Steem Backed Dollars (SBD) Trading Lower Than $1.00 USD Worth of Bitcoin.. Time to Increase SBD APR %?
While certainly not the most knowledgeable person when it comes to the work an economist would normally do I've noticed a trend over the past few days which has SBD trading at anywhere between 2%-8% lower than it's supposed to be. Is it time for some change?
Will Increasing SBD APR Percentage Help This?
( screencap stolen from https://bittrex.com showing low SBD price )
It would appear that people aren't holding their SBD post payouts in favour of trading them to other currencies such as Bitcoin. While understandably most Steemit.com users are in need of monetary compensation this rush to cash out into other currencies has put a strain on the peg causing it to fail far below what it's intended level is. Would an increase in SBD APR % paid monthly make more users hold their SBD? My thoughts and guts are telling me yes, however that being said it's up to my fellow witnesses to agree on an increase.
I propose an increase of SBD APR percentage to 1.00% to reward SBD holders for not cashing out right away. However, as detailed below see some issues with doing so. Read below:
The "Problem" With Increasing APR Rate
Some of the largest holders of SBD are exchange accounts and while they are performing a great service for the STEEM network it's to be mentioned that by increasing the APR rate these services will profit immensely, more so than the average user. If these exchange accounts were to trade in their SBD earned by increasing the APR rate for other currency the exact opposite effect may occur then what we wish to happen.. And SBD price and peg may fall even shorter than it is now... Sort of a dilemma. Not sure the best way to go about this.
Now while these exchange accounts such as @bittrex and @poloniex have every right to dump their interest earned SBD for other coins, some form of agreement or contract having them hold onto the SBD or convert it into STEEM seems the best course of action..
Albeit it may be difficult to convince these organizations to act on behalf of our STEEM networks greater good rather than their own. Perhaps it's time to contact these exchanges and ask them to aid in the keeping of the peg?
This post is more so a means of starting open discussion and getting the gears turning to get our $1 peg back to SBD.. I'm not an economist nor do I even know if the ideas given above would help maintain the peg. It's up to our community and the companies who serve as exchanges to come up with an answer to the failing peg problem we seem to be facing.
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I dont think this will be an issue as long as its staying around the 0.95$ range its just the sentiment of the market right now.
As stated I think most people are going to be selling there sbd and buying btc so they can accumulate btc for the upcoming hardforks.
Once all that settles down I think the peg will stay closer around a dollar. Heck if someone gave me some btc and I saw sbd hovering $0.95 or lower id buy as much as I could up just dont habe the liquidity right now.
Just my two cents, but sbds current weakness is just smart investors future gain.
If a person is willing to trade SBDs at 5-10% below the peg for short-term cash, will a 1% interest rate really convince them otherwise? I'm skeptical. If we're going to try this, I'd vote for a bolder move, as high as 2.5%
SBDs have been mostly under $1.00 for a couple of months now. I've been saying that there should be interest, as STEEM prices and volume had been trending downward during this time.
How long should we "wait and see?" Having SBDs routinely under $0.95 isn't exactly inspiring confidence in the token. Witnesses need to do a better job of managing this. SBDs need a floor, but they don't necessarily need a ceiling. Raise the interest rates a bit and see what happens. They don't need to be 5% or 10%, but they should probably be higher than 0.1%.
I agree so much to you @ats-david ...and I suggest it to be 1% the APR interest rate as @kyle suggested ,too. And see what happens.
It is possible to lower the amount of SBD generated for rewards? Currently 50% of rewards are SBD and 50% Steem Power, changing that to, for example, 40% SBD, 10% Steem and 50% Steem Power should help to rise the SBD price.
However I do not know if Steem is designed for making that change as easy as modifying the APR.
About the exchange problem, I think the solution will be giving interest only to the SBD in the saving account, and maybe also increasing the lock time for savings. But again, I do not know the difficulty of that change for witnesses and developers.
I think that shouldn't be a big problem. Maybe it would be hard to make it as you propose ( so adding Steem to that ) but changing it to let's say 60-70% to SP and 40-30% to SBD should be quite easy.
thanks for thinking that through a bit... this is new to my klye .. I'll be waiting for the knowledge to drop on this <3
An attempt to consider some more of the possibilities than what I normally would.. Looking for community input and thoughts on the matter. It effects everyone using STEEM and Steemit and thus should be put out into the open and talked about as a community rather than having a select few decide the fate of many.. :)
can I suggest the #discussion tag? that one seems fairly active
perhaps switching to the tag #discussion would help... that is a very active tag where people discuss stuff, it's a tag "sponsored" by timcliff
Good points, there seems to be a lot of volume movement all around the Steem economy right now just based off the sMT announcement. Is it even clear when they go live?
I'm guessing that we're going to see platform upgrades to Steemit before the SMT go live to help insulate the network against being undermined....fingers crossed at least. What does Steemit look like if a company adopts the model but is also beholden to shareholders?
I'm afraid that this won't help much. If I want to exchange SBD for steem or some other coin, I don't care even if interests are 10%. That won't stop me to do it. People cashing out small amounts and there is not much difference.
nice post kawan ,,,
I really like.
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I think you are right..it can be..my thought