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RE: Steem Velocity Hardfork - Hardfork 20

in #steem4 years ago

Hey, @steemitblog, et al.

So, first of all, like many of the commenters have and will continue to do, thanks for the heads up on the Hard Fork update. This is a worldwide system, so I'm guessing that the 11 AM EST time on a Tuesday is the optimum time to do this?

One other thing. Why the change to 9% rather than the 2-5% for SBD printing. I understand we're at or near the 5% now. This feels a lot like the upping of the debt ceiling the US does constantly to allow more spending on borrowed money. I'm just wondering what the reason is, what's the rationale, and whether or not it's an appropriate thing to do given the safeguards that were originally in place. In other words, what has changed (other than the debt ratio reaching 5%) that will make this change better?

Thank you for the ongoing updates this year, and for informing us of these upcoming changes. I hope all goes well with the implementation of the HF, and that all functions as intended.


Hi @glenalbrethsen. Just to clarify, in terms of the "debt ceiling," the closest thing to that with SBD is the "10% limit" on the debt ratio. Basically what that does is that no matter how much SBD is printed, it will never be allowed to exceed a debt limit of 10% of the STEEM marketcap. SBD will just become redeemable for less than $1 USD worth of STEEM, instead of taking on additioanl debt. Based on that, the safety of how much debt the Steem blockchain takes on (in the form of SBD) is not changing.

What we have seen under current market conditions is that there is still a high demand for SBD (the price is consistently above $1 USD) even though the debt ratio is above 2%. What is happening under the current rules is we are printing less SBD, even though there is still excess demand. This change addresses that by allowing more SBD to be printed.

Another negative impact under the current rules is that it is printing more STEEM (instead of SBD). This means we are seeing additional (unnecessary) downward pressure on the STEEM price, when we could just be printing more SBD instead of STEEM.

The last thing to point out is that the current system is missing out on the best opportunity to use SBD to it's full advantage. When the STEEM price is at it's lowest is really the best time to print more SBD, because if you assume the price will go back up - then the blockchain ends up getting a 'discount' on how much STEEM needs to be created. For example, if $100,000 USD worth of SBD printed today when the STEEM price is around $1.00, it would only need 1/5 the amount of STEEM if the SBD was not redeemed for STEEM until the price of STEEM goes up to $5.00.

Technically the same mechanism works in reverse. If we print a bunch of SBD when the price of STEEM is at $5, and then the price drops down to $1, we have to print 5x as much STEEM. If we allow the debt ratio to get much closer to 10% though (by allowing printing all the way up to 9%), then it reduces this effect. A significant price drop in STEEM will not result in as much STEEM being printed if the debt ratio was already close to 10%, because it would be capped once it reached the 10% limit described above.

Hey, @timcliff. Thank you for answering my question on this. It's been extremely helpful.

Now, what I'm wondering is, are we in some kind of market period where STEEM hasn't been before? I guess I'm wondering if it's known that 9% is the better debt ratio than 5%, why wasn't it lifted before this? And what happens if 9% doesn't prove to be enough for whatever reason?

My guess is, either this kind of market conditions have been here before, but it didn't last long enough to get a change made but it's been sitting on the back burner, or it is new, and based on whatever criteria, it was determined the raise should take place just in case the current situation was prolonged, or came back again at a later date.

You are correct. The situation of SBD being overvalued while the printing limits are being hit has not really happened before. It did happen very briefly in 2017 but quickly went away on its own.

However, the overall goal is not so much to react to one particular market situation as to structurally improve SBD so that it works better and adds value to the Steem platform. The changes were actually implemented and merged into the code before the current market situation occurred (though it had been recognized and anticipated).

These are improvements which have been considered and discussed for a long time and are only now getting rolled out because: a) this is the first hard fork update since early 2017, and b) it took a while to both reach consensus among witnesses, stakeholders, and developers about what to implement and then get them implemented.

Okay. Very good. I'm not sure how anyone else feels about consensus making, but I'm alright with it taking a while. If the required majority gets there through taking the time to deliberate and observe, better decisions get made.

It's interesting to note that this will be the first Hard Fork I'm a part of, along with everyone that has come in since the last fork, which is the vast majority of the accounts, and probably most of the daily user base still here. After 19 happening in less than a year if my math is sound, that seems to make this one that much much anticipated, especially when you add on what is expected to arrive later with Hivemind/Communities and SMTs.

Thanks for all this. I feel like I understand why this is going to happen and the reasoning behind it. I hope it, and the rest of HF 20 goes as intended, or at the very least (since there always seems to be something), keeps pushing us in the right direction. :)

Well the main risk is that we see the opposite of what has been happening with SBD, and there is insufficient demand for it. We have seen that before in the earlier days of Steem. Under that scenario, then market conditions would push for SBD to be converted into STEEM, which would reduce the SBD supply.

