What happens when we pass 10% debt ratio and continue to grow past it without no easy way to convert SBD to Steem?
Nothing changes really (in terms of SBD; it does imply a further 50% drop in the price of STEEM which would certainly be painful all around). Since no one is converting SBD the amount of STEEM you would get by converting it is irrelevant. If SBD does drop to $1 or below and it starts getting converted then the ratio would probably drop (eventually).
BTW, the main reason conversion was removed from the UI was people were doing it anyway when SBD was worth $10 and burning 90% of their money. To protect people who didn't really understand what was going on, that option was disabled. However, with SBD back close to $1 it would be reasonable to re-enable it (I'm also told that it is possible to perform conversions using steemconnect for people who don't want to use the CLI).
What happens when freedom decides to sell his 944,780.18 SBD?
The price will drop! If it drops to $1 or below then people will start converting it and the ratio will drop.
Most of the large SBD holders are exchanges and that liquidity is required to maintain their market.
Most likely the SBD held in exchange accounts is actually owned by exchange customers and not the exchanges themselves. Most of it isn't being used directly for liquidity, it is just being held. Who those customers are, what they want the SBD for, what they will do in the future are all unknown.
If SBD remains unpegged to $1 USD, is there any reason to keep it?
As you noted there are improvements already being made in the upcoming hard fork. Also, at a current price of $1.03, I wouldn't consider it to be all that unpegged (this is within the range observed for other decentralized pegged tokens such as DAI or BitUSD). You can take a glass half empty approach and say that SBD going up to $12 proves that pegging doesn't work or half full approach and say that it dropping back down from $12 to $1-$1.20 and staying there for the past couple of months proves that pegging does work (if imperfectly). Eye of the beholder I suppose.
BTW, a large part of why the print rate is zero has almost nothing to do with SBD and everything to do with the STEEM price dropping. When STEEM isn't worth much the whole system is hobbled in a lot of ways, SBD being one of them but hardly the only one.
The user @mwfiae made a very easy to use tool for this exact purpose when the SBD seemed to drop under 1 USD for the first time after the removal of the convert function
Thanks for the mention!
Hope my tool can help some people who aren't familiar with cli's etc. :)
I would say SBD is a pegged asset with upside exposure :) with 1 USD being the safety net for retailers accepting SBD.
That doesn't work at all at significantly above $1 (say $10). No one will spend SBD worth $10 when retailers are pricing in SBD unless they are uninformed (and that is just taking advantage of noobs, who will end up with a very bad taste once they figure out what happened). So either it stops being used altogether, or it stops being used for pricing and becomes a regular effectively-unpegged token with a dynamic exchange rate. It would be mostly okay for a small premium like 1.01-1.10.
Also, nobody would design a token like that, nor objectively think it would be useful. This is essentially just rationalizing the flaws in the existing design with some claimed (but really not very realistic) benefit. (Okay an exception might be retailers who could get some extra value from it, but again, doing that by ripping off less informed users is not a good long term approach from a system-wide perspective.)
What system do you want? You seem to be knowledgable
I'd like to see SBD work better than it does. The upcoming hard fork has a couple of somewhat minor code improvements, additional code improvements can be made, and some improvements may come implicitly from scale should Steem (hopefully) grow larger.
I think it is pretty useful even without a perfect peg, assuming the peg is at least approximate. For small purchases a few percent fluctuation doesn't really matter. For large purchases people will adjust to the exact market price, but that's okay. Over time I think we can get there.
Should you and other top witnesses not setting price feed bias percentages, with a SBD Debt Ratio at 6+% ... there is to much steem being printed.
Or is it that you and the witnesses know this an play dumb? Because at 10% the SBD floor will be gone, and a bail-in is just what you guys want so that users and community be pickpocketed?
Who else is going to pay to bring that 15+ million SBD Debt down? Who is going to burn it?
Looking forward to your answer.
There is no basis for a price feed bias at this time. Nothing in the white paper (even accounting for subsequent changes in the consensus rules or understanding of the economics) would suggest it. Setting that aside, if a price feed bias were used, let's consider how that would work:
The rest of your comment is largely incoherent.
