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RE: Burnpost update for SBD at 1 USD and accompanying rule improvements

in #steem3 years ago

Hey @smooth, I love what you're doing with @burnpost and though I haven't been voting it very often (I've chosen instead to positively reward others' content), I'd like to thank you for any impact this experiment may have had on SBD's fall to $1. This will be good for the platform in the long run and I hope it stays this way.

I have one question regarding the "rules" here. Why use the conversion transaction when the SBD price is below $1? Here's my understanding:

  • Exerting downward pressure on SBD market price is good for everyone, even if it is at $1, because it creates incentive for people (even outsiders to STEEM) to purchase SBD, bringing money into our economy.
  • Burning STEEM is also good for everyone, since it decreases the supply which should create an upward force on the STEEM price.

Now, I understand that on a large scale, the net effect of this difference is minimal, since STEEM is eventually being burnt either way, and it is irrational not to convert SBD below $1. However, the way things are, @burnpost does not act as a constant downward force on SBD; in fact, I think it starts acting as an upward force once it starts using the conversion transaction, since it is decreasing the total supply of SBD.

In general, I feel that since we are lacking a good downward pegging force, especially given the history of irrational valuation, I think we should be focusing on exerting as much pressure in that direction as possible, even below $1. I'd love to hear your thoughts on this.

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The intended reason for using conversion right now is to reduce the supply of SBD which is very high, resulting in reduced printing and even less downward pressure from new supply.

You raise an interesting point about lacking downward pressure. Perhaps an alternative would be holding the SBD in order to potentially sell it later, should the SBD price rise above $1. I think that could make sense if the SBD supply is already low enough that print rate is not a concern. I'll consider it.