SBD Debt Reduction - A Fiscally Conservative View
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 $700 worth of SBD (with BTC), and plan to cycle it through SBD->STEEM conversions. (After the conversions are complete, I will buy back more SBD with the STEEM and repeat.) Hopefully this will help.
If there were better advertising features that the one we have, I would probably be spending much more of it. The "promote" function should position the person who spend that money to be at the "TOP" either on top performing articles as a "suggested post" OR on the top of the most used page on the website...which I guess is the trending page OR directly appear in people's newsfeed. I know there are purists out there but that's business.
Yes, there are discussions in GitHub over how to improve it. I agree!
I love the idea of "suggested posts" appearing in more places. For example, trending/home, tag views which match the tags on the promoted post, etc.
Yup I agree. Let's say if someone paid 20$ 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.
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:
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. :)
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.
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.
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 :)
Cool:)
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.
Great idea!
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
Thanks @jlufer :)