Every two weeks or so I like to compare the current power-up statistics and see how we stand.
Here they are:
14 September 2019
|LIQUID STEEM||123,8 million|
Virtual Supply ≈ 361,451,227 STEEM
27 September 2019
|STEEMPOWER||204,6 million (+3,1 million)|
|LIQUID STEEM||121,8 million (-2,0 million)|
|SBD||7,6 million (0 million)|
Virtual Supply ≈ 362,637,255 STEEM
YES! It was clear it was going to happen this report but it's nice to see it in numbers anyway!
For the first time in a long time, the amount of Liquid Steem has gone down over a two week period by an impressive 2 million STEEM!
What helps a lot is Steemit Inc. not powering down twice in this two-week report (they normally power down 326k a week).
But I also feel that #newsteem has a lot to do with it.
Let's hope we can keep this momentum going!
Addressing STEEM Inflation
There is this constant idea going around that STEEM inflation is +20% or more.
It is indeed true that STEEM inflation has been higher than it should be but that's because of an anomaly it's not a constant.
The anomaly is the SBD.
In the extreme bull market of 2017, there was an extraordinary amount of SBD printed (think millions).
Half of the payout of posts are normally in SBD and in the bull market payouts went to very high levels.
So a $500 post under $4 dollar STEEM would result in a payout of: 62,5 STEEM + 250 SBD.
As you know there is a function in the blockchain that can convert an SBD to $1 worth of STEEM over a 3,5 day period.
IF STEEM is 50 cents then an SBD can be converted into 2 STEEM.
IF STEEM is 25 cents then an SBD can be converted into 4 STEEM.
If STEEM is 4 dollars then an SBD can be converted into 0,25 STEEM.
IF STEEM is 4 dollars and you want to convert 250 SBD to STEEM that would give you: 62,5 STEEM.
What has happened to cause higher inflation?
Well. All those SBD's that were printed under $4 STEEM were not converted to STEEM. They were kept.
And then....the price of STEEM started to drop. Lower and lower and lower.
Now all those SBD's could be converted for way more STEEM then at the moment they were created.
And that happened. Millions of SBD were converted to STEEM while the price of STEEM dropped.
And of course this increased inflation.
Luckily for us, there is a failsafe in the blockchain that prevents this process from running out of control.
If the price of STEEM drops too much the price at which you can convert get's stuck.
Currently, if you want to convert an SBD to STEEM it will take the price of 21 cents instead of 13 cents market value.
So when you want to convert an SBD you will get $1/$0,21 = 4,76 STEEM.
AND NOT!! $1/$0,13 = 7,69STEEM.
That also explains why SBD is trading for $0,62 currently and not $1.
4,76 STEEM = $0,62.
So what now?
In my last reports, STEEM inflation has returned to normal (~8-9% a year).
Why? That's because nobody is converting SBD's at the moment because it's not worth it.
But still, 7,6 million SBD's are left.
SBD conversion will start up again if we reach the 21 cents area again.
So it's not over yet.
But all of this is a result of the extreme bull market of 2017 and the SBD's that were printed and has nothing to do with STEEM's standard inflation.
I think the original idea of the SBD did not take into account the extreme price rises of 20 cents to 8 dollars and back again when it was thought off.
Without these extreme swings, it would work very well as a stable coin worth $1.
I hope this information was useful.
Next report in two weeks!
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