Fairer Price CalculationsteemCreated with Sketch.

in smartsteem •  3 days ago


Fellow Steemians,

@therealwolf here, founder & developer of Smartsteem.com

I'm writing to you today, to share some light on the current situation with STEEM.

Due to the recent STEEM USD price-fall, an edge-case scenario on the Steem blockchain had been activated and over time became more and more serious & prominent. Now, it's not too serious, but I feel it's important to talk about it, to prevent confusion

Problem: STEEM Price is lower than represented on the blockchain

For the technical versed people under you, feel free to read this post as well.

But in a nutshell, the following is currently happening:

There is too much SBD available and STEEM has not enough market-cap (fiat_value * supply), which results in multiple consequences.

#1 - Change in Payout (Less than 1% SBD)

All posts are currently being paid out to 99% in Steempower & Steem. Less than 1% of the reward is paid out in SBD.



As seen on https://smartsteem.com/promote/buy


Smartsteem.com is using the correct calculation, however, 95% of the other services are using an inaccurate one.

To change this, I've gone ahead and made a PR for the postpromoter-software, as it's the most popular one. So for everyone who is using it, make sure you update it! And just as a quick side-note: @smartsteem is using its own source-code.

#2 - STEEM price is artificially higher than it should be

When you look on CMC right now or on the exchanges, you'll see that Steem is currently worth around 27 cents. And even though witnesses are representing this value very accurately, the blockchain is artificially holding the value of Steem higher than it's supposed to be.

The 3.5 day average should be around 30 cents, but it is actually at 40 cents, due to the high SBD supply. (If you're interested about this topic, please read this post).

Generally, this is not a problem, however, it becomes one for those wanting to promote posts by paying with STEEM & SBD.

All services (incl. us) have to take the external exchange prices for calculing the value of the transfer, and until now, we also took the internal price for the calculation of the vote-values.

Which resulted in a negative/neutral profit, due to the nature of the external price being incredible lower than the internal one.

What does this mean?

A few promotion-service operators (@themarkymark buildawhale, @transisto promobot & @yabapmatt postpromoter/steembottracker), including myself representing Smartsteem.com, came up with a plan to temporary fix the situation.

So what this means is that from now on, we're going to take the exchange prices or better yet, the real 3.5 median price for calculation of the vote-values.

The result of this is, that you're going to see lower values on Smartsteem.com & Steembottracker than on Steemit.com, Steempeak, Steemworld.org & co - but the important part is: they are correct and you're not losing money.

As an example the difference of vote-value of @smartsteem:

  • when calculating it with the internal price of ~40 cents =>81$

  • when calculating it with the real average price of ~30 cents => 64$.

[DEV] Calculating Real 3.5 Median Price

For developers, feel free to use the code below. It will get the 3.5 median average price.

const calculate_witness_median_price = async () => {
  try {
    let history = await client.call('condenser_api', 'get_feed_history') // this uses dsteem's client
    history = history.price_history.map(x => parseFloat(x.base.replace(' SBD', '')) / parseFloat(x.quote.replace(' STEEM', '')))
    return parseFloat(((history[history.length / 2 - 1] + history[history.length / 2]) / 2).toFixed(3))
  } catch (error) {
    console.error(error)
  }
}

Ending Words

Now I understand that for many of you, all of this is a lot. But I just wanted to personally address this situation and let you know that we've taken care of it.

Don't be surprised if you see lower vote-values on your dashboard, than actually on the blockchain. You still received the correct votes.

But if there are any questions, please let me/us know in the comments below or on our discord channel.

With that said:

Keep on being positive! The bear-market will not last forever. Instead keep on accumulating and earning sweet STEEM!

Sincerely,
@therealwolf
Founder & Developer of Smartsteem.com

PS: Christmas is coming and maybe, just maybe, the Smart Santa got something for you.. :)


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I really appreciate your positive leadership man, you addressing the problem and providing a solution prove that you only have the well being of the ecosystem as a top priority. These are really tough times, those who claimed to be here for the long haul will be tested and I hope that through hard work we will raise victorious from this challenge.

One thing still concerns me, why does this happen? Why the blockchain shows a price 33% higher than the one it shold reflect? I think that clarifing all these little details is the key to recover user's confidence on the platform... as I see it, having a overvaluated steem prevents users from massively converting SBD to Steem, this might help keeping Steem price's nose just above of the water, but at the same time it sinks SBD peg and (imo) it also sinks investor's trust into the platform. Please correct me if I'm wrong, when I read the Steem Whitepaper I though that SBD will guarantee you 1$ worth of Steem through the conversion function. I arrived to the platform this year, but I know that holding SBD will grant you some interest when SBD's price is below 1$ (which is the case right now).

