Let me explain this more simply so all users can understand, what other “technobabble” blog posts have mentioned.
We must remember that not all users on Steem have experience with exchanges, bid/ask walls, and other even more esoteric trading concepts and lingo. Steemit is targeted to the masses, so we need to make simple explanations visible to the users.
Recently there has been a shortage of STEEM DOLLARS, so they are fetching up to a 33% higher price than their intended $1 value; but Steem users must convert their STEEM DOLLARS to STEEM in the correct way in order to avail of this 33% bonus.
If you’ve earned some STEEM DOLLARS recently from your blogging on Steemit, then when you convert these to STEEM you have three choices of how to do so as shown below.
The ‘Convert to STEEM’ choice uses a weighted average price which will not give you the maximum bonus you could obtain today. The ‘Transfer’ choice is how you could sell your STEEM DOLLARS to a private party or transfer them to your account at another exchange to sell them on that exchange. Yet the easiest choice for most users is probably as shown below to choose ‘Buy or Sell’, in order to sell your STEEM DOLLARS for STEEM on Steem’s (internal) exchange.
On the next page, fill up the ‘Buy Steem’ form as shown below. After entering both the ‘PRICE’ and ‘TOTAL’ of STEEM DOLLARS you have available to sell into the box, the ‘AMOUNT’ of STEEM will be automatically filled in for you. Then you may click the green ‘BUY STEEM’ button.
Choose the price from the second list as shown in the example below; and make sure you choose a high enough price that offers to sell enough STEEM to complete your order.
By selling your STEEM DOLLARS for STEEM (or stated another way, purchasing STEEM with your STEEM DOLLARS), the value of your holdings can increase as the STEEM price does, which isn’t (normally supposed to be) the case if you hold STEEM DOLLARS. Subsequently, STEEM can then be powered up to STEEM POWER so you can earn a very high rate of compounded interest (much higher than the 10% APR paid for STEEM DOLLARS) so that your holdings of STEEM POWER is increasing all the time.
Note the 33% bonus appears to be an arbitrage created by the recent rapid increase in the STEEM price, due to the roughly 33% difference in the current approximately $4 price and the approximately $3 price when the bulk of the recent liquidity rewards were paid out in STEEM. The liquidity providers apparently have an excess of STEEM and need to obtain STEEM DOLLARS. So this arbitrage will decrease over time if the price of STEEM remains stable, declines, or the liquidity rewards are phased out. If the price of STEEM increases extremely rapidly while the liquidity rewards remain intact, the bonus could increase to more than 33%.