SBD Debt Reduction - A Fiscally Conservative View

in sbd •  2 years ago

There are currently 1,054,383 SBD coins in existence. Based on the recent price trends, the floor of the STEEM market-cap seems to be around $20,000,000. At that level, the SBD debt level is around 5% of the market-cap.

As I outlined in this post, we want the network to be at an equilibrium of a 1% debt level. Once the debt level reaches 2%, the network no longer pays out liquid rewards entirely in SBD. Once the debt level reaches 5%, the network no longer pays out liquid rewards in SBD at all. Once the debt level reaches 10%, the network will no longer honor the 1 SBD = approximately 1 USD worth of STEEM agreement. (We don't want it to reach 10%!)

Short-term fluctuations above/below that are normal and expected, but in the long-term we want it to return to 1%.

Unless you think that STEEM is going to reach and maintain a $100,000,000 market-cap, the current amount of SBD in circulation is too much.

If we assume that the current price spike will hold, then we should aim to have 1% of $50,000,000 in circulation, or 500,000 SBD. If we assume that it will head back to the $20,000,000 market-cap floor, then we should target 1% of $20,000,000, or 200,000 SBD.

This is not something that should be done quickly, as we do not want to kill the price spike or put too much downward pressure on the price. It is something that we should try to address slowly over time though. I encourage everyone with SBD to consider converting some of it to STEEM (slowly over time) to help reduce the debt.

[Edit] Another suggestion from @thecryptofiend is to consider burning SBD to promote posts!

I recently purchased around $700 worth of SBD (with BTC), and plan to cycle it through SBD->STEEM conversions. (After the conversions are complete, I will buy back more SBD with the STEEM and repeat.) Hopefully this will help.

Authors get paid when people like you upvote their post.
If you enjoyed what you read here, create your account today and start earning FREE STEEM!
Sort Order:  

If there were better advertising features that the one we have, I would probably be spending much more of it. The "promote" function should position the person who spend that money to be at the "TOP" either on top performing articles as a "suggested post" OR on the top of the most used page on the website...which I guess is the trending page OR directly appear in people's newsfeed. I know there are purists out there but that's business.

·

Yes, there are discussions in GitHub over how to improve it. I agree!

·

I love the idea of "suggested posts" appearing in more places. For example, trending/home, tag views which match the tags on the promoted post, etc.

·
·

Yup I agree. Let's say if someone paid 20$ to promote a post, this post could appear as if it received 20$ worth of upvote. The highest of the 2 numbers determine the ranking but if this is tried promoted post should be marked as promoted post and how much they've been promoted should be displayed on the trending feed. Just an idea.

Another suggestion from @thecryptofiend is to consider burning SBD to promote posts!

yeah... and we can actually do amazing things about this. But not only on Steemit, but also on eSteem (cc: @good-karma), or Busy (cc: @ekitcho). How?

eSteem and Busy also should display in some place those promoted posts. This do not have to be always visible, you can ask once a user, whether they want to support STEEM network by displaying promoted posts in some place.

For example if eSteem would notify me once a day about post which spent on promotion the most, then as a user - I would not be very much annoyed, but as a STEEM shareholder, I would be happy that someone spent money on promotion.

Actually notifying all eSteem users which has this option enabled would be totaly different model on promotion - take all or nothing. Actually people will start to bidding, because they will start to guess how much will be enough to be on first place at 00:00 UTC every day.

Even if they will "loose", they will be still proportionally promoted on Steemit :)

We are a shareholders of Steem - please give as a tools, thanks to which people will going to burn more SBD :)

·

Interesting approach for early adopters. Not easy to understand and adding friction for mainstream audience.
The Idea is OK in my pov. Have to discuss it

·
·

Consider this: option to enable displaying promotion post can be buried in the Settings - with additional information, that enabling this help support Steem network.

You can ask a user once, whether they want to consider enabling that, but only if:

  • you will detect, that certain user is very active, and spends X time a day on your website (probably such user already know everything about Steem)
  • or easier approach. Ask only users, which has... I don't know... maybe 10 000 STEEM or more.

I will emphasize this one more time. This can be disabled by default :)

·

Great idea! Implementing new ways to add value to promoted posts via the other platforms would be huge!!

·
·

but I think other platforms should try to use a little bit different algorithm than Steemit. Displaying in separate tab promoted posts in order... is IMO the most ineffective way to promote posts :) but at the same time I understand this approach.

For example I would like to see an option, in Busy or in eSteem, to put 1 or 2 promoted post in random spots on my trending page. If I would like to cheat myself and force me to take a look on promoted posts without a acknowledgement that they are promoted - then let me do that - this will allow me to do honest curation and support Steem network at the same time :)

·
·
·

There is some conversation about different approaches here: https://github.com/steemit/condenser/issues/1072

Great service announcement, Tim. Anyone looking to buy STEEM now should consider buying SBD first and converting. The downside is this will create demand for SBD which is already at $1.06. We saw the value of SBD spike up the last time there was a sudden price spike also. Becuase of this debt instrument, it seems we've built ourselves a very volatile cryptocurrency. At least it's nice to see it go up for a change. :)

·

As a short-term thing, that is probably OK. When the price goes up from $1.00 there is more of an incentive for people to sell. It might be what is needed to free up some of the SBD that is in "long-term holding mode".

·
·

Yeah, that's a great point as well. Curious to see what will happen.

·

Debt should not be volatile generally speaking, unless there is a high risk of default or it has a high fixed rate of interest. Crypto markets are a bit 'weird'. For example, currently my own trading (which normally helps keep SBD close to 1) is limited by the fact that Poloniex's API is broken.

I've done my part and been converting most of my SBD stash into Steem.

