Don't Forget to Switch Back to SBD Payouts.

in SteemLeo •  12 days ago  (edited)

SBD steem.png

Are your payouts still being distributed as 100% Steem power?

If so you're throwing away free money.

It isn't much at the moment, but SBD is currently trading at $1.05. This means that if your payouts are all Steempower you are throwing away that free 5%. (2.5% because only half the payout is in SBD)

The Steem network assumes that SBD is valued at one dollar. Therefore, when it is valued higher than $1 content creators are generating more value than is listed on the official payout.

Why is SBD being printed again?

The market cap of SBD is not allowed to be higher than 10% of Steem's total market cap. Because the market cap of SBD is currently 7 million and Steem's is 80 million+ we're allowed to start printing again.

When SBD's market cap is higher than 10% we have to stop printing and haircut the value of trade ins. For example, if SBD's market cap was 20% of Steem's market cap we'd have to haircut SBD to the 50 cent level... we got surprisingly close to that just recently.

market-bleeding-blood.jpg

The dark days are over.

An interesting thing about HF21 is that the payout structures were changed. This means that less SBD is being generated. It used to be that 75% of funds used to go to content creators and 25% went to curators. Curation rewards do not spawn SBD.

Therefore, when the ratio was changed to 50/50, far less SBD is being printed. Before the change, 75%/2 (37.5%) was being printed in SBD. Now, that ratio has dipped to 25%. Will this reduced supply make it easier for SBD to break the peg and ascend to a higher valuation? It's something to think about.

While the price of SBD is greater than $1, no one will trade SBD for $1's worth of Steem. This means that a quarter of our inflation gets stuck in limbo for a bit and this takes sell liquidity off the market, potentially spiking the price of Steem coins.

On the flip side, when SBD is greatly overvalued, Steem inadvertently creates more inflation that it should. For example, if SBD was worth $2 a coin, Author rewards would be spiking at a 50% premium. Not only that, more SBD is being created because when SBD is greatly overvalued then Steem is also bubbled. Because SBD is printed based on the price feed provided by the witnesses, a flood of SBD will enter the market.

For example, say a particular post should generate $50 total payout. That leaves $25 for the author, 12.5 of which is SBD.

Now, if the price of Steem and SBD double, that post is now generating $100 and 25 SBD. Unfortunately, when the value of Steem and SBD deflates again this 25 SBD will be redeemed for $25 worth of Steem, and it only should have been half that. As the price of Steem and SBD begins to deflate, no SBD is being traded for Steem because it is valued higher than the $1 peg. All the extra SBD that got printed stays in the system while Steem crashes.

This is a huge problem when say the value of SBD is $10 a coin like what we saw during 2017. Essentially we were printing 10 times more SBD than we should have been at the time.

How to stay ahead of the curve?

Well, if SBD is spiking, consider taking gains; the market is bubbled.
Simple as that.

Conclusion

If SBD spikes to $10 again even my posts will be generating like $1000 per. (This assumes a Steem price of $10 and an SBD price of $10.) We have to be aware of the bubble next time around and not get burned by it.

The value of SBD is currently a double-edged sword.

No sense in throwing away free money.

Posted via Steemleo

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I just want the damned thing to hold it's peg so we can lock in some wins. I would've loved to squirrel away some value in the last spike, without needing to cash out.

Absolutely! We missed a trick in 2017. Hopefully we don't miss the next one.

I hope no one is relying on this, because you will be disappointed. It's hard to create a decentralized stablecoin - DAI on Ethereum is the most successful one and requires a complicated system with huge reserves. SBD is designed to hover around $1, not to defend the peg at any cost.

I'm okay with hovering, but they do me no good if they cost $18 each.

I cannot help but notice that in your cheerful calculation of HF 21 changing the payout to 50-50, or from 37.5% sbd to 25%SBD, you forgot to mention the Steem dao which is 10% SBD always. To add complexity it only nerfed the inflation going to curation and author rewards so its impact is relative to that.

I calculate SBD production now as 10% dao+ 0.25 x 0.65 (amount of total inflation going to rewards) which is 26.5% of total inflation.

I calculate pre hardfork sbd as 37.5x0.75 which is 28.125%

26.5 < 28.125 but not that significant considering we cannot stop the dao from making SBD,

From what I understand the DOA can make SBD but if it's no-one's/not distributed it's no problem.

As far as I know it endlessly accumulates because of the return proposal and pays out up to 1% a day. This probably has a stabilizing factor (and encourages great proposals), but it is definitely an SBD monster under the bed.
It just complicates the factors (hopefully for the good), that's all.

