SBD'S PEG IS BROKEN: ARE NEGATIVE RATES AN OPTION?

in steem •  last year

SBD'S PEG IS BROKEN

As I'm writing this, SBD Is trading above 8 USD per token and this is insane considering this token is supposed to remain at appx. 1 USD for the STEEM blockchain and its ecosystem to remain healthy. If SBD is undervalued, witnesses usually raise interest rates in order to incentivise holding SBD and as a result cause the price to move higher but it appears that there is no plan to help the peg adjust itself if demand goes crazy like now.

HOW ABOUT NEGATIVE RATES?

The only thing I can think of that would help the peg is introducing negative rates to discourage holding SBD and as a result help the ecosystem maintain the peg. What do you think guys? Are negative rates a good idea? If not, what do you suggest should be done about this? Are you holding SBD right now? Let me know below!

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THANKS! :D

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Great read overall! Thanks for sharing! Looking forward to hearing more of your thoughts on the crypto markets!


https://steemit.com/bitcoin/@college-is-dumb/bitcoin-crash-sunday-bitcoin-overpriced-investment-banks-manipulating-futures

Ouch. I just exchanged all my SBD for STEEM Power, and thought I got a good deal, at around 3.47 SP per SBD, as I posted here: https://steemit.com/steemit/@libertyteeth/1-sbd-is-worth-around-usd3-50-right-now-plus-old-world-s-fair-cartoon-and-jonathan-coulton

Aha! Figured out my issue; my title is wrong, and I'll update it (which won't affect the URL above) -- an SBD was not worth "$3.47" when I exchanged; it was worth "3.47 SP", and since an SP (or a STEEM, as they're equivalent) was at the time worth around $2.15, one SBD was worth around $7.50 when I made the exchange.

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I think you did the right thing mate! I don't have anything left myself lol

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Newer posts are saying it's $13, i.e., almost double where I dumped it for SP. Oh well! :) Don't follow me for trading advice... -- follow @haejin! He's doing some great TA.

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It actually went up to 18$on some trading sites. Yay

Great article!

The only way negative rates could be applied would be by decreasing the amount of SBD held by all account holders. Since this would actually decrease the SBD in circulation, it would make the problem worse (not better). The solution would actually be to flood the market with more SBD so the extra supply can bring down the prices. (Focusing on the supply side of the formula, instead of the demand side.)

I actually just posted a way that could be done- increasing supply without simultaneously increasing demand. Would you be willing to check out it out and give your opinion?

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Positive interest rates will increase the tokens in circulation. Another thing that will decrease the tokens in circulation is using the CONVERT button I believe. Where would the extra SBD come from and who would sell them? You can't just create more SBD tokens out of nowhere. And if we decide to burn STEEM from the reward pool to create SBD tokens instead, then people will get less rewards.

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I explained the whole idea in my post, and provided a link in my previous comment. In summary:

Generate new SBD tokens at a rate determined by the market premium and grant it to VEST (SP) holders as a dividend. The new tokens are not given to SBD holders, but VEST holders, so it increases supply of SBD without increasing demand for SBD.

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That would incentivise holding SP. Not a bad idea I guess :)

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Yes, exactly. Reward long-term HODLers by generating more SBD that they can sell to speculation traders that don't even know SBD is supposed to be pegged to the dollar.

Resteemed! This is fascinating. How do we exchange SBD for SMARTCASH? That would be great! @ironshield

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Thanks brother. Simple. Convert it to BTC, LTC DOGE, USDT or ETH on Bittrex and then send it to Cryptopia or HitBTC and buy SMART there. :)

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I predict it will not be long before SMART is on most exchanges. I hope to see it on bitshares soon! @ironshield

Yes, thats really interesting to observe. It may well dip or continue to rise, who knows. Bitcoin has high transaction fees while sbd and steem cost 0 for transactions. Hopefully people will use this to their advantage.

Just over 2 weeks in here, I dumped all my SBD last night at .318 STEEM. Then I saw what it went down to today. :)

I still got a good deal, nearly tripled my account value, powered up on SP, and kept a bit of STEEM. Follow my profile to read the full report. :)

Upvoted, Resteemed, and Followed.

I'm selling all my SBD for STEEM! :D
cg.gif

thealliancereko

Nice, SBD price is going crazy right now, converted 3 SBD for 20 STEEM, and powered it up.

Resteemed

very interesting question....but aren't most high amount trades due to external markets? how would the negative rates be applied there?

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It doesn't matter. External trades are also linked to the STEEM blockchain.

I sold my SBD when it was a 'good deal' at $0.50/STEEM. Go figure. I never thought it would ever be $0.14/STEEM or lower! Who would have thunk it? @ironshield

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I did the same and now regret buying steem so early. If we held and exchanged now we would have at least quadruple our steems. Nuts.

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I agree with other writers that adding more SBD to the supply will likely help control its price.

I am resteeming just to have a chance of winning those SMARTS :p but was wondering why you did not upvote and resteem as mandatory? Thanks.

Resteemed though 5 days late

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Your deposit address is SPbk4fg5hTWvYhzgbTXH7SvpLnSxeJgcHm.

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You have Σ0 SMART (unconfirmed: Σ0 SMART).