Trying to understand the economics of SBD/STEEM

in #sbdlast year

I have little background on blockchain, programming , economics and data analysis. So the topic has been so tricky.

Nevertheless, It doesn't mean that I shouldn't try. My first approach was to read the whitepaper which gave me a broad idea.

The whitepaper was not enough, so i decided to search for ideas from other authors. This brought some interesting pieces to the puzzle:

Steemit's Evil Plan for Cryptocurrency World Domination

The real money isn’t in blogging, content generation, or voting. The real money is found in bootstrapping a digital currency. A currency owned and operated in a decentralized way by ordinary people. More info: @dantheman 's post

How to Purchase STEEM at a Discount on the Internal Markets by Locking in an 18% Margin of Safety ...

...
Doing this weekly, over the long-term, will yield better results than simply holding SP. But, to me, no matter what, having that weekly power down cash flow as zero-penalty liquidity is gold. It's unbeatable, and if you're willing to be at your computer once per week at a time to trade your newly minted STEEM, you'll likely benefit with a larger net increase in STEEM Power in the long-run.
More info: @trending 's post

SBD Explained

The original design behind SBD was that the price should be kept as close to $1 USD as possible. In order to achieve that, mechanisms were built into the Steem blockchain (including several tools that are made available to the witnesses), to help achieve a stable $1 USD price.
.....
Witnesses were given tools to help adjust supply and demand for SBD if the price of SBD is consistently above or below $1.00. Witnesses are instructed not to use the tools to respond to short-term market conditions, but rather focus on long-term market trends.
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In other words, every single SBD token that is in existence right now is reducing the supply of liquid STEEM tokens on the market, which is helping to increase the price of STEEM.
More info: @timcliff 's post

Steem Dollar have limits

These rules would make the economic system of Steem sustainable and fair in all circumstances by clarifying the meaning of a Steem Dollar. With the clarified meaning, a Steem Dollar is allowed to have values above or below a U.S. dollar under certain market conditions. All traders can be aware of those conditions and trade accordingly.

By implementing these rules long before the STEEM / USD price gets near either extreme all market participants have ample opportunity to adjust their positions. More info: @dantheman 's post

Witness Update - Help fix the SBD peg!

I admittedly don’t have a full understanding of the exact mechanics behind all of this but to my knowledge increasing the price feed bias will shift more of the rewards to SBDs and thereby increase the supply of SBDs which should hopefully put some downward pressure on the price. If someone reading this has a more detailed understanding of exactly how the price feed bias affects the SBD supply I’d love to hear about it in the comments.
More info: @yabapmatt 's post

Why A Broken Steem Dollar Peg Likely Occurred

After weeks of trying to identify why Steem Dollars (SBD) diverged from their $1 USD course, I am going to go out on a limb and assert that it was much in part to do with the rise of bots on Steemit.
More info: @investingpennies post

Testing The Steem Dollar Peg

If the price of STEEM were to stay at about the same level, or even rise somewhat, I would be able to increase the amount of SBD that I have. Potentially by a lot. I will provide an update in a few days showing the price movements and how that would effect conversion payouts.

This is uncharted territory for me. If anyone can help me improve my analysis, please comment below.
More info: @bacchist 's post

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Dear @danielfs

Interesting choice of topic my friend. Something absolutely worth reading about.

Did you really read enitre Steem whitepaper? Respect.

SBD was indeed supposed to be pegged to USD but it just failed to do so. I honestly don't know if there is any usage for SBD at all at current stage.

ps. I hope you don't mind that I will share this post with few close friends, as I found it quite interesting and worth reading.

Enjoy your monday,
Piotr

Hi @crypto.piotr

I'm happy that you have read this post. It is a work in progress inspired in @nnnarvaez thoughts about exploring the economics of Steem and the economic model of steem like blockchains.". The idea is that people provide feedback, explore or test different settings in a steemit clone blockchain.

Regarding stable coins I think they are important to bring mass adoption for daily transactions like selling, buying, taking loans, lending money, and so on. The majority of people are not traders/investors.

For example, freelancers at @steemgigs would prefer to receive payments in a low volatile currency like SBD.

On the other hand STEEM/SBD could have the ability to compete with Maker/DAI or Bitshares/BitUSD, or even USDT or GUSD, although it sounds utopian.

Unfortunately SBD broke its peg to the USD long time ago. But this should be taken as a "hard lesson" to move on. In fact, the community (users and witnesses) should help to maintain the peg:

With a three-and-a-half day window, community members have approximately one-and-a-half days to re-spond to any issues that come up.

The whitepaper also says:

In effect, feed producers are entrusted with the responsibility of setting monetary policy for the purpose of maintaining a stable peg to the USD. Abuse of this power can harm the value of STEEM so SP holders are wise to vote for witnesses who can be counted on to adjust the price feed according to the rules outlined above.

Finally, I don't mind that you share this

have a nice day :)

Dear @danielfs

Thank you for that kind reply. I only had a chance to read it now. Appreciate.

ps. I've never heard about @steemgigs - are you part of this community/project?

Yours, Piotr

Hi @crypto.piotr

I'm not part of @steemgigs but I like that project. It took about 2 years to become a reality.

@surpassinggoogle is the guy behind it, he has a good heart and tenacity.

Hello @danielfs

To me it's always been a mystery how Steemit's economic system works. Generally one receives the STEEMs or SBDs from the posts we publish. But sometimes you only get STEEMs, sometimes SBDs along with SPs in common. I don't even know what percentage is assigned to each of you when you win at the end of the 7 days. And that's all I ever care.

I also had no idea that STEEM could be purchased outside the platform. There are few STEEMs exchanges.

I really forget that Steemit is not only a social network, it is also a blockchain, like Bitcoin or Ethereum.

There should be a simpler way to explain these things, whether with dolls or cartoons.

But you've made me interested in the subject.

Thank you for sharing