STEEM Rewards News Flash
Today @sames came to our Discord to ask about an oddity in rewards: We are starting to get STEEM?
This is something that I've known is a possibility, and have documented it in this old post:
SBD Printing Walkthrough.
The relevant quote:
If the SBD's portion of the virtual supply exceeds 2 percent, we start to throttle the SBD production, and at 5 percent, SBD stops being produced altogether. (We get paid in STEEM instead).
As of last looking at https://steemd.com I found the following values:
SBD supply: 10,800,517.770 SBD
Virtual supply: 271,087,830.857 STEEM
Feed price: 1.974 SBD / STEEM
and the computation for debt ratio: 10,800,517.770 / 1.974 / 271,087,830.857 = 2.02%
(Edit: Now corrected, thanks @geekornered for pointing it out).
We've started to hit the point of liquid STEEM printing. Note if STEEM price goes back up, it'll reverse this trend. But for the moment, we are now at the point where SBD is slowing down its printing. As a proponent of the peg, this is slightly worrying. I wonder how the market will react. Actually, who am I kidding, the market knows jack squat about how any of this works anyway. We riding the BTC wave. Hold on to your pants (dress) folks!
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Thanks for clearing this up for me. Upvoted and resteemed to my 3500 followers.
You are welcome. Thank you kindly!
This has not been announced officially yet.
Been getting liquid STEEM myself. I’m still confused at how this all works, but I guess this is what’s supposed to happen if the SBD get about 2% of the STEEM market cap. Didn’t remember reading about this in the whitepaper, but I may remember less than 2% of the whole thing. Thanks for the post! :-)
The white paper makes a passing reference to a mechanism that shuts off SBD when debt ratios are too high, but it doesn't mention specifics. The referenced post was me digging at the details after I read that section hehe.
I'm definitely following you now! Thanks for this and the SBD walkthrough article from a few months back too. Thank you for doing all the work it took to really spell this out. Your walkthrough should be required reading on this platform, and I'm sharing it with some folks I'm trying to introduce to Steemit blogging right now. Now I finally understand why I'm getting STEEM in my wallet (and reduced portions of SBD and SP, btw). And I see that it won't last if the price of STEEM increases.
I also get now how the price of STEEM going up means more SBD getting printed, so lowering the price of SBD.
And STEEM price going down means less or even possibly no SBD getting printed, so that we have to start getting paid in some STEEM instead of SBD (though why it couldn't just be more SP I don't understand, but I'll take it).
But wouldn't that increase the price of SBD to make it even farther above both the $1 supposed peg and STEEM's price? If more SBD printed means lower SBD price, then the reverse should also be true. Is it just that it will take longer to see this effect?
Thanks for the kind words! It's interesting. --
About SBD price, It's hard to say how things develop. Note that right now SBD is still being printed, just at a slightly lower rate. So it's a matter of comparing with how the demand grows/shrinks. There's also the feeling that Steem price (as with other crypto) seems heavily tied to BTC movement.
I was referred by @sames to this post. Thanks for the explanation. I personally think the witnesses shot themselves in the foot by the price feed bias they created. The best way to deal with a market is to leave it alone. SBD had bigger gains than STEEM.
At best SBD will go sideways. I think it's more likely to see $10 SBD than $1 SBD.
This is a common misconception, but the biases that some witnesses have set have never taken effect. The effective price feed is the median feed price of the top 12 witnesses, and they all set to market price of steem. The system is designed to print more SBD the higher the price feed is as well, so in the long term I actually think 1$ SBD is the future (there are probably going to be some pumps before that settles though).
Having a peg is a useful property, if reliable. So I can see why witnesses are in a hurry to do it. But it has to be done responsibly.... It's a tricky situation.
I thought it was the top 20 witnesses. Thanks for clearing that up.
Ack. I don't have my numbers straight. My old post even said 21 witnesses. But even then, the median would still have been market price unless I am missing something.
When SBD got listed on new exchanges people were just looking at the circulating supply and buying it up since it only has a few million. They clearly don't understand the $1 peg and why it is important to SBD :-D!
Was getting mildly confused, thanks for the explanation!
I am curious to see how the prices are affected. My guess is that limited supply leads to higher prices based on law of scarcity. However, having Steem as part of the payment, how is it exactly calculated for post rewards? For example, if I have a 2 SBD in post rewards, would it be based on the market rate amount of SBD to Steem or will it be a fixed rate?
Think of it as instead of 50/50, where half of the amount you see is going to SBD and the other half converts to SP via feed price, it's more like 49.9/51.1 or something. With the difference being that extra 0.1 is STEEM instead of SP.
The short of it is, with SBD being worth more than a dollar, the USD value of the payout is effectively lower than before, since less of our reward is in SBD.
“We've started to hit the point of liquid STEEM printing.” Do you mean that the steem inflation rate changes?
No. The inflation rate is unchanged. You can see details in the walkthrough, which shows how the allocated STEEM amount to a post's payout gets broken down to SBD, STEEM, and SP.
But the amount associated to a post is independent of all of this, determined by rshares / SP and votes. I'll get back to you when I find the references for the inflation, but that was not a part of that walkthrough.
(Edit: Found it: https://github.com/steemit/steem/blob/25dd6ad58a94b803eaa1571964d02e0dde85a38e/libraries/chain/database.cpp#L1829)
when it hit 5% and SBD author reward payout totally stop, is there any other triggers in the code that still generate SBD ? if it continue to stay higher than 5% for a extended period, does it make the smaller supply SBD compare to steem even more limited.
There is no other way that I am aware of. It is a bit of an odd situation. I remember trying to reason through these scenarios before about what would happen if it would stay like this. Keep in mind that as more steem gets issued in place of SBD, debt ratio gets lower again (relatively). This means that SBD would grow at a rate pinned to 5% of overall market cap in that scenario.
as more steem get issue , that means the price of steem keep dropping which could increase the debt ratio too right ? After 5% mark, is there anything else in 8% or 10% ?
thank for sharing your views and knowledge. glad to know you @eonwarped =)
It all depends. It would have to tank hard for that to happen. Depends on demand. But anyway, there's nothing else beyond the 5% mark.