You are viewing a single comment's thread from:

RE: Witness Discussion – SBD price and reverse peg

in #witness-category4 years ago

As an active Korean community support, I personally experience high SBD price is very effective and helpful to authors more attention and engage to the community.

The implication of high (e.g. $6) SBD price is like, Steem pays $1 for authors and the investors(or speculators) pay the rest of $5. So it can be considered as outsourced support on behalf of authors.

Despite the high SBD price, its usage is growing in Korean community. I believe this is due to the fact that the adoption of currency is not only dependent to its stability, but also highly dependent to how many people are engaged in the ecosystem and how much they trust the economy.

Also, I am highly against the suggested conversion model, since it cause very high vulnerability to Steem economy. The nature of SBD is a derivative, being backed by at least x20 STEEM in order to deal with STEEM price fluctuation. Theoretically, if STEEM price goes down by 95%, SBD becomes broken.

But the suggested model requires only $1 value of STEEM to create 1 SBD. This will decrease the STEEM reserve ratio that backs SBD. In bullish market, this may be not a big deal. But in bearish market, it can be a huge weakness of our economic system.

In my opinion, SBD is mainly for contexts creators. Specifically, it is aimed to secure author's income in terms of USD value. Its high price obviously benefits the authors now, while does not harm any others except poor speculators. I also saw many authors who like Steem sell their SBD then buy STEEM, in that way high SBD price still contribute STEEM price. I really like this golden goose, and want to keep alive as long as possible.

Sort:  

Its high price obviously benefits the authors now, while does not harm any others except poor speculators.

Agreed, the Korean speculation money is literally subsidizing the entire steemit community at this moment, hopefully there are not too many angry bag-holders when they discover you can just print more at the push of a button. I hope not too many new users here believe the SBD price is a new norm, as they will be in for a shock when they realize what SBD are really supposed to trade near. Currency pegs never really work as intended, and take too much to keep going.

The nature of SBD is a derivative, being backed by at least x20 STEEM in order to deal with STEEM price fluctuation. Theoretically, if STEEM price goes down by 95%, SBD becomes broken.

This is not how SBD works since the 10% of market cap hard limit was implemented. In fact STEEM only needs to decline 50% from the 5% level for SBD to start to take a haircut, but the haircut is gradual, and the broader Steem/STEEM/SP economy is never threatened. No matter what happens to the price or ratio, SBD never represents a claim on more than 10% of the total value of STEEM/SP (a relatively small amount which is within what we see in one-day price fluctations on a regular basis).

This is a fundamentally different design with much lower (if any) risks to Steem/STEEM than a hard collateral-based system. In effect SBD is not defined unconditionally as $1, but as the lesser of: a) $1; or b) STEEM market cap divided by 10 divided by SBD supply. Essentially all of the price risk is shifted to SBD. That may or may not be a problem for SBD but it is something we can safely try, and if things don't work out then Steem/STEEM/SP is not harmed at all (and SBD is only harmed incrementally by a fractional haircut).

Agree. Same as Chinese community.

Well said friend, you represent my interests, and thusly you have earned a vote from me.