Steem’s SBD Burn: Reducing Liability, Building Resilience
Hello all,
As many of you are aware, I proposed the controlled burn of idle SBD held in the Steem DAO account — a proposal aimed at strengthening Steem’s economic foundation. The proposal, titled “SBD Burn Proposal – Let’s Get Rid of What We Don’t Need”, has received overwhelming community support, with over 70.11 million SP in favor.
The burn has now commenced. The first hourly batch of 1,456 SBD (equivalent to 35,000 SBD per day) has been successfully sent to the @null address — permanently removing it from circulation.
Over the next 30 days, this process will continue hourly, reducing the total SBD supply by 35,000 SBD daily, for a total burn of 1.05 million SBD.
Current SBD supply: 9,101,129.870 SBD
Post-burn target: ~8,051,129.870 SBD
What This Achieves:
- Reduces Systemic Liability: Idle SBD is a protocol debt liability. Removing it directly lowers the burden on STEEM holders.
- Lowers the Haircut Price: As SBD supply decreases, the haircut price — the STEEM price threshold below which new SBD can be issued — is mechanically reduced. This improves the sustainability of the SBD peg.
- Signals Economic Discipline: A transparent, automated burn reinforces confidence in Steem’s long-term governance and monetary policy.
- Creates Scarcity Narrative: In crypto markets, token burns often attract attention and can positively influence perception and price dynamics.
While the immediate impact on virtual supply may be neutral under current conditions (due to the 10% debt cap), this action is a necessary step toward re-establishing a healthier SBD/STEEM balance. It positions us to more easily return to a state where SBD issuance can resume safely — and where the peg is more resilient.
This is not a quick fix. It is a deliberate, community-driven recalibration of Steem’s economic model.
Thank you to every witness, voter, and supporter who helped make this happen. Let’s continue building a leaner, stronger Steem.
There's also an argument to be made that this is one part of a two prong protective strategy against a particular form of attack. For many years, SBD conversions were basically halted because of artificially high prices on external exchanges. Why convert for $1 if you can sell for $5? As a result, the SBD supply grew far higher than it would have grown, naturally.
We saw in the beginning of the year that when this is allowed to happen, high volumes of simultaneous SBD conversions can be used to flood the blockchain with inflation (unlike burning SBDs, SBD conversions serve to increase inflation, and ~5 million were converted in very short order). I have no reason to think it was done maliciously, but that could be different in the future.
The lesson we should learn from the inflation tsunami in the spring is that excessive SBD supply can threaten the blockchain in multiple ways. It's not just the raw amount of debt.
Longer term: In addition to controlled burns in the SPS, in the future, we may also want to seek ways to restore the peg from the top-side if/when the price goes above $1. We have not done that effectively in the past, and the end-results weren't pretty.
0.00 SBD,
1.60 STEEM,
1.60 SP
The conversion you mentioned happened when upbit , a korea based exchange De-Listed SBD , which Fell its price below $1 . and Large conversion were made
0.00 SBD,
0.15 STEEM,
0.15 SP