·

Same here.

·

Awesome!

·

That's nice !

As a new user i had no idea this was going on, ill make sure to do what i can as long as steemit is keeping this current trend i have no issue trading in some sbd.

·

Cool - keep in mind though there is a difference between trading SBD for STEEM and converting SBD to STEEM. If you trade, the SBD stays in existence - it just changes hands. If you convert, it actually destroys the SBD and mints new STEEM in its place. Keep in mind though that conversions take 3.5 days, and you can end up with more or less STEEM per SBD than you would get from trading - depending on the price fluctuations during those 3.5 days.

·
·

Well for the next 30 days im only doing things to raise my sp so its no matter to me for now. But i will keep that in mind once I'm done with this 30 challenge.

·
·
·

You can do both. If you get any SBD, you can convert it to STEEM (via your wallet) and then power it up :)

·
·
·
·

Oh yeahhhh!! Thanks again

·
·
·
·

Not essential but one nice feature I've wanted to see would be convert-to-SP (powers up immediately upon conversion)

·
·
·
·
·

Agreed. I emailed @sneak about it a few months ago.

This is why I have been converting my liquid rewards to SBD and then burning them through promotion - people may think it is stupid but if more people did that we would slowly erode the debt.

·

That's awesome, yes it really does help!

·
·

We should get as many others to do the same as possible. A handful of people doing it doesn't make a big difference but imagine a 100 or a 1000!

·
·
·

Indeed!

·
·
·

See post edit :)

I have also converted mine, about quite a long time ago. I only had understood the convertible note concept behind SBD but I didn't know how huge the debt was until I read your post.

To make apparent the importance of converting from SBD to STEEM, maybe we can try to have like a challenge or advocacy lead by some of the most influential people here in Steemit - since it's a social network, maybe it will work.

What about asking Steemit inc to convert a part of the SBD they hold. They are the biggest SBD holders by a long shot. Have you consider asking them?

·

It is my hope that they come across posts like this. I think they have burned a significant amount of SBD iirc. I have not asked them directly though. I don't really feel like I have a right to tell them what they should do with their money.

This is good information to have-- thank you. I just have a few SBD, but I will get out of that.

Excellent information sir @timcliff, thank you very much for keeping us informed, congratulations for the good work you do on the platform

·

There are currently 1,054,383 SBD coins in existence

It was about 1.2 mio a few days ago. So it looks like big players are pretty well aware of all the dangers and playing accordingly.

·

Are you sure? I have that on March 1, there were 1,105,077. I agree that it is going down (which is good) but I'm not sure if it has dropped that significantly in a short amount of time.

·
·

Well, peoples memory might play tricky things, but yes, I do remember that clearly, because I thought : "wow, with that and 0.07$ for Steem now we are really close to 10% debt"

·
·
·

Could it have been the market-cap of SBD, instead of the number of coins?

·
·
·
·

Yes, indeed, it could be the case because I also remember to be a bit surprised to see 1.05$ for SBD also a few days ago.

·
·
·
·
·

That would make sense :)

Good information! :) Thank you @timcliff! :)

I always directly convert my Steem and SBD in Steem power !

·

How do you turn your SBD into STEEM? Do you trade on the market, or convert via your wallet?

·
·

I use the inner market of steemit, so it's with blocktrade I think. Now, I direct create my post with 100% steem power... Do it help to rise the price ?

·
·
·

If you use the market, it is actually running on the Steem blockchain directly. That actually doesn't use Blocktrades.

When you use the market though, it is technically not reducing the SBD debt, since the SBD is just traded with someone else in exchange for STEEM. When you do the 3.5 day conversion via your wallet, then it actually destroys the SBD in the process. It is a little riskier though. You can end up getting more or less STEEM that way - depending on the price fluctuation. Plus you have to wait :)

If you do 100% SP posts, then it doesn't generate any SBD (which is good) and it keeps STEEM out of circulation - which is also good :)

I've been making satirical news posts and have been using Steemian's posts from the day as the leaderboard and box banner ads, even as page-break ads. One of the points I'm trying to make by doing that is that we could consider building an internal traffic system that would take SBD and then 'serve' the post promotions in ad slots in a "run of network".

We could even tie the impression goal to the SBD CPM rate.

Do you think this idea has any teeth to help get that percent down to %1?

·

I'm not 100% sure what you are proposing, but it sounds similar to something the @pipes user is doing. You should check them out. If you had something different in mind, let me know. (Maybe an example scenario of your plan in action would help.)

·
·

Hey @timcliff my response got too long so I just went ahead and made a post haha. Give it a read while I go check out @pipes and what they're doing ;)

https://steemit.com/steemit/@prufarchy/idea-steemit-post-promotion-ad-server-using-sbd

·
·
·

Cool, I'll check it out :)

Thanks for the post! I don't fully comprehend all the info behind market cap and debt level. Trying though.

Does this suggest one should buy SBD with one's BTC and FIAT first to achieve best value whence finally converting to STEEM. ( assuming one's greater goal is to acquire valuable steem, as is mine )

Second, this information was shared with me via Trading View:

"it's interesting, eth during this pump finally reached 100k transactions per day , typically 50k, https://etherscan.io/chart/tx however steem has been steadily above 100k transactions per day even during low volume seasons https://steemit.com/steemit/@stephenkendal/steemit-daily-transactions-have-seen-100-000-day-in-6-of-the-last-7-days

Cheers STEEM!

·

Sorry, I'm not a good person to ask about optimal trading strategies :)

Here is another cool post about transaction volume:
https://steemit.com/blockchain/@roadscape/another-look-at-btc-eth-and-steem-blockchain-utilization-tps