When I read all those guarantees I thought that investors will be confidence to drive their capital here because the system was designed to inecntivize those who hold. The bear market is a great opportunity to test these two mechanisms, so far I can't say they performance was up to my expectations. It will really be reassuring to understand why current flaws do occur in order to start thinking solutions, if you just don't understand the problem it is impossible to contribute to the solution. Therefore, why the blokchain is overvaluating Steem? Who is the one that establishes the blockchain steem price if top 20 witnesses' feed price is the real one? Why interest for those who hold Steem tokens have not been activated since it is a mechanism that encourages holders? I am aware that witnesses have the cal to activate the interest when you lock some SBD, what is the general opinion that top witnesses have on this mechanism?

I'm not lossing my enthusiasm because of those unaswered questions, I know that the ecosystem is still pretty young and has a lot of room for growing, developing, and fixing it's inconsistencies. I really think that community have to take the lead and get back Steem to the road of success, we all have to contribute to that goal however we can.

I already went and wrote wall of text, sorry for that :)


Edited: I read the post from oflyhigh, I understand why does this happen... but still, I read all the HF20-related posts and none of them highlighted this code update... at least I understand a little bit more why is this happening and the solution is quite simple, Steem development cannot be on a bunch of hands, I think that if consulted this code change will never be allowed... it removes authority from witnesses and renders useless their price feed.

This is all correct, but may I suggest abandoning $ calculations and using STEEM as the native and base currency.

For those paying in STEEM, it is then a simple calculation to value the upvote and the amount needed from vote-sellers. The value of an upvote is based on the official blockchain price, however wrong it may be compared to external market prices.

I also think this is a good time to ditch the $-designated rewards and show them in STEEM. Then users will also see how stable upvotes have been in STEEM.

Thanks.

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Lots of people have suggested doing away with the USD valuations on Steemit.com and showing them in STU's (Steem Internal Units.) That way, when the markets fluctuate, you will still see the true, unchanged value of your vote.

Though, this suggestion has been predictably unpopular for reasons you could likely guess. Most people, even those blogging on a cryptocurrency website, don't really care about the native token. They are still fiat-centric and want to know how many loaves of bread they can buy when their post pays out.

Clones like WeKu have implemented this change and it makes using the platform feel a lot smoother, so I'd certainly like to see it tried here, as "surface-level" as it may seem. Psychologically it's a significant difference.

What about an option to toggle "Native currency" or "Fiat currency" display in Settings? I think it would be quite nice to have that available.

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the toggle may please both camps. Steempeak shows STUs.

I agree, it is a big psychological difference to see your earnings stable in the face of a changing exchange rate. I don't think it is a "surface level" change - it's like going abroad and always converting local prices into your native currency; once you live there, you stop doing that coz it stops making sense; you live, earn and spend locally.

That is, in many ways, steem's one good feature - a feature that then isn't... featured! Go figure :-)

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That’s funny that you think anything could ever please both camps in 2018. They’ll both still find something to dislike. Disappointment is one thing at which we all still excel.

(I’m being sarcastic)

Posted using Partiko iOS

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More gallow's humour appreciated in these dark days. Unfortunately, the "sarc" tag is often needed to avoid triggering the over-sensitives.

@therealwolf I understand the different calculation however, what I do not understand is, if I send 1 steem here on steemit, I'm 1 steem out, yet if on an upvote you get back 0,95 steem, than I still loose money all the time. Even though it could be a correct price outside the platform, we are on the platform and therefore this still affects our vote-buying right?

??? What needs tobe fixed? Is there an error?

What do you mean with real median price?

The median price is 0.402 as of now. This is the real median price!!!

The blockchain is always leading. So how can you make something different for the median price?

This median price (0.402) is there with a reason. And now you guys (are going to fix) the reason?

This goes against the blockchain, ahh I understand, The Bot is of more importance, there must be revenue, ...

I am really very disappointed...

Today I did not get any rewards transfared to my account - wat does it mean - when will I get them????

Fantastic concept and wonderful post. Thank you for sharing.

One other thing needs some serious thinking - serious re-thinking - the idea of capping SBD at 10% and at the same time implement the so-called "haircut". That algo is there to avoid the potentially catastrophic scenario of having such a low STEEM value compared to SBD that the SBD-debt is higher than the market cap of STEEM. We are nowhere near that scenario and yet the ecosystem has triggered this algo.

