Powered down SP goes to STEEM.
I think VESTS are only created or destroyed by power up, power down, or rewards (that pay in SP/VESTS), unless I'm forgetting something.
If you sell SD on an exchange, literally nothing changes in terms of supply, just the owner of the existing token. That seems kind of obvious, no?
Yes changes in the price of STEEM (as reported by the oracles i.e. witnesses) between the time SD is created and when it is destroyed will influence the money supply (virtual supply; converted to real supply if and when the SD->STEEM conversion takes place). If I'm not mistaken that is covered in the white paper.
There is no special tagging of VESTS nor the STEEM/SP in the vesting fund.
I think the confusion was I thought commentators were stating that no liquid STEEM were in the vesting fund and I thought only VESTS would go into a "vesting fund". So I was confused as to where the liquid STEEM were accounted.
Now I think I've been told the VESTS are not in the vesting fund, so therefor liquid STEEM are accounted for in it, and the SP are accounted for in the VESTS. Is this correct? If not please provide some complete definitions. This is getting ridiculous. How can anyone know WTF is going on if the damn terms and design isn't documented. I try to guess based on different statements which makes it look as though it is my error, but it is a failure of clear communication.
I'm not sure I'm following this but let me try to explain it clearly.
The vesting fund contains STEEM POWER. That STEEM POWER can only be converted to STEEM (1:1) according to the power down rules (1% per week, etc.). STEEM can be converted to STEEM POWER (1:1) by powering up.
The vesting fund can be denominated as VESTS, which represent
shares of the vesting fund. VESTS are created and destroyed by:
1. Power ups (creates new VESTS)
2. Power downs (destroys VESTS)
3. Rewards paid in SP (creates new VESTS, and SP is added to the vesting fund so as to not dilute the vesting fund)
The exchange rate is the number of SP in the vesting fund divided by the number of VESTS. The exchange rate is modified whenever new SP are added to the vesting fund as anti-diluation payments. This increases the exchange rate per VESTS but does not change the number of VESTS.
What I understand now is that when we "Convert" our SBD, it retires them and converts to liquid STEEM. Whereas, when we choose "Buy or Sell", then we exchange the SBD for liquid STEEM and the SBD is not destroyed.
Correct.
Well someone over there mislead me by stating that when SBD are created, the VESTS are created to back it. Obviously that is incorrect, because you are confirming that only liquid STEEM are created to convert (retire) SBD.
Any thoughts on why people are so fucking confused in their explanations or WTF they are referring to?