It sounds very drastic, but the absolute worst case scenario is that the SBD peg would break in the negative direction, and SBD would be worth less than $1. At that point, it would be up to the market to determine what SBD would be worth.

very good presentation, we hope that content creators related to the price at the crypto market, hopefully the price can go back to strength. this greatly influences our enthusiasm in creating valuable and worthy content

Okay. I think I'm getting this. This is basically a change to help ensure the SBD ratio is maintained within favorable parameters and that it continues to bolster the peg, as it is worse for SBD to break the peg in a negative direction than it is to do so in a positive.

Well, the peg is already 'broken' in the positive direction. There are not really sufficient mechanisms to push the price back down to the peg when it goes up. The changes being discussed here are all intended to help push the peg back down.

Okay. Very good. I feel better now. :) I appreciate the time taken by you and others to explain things. May it all go the direction we all hope it will go—for the betterment of the STEEM platform.

Apologies sir, i have wrong button press downvote 🙏🙏🤦🏿‍♂️

@glenalbrethsen so sbd won't be higher than 1$ or less than 1$. is this they trying to fix..

Hey, @lelong.

The short answer to that question is probably yes, in theory.

Longer answer is, it's not like they can fix it to any one price point, though. They're doing what they can, but the market is still going to decide what SBD does, even with this code change. Sounds like they're mostly concerned at this point with SBD dropping below a $1, too.

Excellent points I think I follow you here @timcliff. Right now there is an underflow of SBD within the economy and perhaps not coincidentally there is a very very low rate of interaction on here right now with the users across the board. Honestly there really is no way to deny that even with the intentional decrease in supply it has brought steem value's down significantly by price and additional quantities paid out in steem per post--which is the exact opposite intention it was created. Getting to the SBD payouts in posts, if I do not buy anything that really requires me to use SBD (for example bid bots which have basically become the engines that fuel SBD consumption in the economy really at all and are a virtual surefire losing bet right now) why would my post payout be tied and beholden to SBDs? I get the relief they bring in having to produce additional steem in the event of price crunches but isn't this one radical turn from one direction to offset the other? With the ability to overflow the system with up to 4.5 to 5 times more in supply as of say right now isn't that a concern? At $5 steem that isn't much of an issue but what if whales that are unloading truck loads of steem right now keep doing this at prices even below $1 when this fork comes out? SBDs will become an extinct medium of exchange very fast on here for sheer worthlessness.
A very overachieving, proactive approach at this fork would have been having smart tokens ready to launch and take our chances with them working out desired effects that we hope they do in helping reflect the many varied interests of our economy here on steemit. It would seem to solve a lot of this angst that is going on within the community, but it is not even mentioned on this announcement. I hope to avoid sounding like Captain Hindsight, but here we are and we have what we have moving forward. Are we supposed to believe that continuing to bail out the bid bots massive losses since sbds/steem has plummeted and votes are more and more worthless that continuing to fund this losing endeavor with more of the same is a legitimate response to curing these ills? If I were manipulating prices of steem/sbd I would be terrified of a smart token, because now I have to track 10,000 tokens day one when they are able to be implemented and find which are good and which are worthless. Also in the meantime finding out what they are being used for and whether it's worthwhile to follow or not. That is a lot and I would love to hear your response here, I certainly am not venting this all in your direction but to the debate at large and what can be done, and preferably not pushed down the road by a CEO that is currently unloading their stake in the company at two year lows in prices at best.

As far as the smart tokens you are referring to, they sound a lot like what they are planning for SMTs. What are your thoughts on those?

They are incredibly promising. Having the dynamic of getting payouts with them within communities/groups you choose to affiliate and have closer control on how the tokens are issued and how value is created is incredibly intriguing. Having them issued at a customized mode, whether it be in curation rewards or simply upvoting a vested member in a group could go a long way in maintaining and building membership here. It's all future projection of course, it really depends on how they are understood but it does really reward the people that do a lot individual community based activities.

What happens if we reach the 10% doubt ot ownership ratio and the STEEM price drops, let's say, a 50%? In this case the ratio will increase to 20%. Which are the mechanisms to regulate it again?

Interesting comparison Glen!

Hey, @ecoinstant.

I'm going to guess you're talking about the comparison between the lifting of the debt ceiling the U.S. Congress loves to do periodically and the lifting of the 5% SBD debt ratio to 9%?

If so, I thought it was too, but the major difference is, the ceiling is 10%, and will remain that way, according to everyone who answered the question. Which is good. We don't need to be jacking that up.

Well, they might have said that at 5% lol.

All they need to do, like congress, is vote again. I do think there are some technical differences, we don't need the debt to pay anything, all we are doing is balancing the markets between debt instrument and token. No body can foreclose on us if we don't pay our debts, for example.

