Boost Steem Value by Backing Steem DollarsteemCreated with Sketch.

in steemit •  2 years ago


We created Steem Dollars with the intention of keeping value within the Steem network. The idea behind Steem Dollars is that people would be more willing to hold their Steem Dollars than a volatile cryptocurrency. The interest rate on Steem Dollars was designed to attract capital.

In my opinion, the Steem Dollar system is only working at 10% of its potential because the frequency and duration of time that Steem Dollars have traded between $0.80 and $0.90. This level of volatility means many people still prefer to “run to the exits” rather than hold on to their Steem Dollars and earn 10% interest. The market has spoken, Steem Dollars, as they are managed today, are not worth $1.00 even with 10% interest.

Disclaimer

What follows is my personal opinion and should not be taken to represent the opinion of Steemit, Inc. This disclaimer applies to all posts I make from this account.

Why Steem Dollars are Discounted

A Steem Dollar does not represent the current value of Steem, but the 7 day median price. They are not backed by immediate delivery, but by delivery in 1 week. These two characteristics mean that the market prices in the cost of a 1 week option into the current price. The more volatile Steem becomes the higher the option premium.

The price of options go up when there is strong market sentiment on the expected future price. In a down market the cost to buy an option to hedge against future losses is much higher than the price to buy against future gains. In a bull market the opposite is true.

Why we should Improve the Peg

A strong peg of Steem Dollar vs Dollars means the market will have a strong degree of confidence in the Steem Dollar. The more confidence the market has, the more value / demand there will be to hold Steem Dollars. This in turn means there is a ready and active market for those who earn Steem Dollars to sell into when they want to.

Having confidence that there will be market liquidity at around $1.00 when you want it goes a long way toward people being willing to trust their wealth to a currency. It goes a long way toward merchants being willing and able to accept Steem Dollars at face value. All of these things help grow the value of the Steem network by making it easier to use and building trust.

How to Improve the Peg

There is a simple and straight forward means to improving the peg that can be performed without a hard fork and completely within the options outlined in the white paper. It requires Witnesses to publish a price feed that is adjusted by an amount proportional to the current option premium.

Lets use a simple market scenario:

The current price of STEEM to Dollars is $0.50
The current market price of a Steem Dollar is $0.80
Then the price feed should be 0.40 SD /STEEM

Todays price feed of $0.50 would cause 100 SD to yield 200 STEEM. With the adjusted price feed, 100 SD would yield 250 STEEM which would clearly make Steem Dollars more valuable.

With this adjustment to the price feed, speculators have greater financial incentive to trade toward the peg because the volatility risk associated with converting at the feed has been largely mitigated.

If at some point in the future the Steem Dollar starts to consistently trade at more than $1.00 then the interest rate can be reduced or the feed can reduce its premium.

Keeping a lid on Steem Dollar Supply

The result of making conversion from Steem Dollar to Steem more profitable means it will be utilized more frequently whenever the price of Steem Dollars fall below a dollar. This in turn will help shrink the Steem Dollar supply which helps keep a low debt-to-equity ratio and improve overall economic stability of the platform.

Transparency of Witnesses

I think it is incredibly important that witnesses establish fixed and predictable offsets in their price feed so that other market participants can make more informed decisions about the expected future redemption prices of Steem Dollars.

Raising Interest Rate would be Ineffective

Some people have suggested raising the interest rate as a means of increasing demand for Steem Dollars and restoring the peg. The problem with this approach is that interest rates are only effective when volatility is contained. Why would someone buy Steem Dollars at $1.00 when there is a high probability that they could be forced to sell at $0.80 if the interest rate is only 10% per year. Interest rates help with long-term price support, but do little in the face of large swings in volatility.

When Steem Dollars are trading at $0.80 there is an implicit market interest rate of 30% assuming Steem Dollars eventually revert to $1.00 within a year. Those who believe in the economic fundamentals behind Steem Dollars don’t need more interest and those who don’t believe in the fundamentals would require significant interest to compensate for the long-term risk.

Because there is only one interest rate, we end up paying all holders of Steem Dollars much higher interest rates in order to attract each additional Steem Dollar buyer. When we increase the STEEM backing of a Steem Dollar it actually costs the network nothing.

Reduce SBD Creation Rate

When we adjust the price feed we also reduce the number of Steem Dollars awarded to posts which in turn reduces the supply of Steem Dollars. This helps keep the network solvent while simultaneously biasing the estimated payouts in a conservative manner. It is always better to under promise and over deliver. Currently, Steem Dollars are over promising and under delivering.

