM remains unchanged, and if STEEM rises, until the peg value reaches $1, SBD still either rises with it or outperforms it (for the same reason). At some peg value near $1, one might prefer STEEM, because of the possibility that STEEM suddenly jumps to well above the repeg point, but at this price it is a negligible factor.

The 'creep' is not insignificant. The peg-to-par price for STEEM has dropped from 0.415 to 0.401 over the past several days. That's a few percent outperformance for SBD.

Yes, I was talking about the Witnesses collectively. I think if we lost the Witnesses outside the Top 20 we'd be in serious trouble. It's not just about centralisation (since we really are already fairly centralised), it's about having fail-over / redundancy and a robust network that can self-heal.

The high ranked backups who serve as (somewhat) immediate fail over still do okay. They get 5x per block compared with top 20 (which was put into place exactly for this reason), and 1-2 blocks per hour. That's still well above server costs. It is the lower ones who get only a block or two per day who are are struggling. They need to operate very lean (maybe a laptop at home) or quit, or accept the (small) losses for community participation.

Anyway, low STEEM prices are painful for everyone (except shorters if there are any).