But I still think the analogy is apt.

By the way, I noticed you changed your vote on my comment. Not a big deal, I mis-vote all the time with those goofy sliders, especially on mobile. But did you know that you don't get the voting power back? You actually spend vp for both votes, and just burn the first vote. Just something I learned, and I post it here with all these tech guys hoping that if I am wrong they will call me out!

Love and Light Glen, I always love seeing you around, I like that you try to get to the bottom of things, not a yes-man, but a ask another question man!

Yeah, I've been noticing that myself with the upvote. I should have just left it. I mostly have an issue when the system is glitching and it tells me I have to re-sign in to vote. Then it jacks the slider up to 100% and votes that way without allowing access to it until after the vote is made.

re: said that at 5%.

I was kind of feeling confused myself, about that, but apparently there's just things they find out about as things unfold. It seems a little disconcerting to me, but it's hard to tell sometimes what I should be worrying about and what I can just let ride.

re: vote again

I also thought of that. Is there a market where that might be favorable, or at least considered? I guess we'll find out down line. Whether it has any repercussions or not, why set any parameters at all if it's no big deal to just raise it?

re: not a yes man

Well, I appreciate that. I'm getting too old and grumpy to take things at face value, though I do prefer a civil conversation over a finger pointing contest. It just seems to get more accomplished, and when I have more questions later, they tend to get answered.

I get concerned that in our desire to be transparent and decentralized that we're needing to worry about a great many more things than what we really want to. On the other hand, if this is to be some form of governance for the blockchain, than we all need to be aware of what's happening, and at least attempt to understand it.

Hey that has happened to me! I know exactly what you mean. I have been switching to when it gets really bad, two nights ago it was pretty terrible. I think this must be server load on the front-end.

I do think parameters are important, because most of what happens is automated. But, I think I read timcliff say that it is better to issue SBD type debt when steem is cheap, because we only need to pay back each one with a dollars worth of steem. So if it goes up we can pay it back with less.

I'm not really worried about it, I think 10 percent is still pretty low for such a useful token. But I really like that you are there poking them about it! Debt is a tool, if used right you can avoid hurting yourself.

I agree what you say, we have a much greater responsibility in a decentralized system!

Cheers Glen :)

we live - we learn

Oh the debt ceiling in the US, don't worry about that, it's just a number of absolutely zero consequence. LOL if only on steemit we could get away with what is gotten away with there...

Hey, @cryptkeeper17.

I'd like to be able to get away with it in my own pocket book.

No money? No problem. I vote to raise my own personal line of credit. Of course, I'm good for it. I'm me!

If only, but don't forget to also vote yourself a raise first.

Man. It's amazing the United States is still standing and at the very least, a facsimile of a sovereign nation. I guess the fact that the exact same thing could be said about virtually every other nation is what's saving our collective skins. We just keep passing the buck around like a hot potato.

There's so many things that Congress gets away with that we can't. Set your own raise. Blank checks. Insider trading. Unless you tell your family members, then it's a no go.

USA has less debt per % if gdp then China Europe or Japan so it’s not a USA problem but the whole globe

Hey, @geneeverett.

Yep. The world is definitely all tied together in all of this debt. I would say, though, that it is a USA problem if you're living in the USA, just as it is a wherever you are at problem if you don't. It's going to catch up to all of us at some point, and when it does, getting further into debt won't be the option, nor will be raising taxes.

Those changes were submitted by @timcliff and approved by the witnesses. He will have to speak to the intent behind these changes. I can only speak for myself when I say that it's great to see a community-member PR acquiring consensus among the witnesses and being scheduled to be added to the protocol.

Cool, @andrarchy. Tim's been good at follow up so I'll see what he says. And I agree, it is good to get some consensus on any level, especially from the community and the witnesses. The more proactive we can be, the better.

11 AM EST time on a Tuesday is the optimum time to do this?

You can never satisfy everyone on a global system. One of the requirements of a witness or even developer role on such a system is the necessity for a certain amount of 24 hour availability. 11 am on Tuesday is okay for US and Europe but pretty bad (early to extreme early morning) for most of Asia. Making it later helps with Asia but hurts Europe. There is no perfect time.

Okay. Pretty much figured that to be the case. I was looking at it, of course, from the user standpoint, but that's obviously not the only consideration here. You've given us all a decent amount of heads up, though.

Since I've never been through one of these before, is there any expected amount of downtime at all? Or, if everything goes according to plan, do we just all keep working as it rolls out?

In a normal update there's usually the time it takes for that to happen. With a hard fork on a blockchain, though, it sounds like things keep rolling as you go?

If everything goes according to plan there should not be any downtime.

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