The SBD smart contract includes (since almost two years) the possibility that (based on 10% market cap) SBD may shift from being pegged (if imperfectly) to USD to being pegged to STEEM. If and when the ratio subsequently decreases, it returns to being pegged to USD. Any SBD holders who don't like taking that risk not only had the opportunity to sell over the past nine months at prices as high as about $10 but can still sell or convert at about $1.
Everyone is in the same boat here, we would all like the price of STEEM to rise. But if it doesn't the system includes reasonable rules for how to handle that situation with respect to SBD.
People may burn some coins (for example see the promoted feature) but that certainly isn't part of the consensus rules. No one should count on any amount of coins being burned.
BTW, referring to SBD as a debt instrument or debt-like instrument is an analogy. It isn't literal. "Debt" implies some sort of claim against an asset, which doesn't exist here. SBD holders have the right to trade their tokens or convert them according to the smart contract, that is all.
Those are the wrong answers. I am out. I see what course this ship has chosen... I wish you good luck on your adventures.
Should you and other top witnesses not setting price feed bias percentages, with a SBD Debt Ratio at 6+% ... there is to much steem being printed.
Or is it that you and the witnesses know this an play dumb? Because at 10% the SBD floor will be gone, and a bail-in is just what you guys want so that users and community be pickpocketed?
Who else is going to pay to bring that 15+ million SBD Debt down? Who is going to burn it?
Looking forward to your answer.
Indeed it would. Any idea of why it hasn't been re-enabled?
No, but my guess would be: a) other priorities, b) SBD is still above $1 (if only just) so in most cases conversions are pointless still. Most of the major traders/investors who want to do this are comfortable using the CLI (or possibly steemconnect) anyway.
a) Is just not valid. To re-enable previously disabled functionality in a UI is seriously a 5 minute job - maximum.
b) I wouldn't consider it pointless. If I was a big holder of SBD and wanted to liquidate, converting to STEEM at 1.01 or 1.02 it is still much more preferable for all involved than dumping my large SBD holding on the open market - paying brokerage and damaging my sell price with volume in the process.
But sure, major traders/investors (a.k.a. speculators) are not affected and those are the ones we really care about...
If you are really a big holder such that you can't sell without crushing the market below $1 (easily thousands of SBD can be sold >$1 though, just not instantly) and you care about this you can manage to figure out how to use the CLI or it can be done with steemconnect (which amounts to putting the request in a web link and typing it or copying it into your browser; I believe there are some posts explaining how to do this).
Bear in mind that the UI in no way supports the entire range of Steem blockchain features. For example, withdraw routes are another feature that can only be done using the CLI (or steemconnect). Or creating accounts, or fill-or-kill market orders, or several other things. Once SMTs arrive there will likely be a lot of SMT functionality that can't be accessed via the web site. I think its okay that the web UI provides basic functionality and to do the rest you have to use some other tool.
You mean slippage maybe? Because if you trade on the internal market there are no fees. You can only trade for STEEM, but that's what you get if you were to convert anyway.
I agree with you on a) but in practice there seems to be a problem with walking and chewing gum at the same time around here.
Okay, Sorry but I just have to ask, this conversion function that some of these people want to come back, is this the same conversion that took 3 1/5 days to convert SBD to steem? If so I, as a non-crypto person thinks it should stay gone. the internal market does the same thing only faster.
Yes that is the function they are talking about.
I hope they do not bring it back, after @everittdmickey explained the internal market, It was a big boon to me. So thank you for trying to keep things clear.
Nice
I could implement this over on steemfiles.com but you'll have to audit Typescript/Javascript code or trust me. I should link to the source code of the steem-js fork I use but the rest is clear un-obfuscated javascript.
Motivate me to implement it and I'll start on it.
Peg to $10 I say.
Cg
That would crush STEEM. At the current 50% debt ratio the outstanding SBD would be multiplied by 10 and would represent a 50% increase in the supply of STEEM. How is an already-weak STEEM market going to support that? It won't.
What if for future value movements, as sbd goes back to 10 or more than 1, steem goes the same way? Or lets say steem goes higher than sbd? Would that make a correct proportion of debt ratio as a stable one?
Sorry I'm not understanding your question.
I think trying to manipulate SBD back down to $1 when Steem was $3 and SBD was about $8 is more detrimental to Steem.
Cg