Steemit Crypto Academy Contest / S9W4 -: Blockchain Steem: Debt Vs Ownership.
Hello everyone, welcome to the 4th week of the season 9 steemit cryptoaacademy contest.
Here, we will be discussing on debt vs ownership on Steem Blockchain.
Steem is a cryptocurrency that is earned as a reward on the Steem Blockchain. It is used for various activities such as staking, delegations, and day to day transactions.
When Steem is lend to a user, the action is carried out by smart contract and the terms of agreement between both parties are encoded and recorded on the Blockchain in a manner that it cannot be twarted. In certain cases whereby the lending criteria/agreement is not properly reached, the transaction will not proceed.
On the Steem Blockchain, there have always been debt and ownership ratio which is determined by Steem token and SBD. The debt ratio determines the manner at which rewards are distributed to authors on the Steem Blockchain.
On a normal sense, authors on the blockchain earn their reward in Steem and SBD on a 50/50 basis although it can be manually adjusted by the author based on choice.
Also, the Steem token which is used to back the SBD also has a part to play on this reward distribution. When the value of Steem is high, the amount of Steem required to back SBD tend to be lower thus keeping the Steem/SBD (debt ratio) lower than 10%. But if the Steem value is low, it means that a higher amount of Steem is required to back SBD thus keeping the debt ratio above 10%. This increase in debt ratio means that the printing of SBD will decline and authors will no longer earn Steem and SBD Ina ratio of 50:50 but will earn higher parentage of Steem and lower percentage of SBD.
The printing rate of SBD declines linearly with the increase in debt ratio untill it drops from 100% to a point of zero (0). When this happen, there will be more no SBD reward for authors but purely Steem (SP).
Coming to the centralized fiat world, the Steem and SBD debt ratio can be linked to equity and liability.
Debt ratio = Liability (debt or loan) /Equity (owned money or colleteral)
When the debt ratio is high, it means that the equity is much lesser than the liability and this reduces the level of ownership and increases the level of debt.
Let's take for instance:
I bought a house using a bank loan of $20,000 with a 1% interest per month.
If I gave out a colleteral worth $10,000 at the initial stage, the debt ratio will be,
Debt ratio = ($20,000 + interest)/ $10,000. If the debt lingers the interest will keep adding up thus increasing the debt ratio.
The more the value of the debt ratio, the more the percentage of my ownership decreases. That is if the debt ratio is 10%, my ownership rights has decreased by 10%.
If the ratio SBD Debt /STEEM ownership is high, it means that the SBD debt is much more greater than Steem ownership thereby altering the 50:50 reward distribution.
When this happen, more Steem will be required to balance out the SBD debt thereby leading to high percentage of Steem required. If the ratio goes higher to the point that the SBD printing drops to zero, authors will be earning 100% Steem reward thereby increasing the supply of Steem. And when the Steem supply keeps increasing, it reduces Steem scarcity which in turn leads to a drop in Steem price.
The debt and ownership relationship is gotten from comparing the SBD market cap with that of Steem.
(SBD MC/ STEEM MC) × 100/1
If the debt ratio is 10% or above the SBD print will drop to zero.
Let's calculate the current debt ratio to know where we are at the moment.
SBD market cap= Total supply × Current price
Steem market cap = Virtual supply × Current price.
To get most of this information, let's go to steemdb.io
Steem virtual supply = 481873991.978
SBD current supply = 12148261.0303
To get the current Steem and SBD price, let's check it out on coinmarketcap
To calculate the market cap of SBD
SBD MC = 29,277,309.01
STEM MC = 96,374,798.2
Debt ratio = (29,277,309.01/ 96,374,798.2) × 100/1
Debt ratio = 30%
The current debt ratio have exceeded 10% which explains why there's no more SBD printing. The SBD printing will commence once the debt ratio drops below 10% and that is expected to happen during bull circle.
To convert SBD to simple is a very simple process using the steemit wallet.
First enter the Steem wallet section and click on market.
