RE: Steem post promotion: Past, present, and future
As I understand it, the usual argument in favor of burning is the assumption that overall market cap represents the total valuation, so eliminating some tokens from the supply should increase the price because overall valuation won't change.
That's my understanding too. The market cap remains unchanged but the number of tokens in circulation decreases, therefore increasing the unit price of each token.
(If we wanted something similar, with a central agent buying tokens and disappearing them, a DAO-funded bot could do that).
I have (and you probably have too) seen a lot of discussion about the SBD that go to the DAO get burned - I think that this idea is being seriously discussed by those that can make it happen but I haven't been following it closely.
I haven't seen much actual discussion, I've seen some vague references to things happening behind the scenes (although maybe I'm not looking in the right places). So my (perhaps cynical) expectation is that at some point a half-thought-through change will be sprung on everybody at which point it will be too late to ask questions or point out problems.
Personally I think it would make sense for those Steem DAO SBDs to be used to buy Steem, thus raising the price of Steem and dropping the price of SBDs. Burning the Steem at that point might not be terrible (although seems wasteful to me, seems like it would be better if it ended up as SteemPower in the hands of people who use it to make the chain a better place, but finding a fair way to identify who that would be is not a simple question).
This rings a bell and might be what's being discussed. It feels like a long time since I last heard about it though - hopefully it's still a possibility.
That's always been my mindset too but there will always be problems finding the people who improve the chain. So often, it's the people who earn their way into Steemit's trust and get access to booming support or steemcurator accounts who find the temptation too much and start creating and upvoting their own accounts.
Yes, I would say that too.
But it improves the ratio to the STEEM, which then has an impact on the debt ratio.
The best thing for the debt ratio would probably be for the price of SBDs to drop below $1 USD so it makes sense for people to do conversions.
If SBD falls under $1, there would be bots buying SBD from the open market, wait for the 3-day conversion window and repeat the same. Like, no one would let the opportunity like that pass. I think we need to get it to be stable at the dollar price.
Regardless of the source, when there is buy pressure what happens to the price? This is the mechanism that keeps the price near $1 (from below, at least): SBDs priced at <$1 are valuable, so people should want them (slight caveat: the haircut rule is also a factor). It is a distributed, decentralized mechanism. It doesn't work when the price is >$1 because there's no reason to do conversions. Doing conversions would take the SBDs out of circulation and the debt ratio would get better.