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RE: Witness Proposal, 0% SBD Interest
Hi, @themarkymark I'm still kinda new to the steem platform so maybe this is a total noob question. But why do you feel like there is no need for interest on your SBD? Also, is this only a thing that witnesses can do or can anyone change their interest rate on SBD held?
Hi @kslo, only witnesses can set the interest rate on SBD, but to be clear they are not setting the interest rate on their own SBD, but the interest rate on SBD for everyone. I believe the actual interest rate given comes from a combination of the rates set by the top witnesses although I don't know the exact details of how that works.
The whole point of SBD is that their value should be as close as possible to $1 USD and it's part of the job of the witnesses to keep it there. Setting the interest rate is one of the ways to do that. If the price of SBD falls below $1 then increasing the interest rate can make them more valuable and raise the price closer to $1. On the other hand if SBD are trading for more than $1 then interest rates can be lowered to try to bring the price down.
Currently SBD have been trading for over $1 so that's why @themarkymark is lowering his proposed rate.
Hope that helps explain things, let me know if you have any other questions!
Hey @yabapmatt this explains it perfectly. Thanks for taking the time to write a beautiful explination. I didn't know that the witnesses were in charge of keeping SBD at the $1USD mark. It makes a lot of sense.
This is a great explanation; well done!
I think it would also be helpful if people understood that SBD actually means "Steem Backed Dollar."
Well said, the top 20 set the interest rate with their consensus.