Either move the SBD debt rate back down, or move the haircut-trigger up - either way do not have them triggered at the same time!

Also, there was nothing wrong with SBD at max 5% - it was a stable ecosystem that worked without SBD printing. Now we are in a worse scenario.

Thoughts appreciated.

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I fully agree. We're currently in this mess because some people thought it was a good idea to print millions of SBD, to counter a good thing: a pump.

Supply went from 3 Million to 16 Million. If the supply would still be at 3 Million, the peg would have hold easily on the downside.

But now we're at the point where converting SBD to STEEM is risky and actually bad for STEEM (due to the inflation). Reducing the haircut rule wouldn't be good in my opinion as it could very well increase the STEEM supply by a lot.

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Thanks! Yes, messing with the rules now needs to be done with care - a care that was not taken when cheering an SBD supply hike.

I have been thinking about any solution and the sad thing is that there is nothing anybody can do within the ecosystem to change its current blockage. It requires external changes, such as a drastic change in the steem/sbd price.

When that happens, I suggest reversing that 10% debt level or at least putting some distance between the debt ceiling and the haircut level (the tonsure!)

Indeed, if the haircut level were to be increased just 1% now, it may unlock the system. SBD print rate would still be 1% (or zero) so it wouldn't be able to run up that 1% in coins, although it could do in price. Just thinking aloud, perhaps just to show that tweaks are not currently going to be effective.

On the upside, earnings in STEEM are edging upwards :-)

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When the steem price stabilised and get at 0.402 cents then the SBD PEG will be restored.

The current haircut median price will slowly come down, as it has from 0.417 when we started it is 0.402 as of today.

Bots are a total different game ... they can choose as they wish...

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If you are waiting for market conditions, then it is not a peg.
There is no peg; it's just an idea without mechanisms to implement it.

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Stop wishful thinking about what should be, use reasoning about what is.

The peg is not an idea, it's the outcome of a calculation. What we are witnessing now is exactly the peg mechanism at work.

115322866.353 / 286962591.735 = 0.402

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It isn't a price peg mechanism; it is to avoid the SBD debt ratio rising, potentially to be greater than the STEEM market cap.

So, what would happen if prices were x10 - STEEM at $2, SBD at $6?

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??? It is a supply mechanism. When prices were x10 the mechanism stays the same. We would have a median of 4.015. Maybe I don't understand what you are trying to say.

The SBD debt ratio is capped @ 10% of steem market cap.

After the crypto crash the blockchain triggered the 10% SBD debt ratio Hair Cut Rule, the steem price crashed and the blockchain is now in a recovery period.

As you can see the blockchain creates an incentive to convert sbd to steem.

There is a bug that's the reason we are still printing 1% sbd... that's not a big deal, with every conversion the SBD debt will go down and so will the median. However, it takes time...

This way the steem price and the median will find each other again, and that would be the end of this Hair Cut recovery period and the SBD / 1 USD peg will be restored.

Of course when the steem price recovers, it has the same effect, market cap would rise, and the debt ratio would go down. Steem price and median will find each other, and from that point, the SBD Peg will be restored.

PS: Market Cap Debt Ratio @ 1 SBD = 1 USD was 18.xx % as you can see we are now down to @ 16.xx %.

We will be fine, tshtf in cryptoland, and we are recovering and we did survive. Hurray

Your transparency brings forward a nice and quality service we can all enjoy and watch grow, thank you for this post keep it up!

Great solution, always appreciate you and your efforts in being the most fair and transparent.

I'm very glad to see this being addressed. I just wrote an article about it a couple of days ago.

https://steemit.com/busy/@jeezzle/the-truth-about-bidbots

I lost about 16 Steem on this post. https://steemit.com/busy/@jeezzle/the-dark-crystal-even-better-than-you-remember

That had been upped by 154 Steem.

By my calculations I should have actually made 50 Steem.

If you read that post you will see that I made the decision to never promote a large post again because it simply isn't worth it. I did also come to conclusion that the calculations for Steem at the time of the original post would have been listing at $0.40 even though I took several snapshots of the actual prices for everyday and included them in that post and you can see that they are all between $0.34 and $0.30. So where did it pulled out $0.40 from? It seems like it simply pulled it out of thin air in order to screw us.

Very nice

Sounds good. 👌

Posted using Partiko iOS

Regards @smartsteem

I've sent you this link https://steemit.com/dtubedaily/@luciannagy/txynz048 for upvote and nothing appear yet ... hope everything is fine. Regards

Congratulations @smartsteem!
Your post was mentioned in the Steem Hit Parade in the following category:

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