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RE: % of Author Rewards to be Paid in Steem - Tuesday 13th onwards...
Ok, I have a question. If it is so bad for the Steemit network that many are holding SBD, then why does the network offer such a generous reward for holding them: the insanely good 10% interest? Shouldn't witnesses just lower the interest rate to encourage SBD holders like myself to buy up SteemPower?
The issue they are trying to solve is limiting debt burden on the Steem system. Each Steem Dollar that exists is essential debt, and if that Debt gets (relatively) too big, it could make the whole economic system unstable.
If the price of Steem continues to fall, and the amount of SBD in circulation keeps increasing, we could get to a situation in the future where Steem Dollar holders could call for 20%-30%-40% of extra Steem to be 'printed', which could render Steem value-less...
This measure is purely designed to make that impossible..
If the price of steem is falling by 10-20% per day then the interest rate isn't much of an incentive to hold SBD, correct? Although I am not totally clear on what the relationship is between the price of Steem and the price of SBD... anyone?
Sbd doesn't fall at that rate.
so you actually want people to hold sbd? it's still very unclear. I see you hold sbd, but should we too?
What would you, @dantheman, do if you had 5000SP and 500sbd?
This is not about whether you should do X Y or Z. It's merely protecting the Steem System from too much debt. It makes everything better to hold, because a risk has been quashed...
Ok, thank you. I wasn't thinking that it did, but I was thinking there was some relationship between the two... Is there any relationship between Steem and SBD?
Steem is not SBD. SBD is supposed to be pegged at 1 US dollar (though in practice it may be less). Holding SBD protects you from the falling Steem price.
Oh yes, thank you. I remember reading that now. Is there any relationship then between the price of Steem and SBD?
Only that, if your expecting the price of Steem to fall over the following 7 Days, your conversion will take place at a price worse than market. So, if Steem is falling, often the price of SBD will fall.
The opposite is the case for when the price of Steem is going up, and users expect that to continue.
I have gone through this roughly here
There is still an incentive to hold SBD. SBD is deliverable for $1 worth of Steem, at the Average Daily Price, over the following 7 days after conversion request. This still remains true, whatever the price of Steem.
I got it, so does that mean the best protection over a plummeting price of steem is to hold as much in SBD as you can? What is more beneficial in the current market conditions (falling price of steem), holding SP or sitting in SBD?
Hold SBD protects users from falling Steem Prices. So, in that instance, SBD is more beneficial