Thanks for information, pal!
I became rusty since new HF... need to learn STEEM again (

I appreciate the explanation of how the system works, @edicted, it has always seemed a little ambigious in my mind.

As I recall, at least one of the past spikes in the price of SBD had little to do with the Steem infrastructure and a LOT to do with a listing on a Korean exchange and a bunch of people simply seeing "a new coin" and running it up on speculation.

Either way, my own hopes for keeping SBD stable around $1.00 is to have a semi-solid currency that can facilitate actual use cases for ecommerce based here... I'd like to know that my T-shirt priced in a crypto token is about the same cost today as it is next week. Wild fluctuations serve as a massive deterrent to that.

=^..^=

Posted via Steemleo

By the time I read this, it had slipped back below a buck. But yeah, as a general rule, choose SP when SBD is well below a buck but 50/50 when it’s well above a buck.

When near parity, it’s a guessing game of where things will be in a week.

With 7 days to payout, its hard to tell what to do. We were (are) in a looooooong winter, but from what I understand, "usually" 7 days is a whole lot of time in the crypto world.

Posted via Steemleo

So in summary, let's get rid of SBDs and let's just have one currency!

If we fixed SBD and gave it the powers that MakerDAO has it would be incredible. I wanted to scrap it at one point to, but it really can't be scrapped... it's on the blockchain forever no matter what.

I think it would be harder to scrap SBD than it would be to actually fix it. It's quite embedded into the consensus layer.

Are you saying that when sbd is higher than $1 we should convert it to steem?

Also you should only make this trade if you think we are in a bull market. Steem is more volatile than SBD, so if you think the market is going to crash SBD will normally lose less value.

Thanks. !BEER


Hey @edicted, here is a little bit of BEER from @cflclosers for you. Enjoy it!

Learn how to earn FREE BEER each day by staking.

Traded for STEEM, not converted into it. Absolutely not converted. In the conversion process, the SBD is burned and 1 USD worth of STEEM is created. That is a very stupid thing to do when SBD spikes.

!BEER

Cheers!


Hey @markkujantunen, here is a little bit of BEER from @cflclosers for you. Enjoy it!

Learn how to earn FREE BEER each day by staking.

Luckily they took the convert feature out of the Steemit wallet because many people made this exact mistake. You're supposed to trade your SBD into Steem using the market. No SBD is destroyed in this process.

  ·  12 days ago (edited)

Keep in mind that the SPS pays out only SBD... so it's possible there might not actually be a reduction in SBD...

  ·  12 days ago (edited)

The SPS creates Steem inflation out of thin air?
That's news to me.
I thought the SPS was going to run on donations for a while to see if that was enough funding.

  ·  12 days ago (edited)

No, they reduced the author reward pool and created the SPS out of that inflation. That SPS inflation is paid solely in SBD though.

Sounds like the SPS creates Steem inflation :D

SPS usually refers to Steem.dao which received 10% of all steem inflation as a result of the hardfork. Maybe you are thinking of Steem Alliance?

There is a reduction from 28.125 to 26.5% =)

I did not know, they print the SBD coins, I not understood why opting for SBD payment is better than opting for Steem though. Complicated.

When I don't have SBD in my wallet, I get annoyed, wanting a peg to 1 USD so it will be more "useful" and likely to be used as currency. When I have SBD in my wallet, I want it to SPIKE SPIKE SPIKE.

Posted via Steemleo

SBD needs to be removed if steem is ever to be stable otherwise we will forever have these deferred debt based inflation followed by hyper inflation when people rush to convert the debt into STEEM once it falls below the 1$ peg which drives steem to the floor.

Apologies if this is a stupid question, but why don't we have a ethereum DAI approach to our stablecoin here?

I've only looked into the DAI methodology a little bit, so perhaps I'm just not appreciating its vast complexity, but that system seems to work amazingly well. Roughly, how hard would it be to implement something similar for SBD?

The SBD peg and it’s relationship to Steem are confusing. But I appreciate you attempt to explain it.
I will need to read the white paper sections on these three currencies and their relationship again, then come back here and read this post again. I am embarrassed to say this just isn’t clicking.

I will accumulate my SBD in the short and see later on!

I think that's my plan too. Save up some SBD and trade it when I can get at least $50 USD out of it. I am not making the mistake of powering up all my earnings in the next bull market, I'm taking my winnings when they are around. Don't want to wait patiently for another few years to see a payout.

Posted via Steemleo

It is a game of patience and believes!

Thanks for the reminder! I love taking profits in SBD any time it's over $1. It's like a no brainer.