That will take you to the Steem decentralized market place where you can convert the amount of SBD you want to Steem. Input the amount and click buy.
After clicking on buy, an order will be created and once filled, the Steem will reflect in the steemit wallet.
Converting Steem to SBD in the steemit wallet is a very easy step. I will be showing it here.
First go to steemit wallet and select market.
Then input the amount of Steem you want to convert to SBD and click on sell.
Confirm the sell and an order will be created.
- Order
- SBD
The ownership and indebtnesss of the Steem Blockchain is controlled by the mechanism which decreases the rate at which SBD is printed in accordance with the rate increase in debt ratio.
I will like to invite @patjawell, @jueco and @steemdoctor1 to participate in the contest.
Well done @sir-charles-jude! Your post on the differences between Steem debt and ownership was very clear & informative . i appreciated the way you explained the technical Concepts of the blockchain & Steem ownership in a way that was easy to understand for the average Reader . your use of real-life examples and scenarios was also very helpful in making the content More relatable and understandable. Your writing style is Engaging and kept me interested throughout The post.
Thanks for your valuable comment, I appreciate the time you spent in going through my post.
Congratulations 🥳
Thank you, friend!
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Hola Sir Charles, algo que me gusto mucho de tu post es que explicaste todo de lo mas sencillo. hasta lo mas complejo. Sin duda el formato de contratos inteligentes son positivos para las transacciones, basicamente no existe nada oculto.
Yo tenia una duda pues me confundi creyendo que el steem es la deuda, pero no es asi, es el sp. Sin embargo leyendo cada post y la explicacion del profesor pude entender todo perfectamente.
Suerte y exitos.
Thank you, I’m glad you found my post very understanding.
Dear friend
I appreciate your efforts for given brief knowledge of debt and ownership. You clearly described in simple words how steem is ownership and sbd is debt.
You wrote very well about mechanism used for debt ownership ratio.
You described the steps for the convert of steem and sbd, all steps were easy to understand.
Wish you good luck
Thanks for the valuable comment. It’s good to know that you took your time to go through my post and you found it interesting.
You are welcome it was knowledge based. Keep it up
Your have explained well about debt and ownership. Yes when there is low debt then demand of Steem Tokens increases and investors also. When debt ratio is 10 percent then there is no printing of SBD. Ad now a days we are facing the same situation. We are not getting reward in SBD . Reason is that debt ratio is more than 1p percent as I have mention in my entry post with analysis. According to me debt ownership ratio is 13.6 percent that is more than 1p percent that's why there is no printing of SBD. That's why post reward is not given in the form of SBD. Thank you for this informative post. Good luck for the contest.
I’m glad you took your time to go through my post. As members of this platform It’s very important we know all this.
Thanks for your beautiful reply. Yes, we must know.
Hi, @sir-charles-jude
You have explained very well about the debt and ownership in steem blockchain. Your post is really informative. And if Steem debt rate is less than 10 then we can get reward in the form of SBD.
Becuse reason is that when debt ratio is high it's totally effect the Steem Currency it's mean there are so many debt on steem. Overall i really like yor post. Thank you so much for sharing this. I am wishing you success on this contest.
Regards,
Faran Nabeel 🙏❣️
Thanks for your valuable comment, I really appreciate.
Hi brother Greetings,
I have read your post and you have shared all the questions with detailed analysis. You have explained well about indebtaness and ownership ratio. I am glad that you write about Steem Blockchain ownership and debt as Steem is ownership and SBD as debt.
You have explained about affect of debt-ownership ratio on steem blockchain but missed to explain it on the Steem price.
But you have explained the mechanism of Steem Blockchain to control debt-ownership ratio on detailed way and performed all the calculations correctly. But I have learned that SBD price is never above than 1$ and most of us used it's external market value which has no affect on SBD price.
You have shared the clear steps of Steem to SBD and SBD to steem conversions. Overall you are master in some topics and explained well. I wish you success for your participation. Best of luck.
Thanks so much for taking your time to go through my post, I'm glad to know that you found in understanding and interesting