Why Steemit, Inc cannot play Market Maker

For some time the Steemit account has attempted to buy Steem Dollars with Steem to support the peg. Our actions have had a two-fold effect of causing us to realize capital gains and introducing more STEEM on the market (driving down the price of STEEM). This is not a long-term sustainable approach for Steemit, Inc nor the Steem blockchain and may result in undesirable tax consequences.

When the blockchain through witness price feeds performs the same actions of supporting the price through redemption requests there are no tax consequences and no dependency on a limited pool of funds that are unable to sustain the peg long term.

Call to Action

I think all witnesses need to pro-actively manage the price feed such that a Steem Dollar never falls below $1.00 for more than 1 day per week. This means adjusting the price feed and interest rate in what ever way they can to ensure that a Steem Dollar never breaks the buck.

The benefit of having a value of more than $1.00 is that market participants can begin to rely on its value. If people can rely on its value, then there is no reason for them to cash out into their bank account. In fact, there may be every reason in the world to move your money out of your bank account and into Steem Dollars.

If you want to boost the price of Steem, then we must support the Steem Dollar by adjusting the price feed. I call on all voters to carefully consider how the witnesses you vote for support the price feed.

Lets all vote to support the Steem Dollar and give investors confidence in storing their hard earned money on the Steem blockchain.

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Downvoted for irrelevant clickbait title. You did not explain how stabilizing SBD helps the value of STEEM. You didn't even give a poorly reasoned explanation. You gave no explanation. Downvote will be removed upon the addition of a reasonable explanation.

P.S. Moreover the price has been very stable between $0.80 and $0.90, so this really isn't about stability, it is about raising the value of SBD relative to what it is now. That means, necessarily weaker STEEM, because strong SBD represent more STEEM. If the number of SBD are fixed, then that means the supply of STEEM will be greater, meaning the price is reduced according to supply-demand laws.

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the price has been very stable between $0.80 and $0.90

It could be very stable between $0.50-$0.60 also... The point is to stabilize nearer and tighter to the $1 value, between $0.99-$1.01 for example. Why should he explain the obvious?

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I try to appreciate SBD for the sense of security it provides to newbies - like training wheels, sort of... but I keep circling back in my head to "why do we even bother with this?" I'll bet that it would work out just fine to remove SBD entirely and let newcomers think that steem isn't real money at first. It might even be a good thing because they'd probably feel less intimidated by it if it felt more like play money. I dunno, do you think I'm overlooking some other value that it provides that's worth holding on to?

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The dollar is a necessary bootstrapping mechanism. It is much more likely to bring users to the system. Perhaps at some point in the future, when steem and SP are known by mainstream as having real value, then the secondary assets can be done away with completely.

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I used to think that too but I'm not quite buying it anymore. I've been observing a lot of newcomers and helping them get into the game without any prior crypto experience (which is still most people in the world). They usually feel like Steemit is like a game with steem serving as a sort of play money. They only start to get intimidated when the connection is made to "real" dollars.

I was just looking into storing my money on the steemit blockchain. I see interest payments on accounts that do and it looks very nice indeed. I agree with everything you are saying. But

But.... I live in a country where the paper has collapsed and prices on everyday things is $2-$4 higher every time you go to the supermarket for the last 2 years. Milk has gone from $0.80 to over $29.00. The dollar has done the SAME (but over a 50 year period) eg; the same loaf of bread was $0.29 in 1980 and look at it now.

When the dollar collapses, I would rather not have a hard peg (or at least an instant way of pulling out from the pegged asset). That is why I have ALL my money in either gold, silver, btc, eth, dash, or steem.

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I think we as a community can move Steem Dollar to a Steem Silver backing when the time comes. I think it would be worthwhile starting a discussion on when the Steem Dollar would switch its peg so that investors and speculators can factor in this added benefit.

It is clear that hyperinflation of the U.S. dollar is something that we should consider and any kind of "protection" that we can offer would probably help boost the value of Steem Dollars relative to bank dollars.

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Why not have more options in parallel right now? When an author post a new story ask him if he wants to get paid in Steem Dollars or Steem Euro or Steem Gold ... The blockchain will then define the right supply for each Steem Asset!

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That would get too complicated IMO and the learning curve would steepen further. If you can't hold a peg to USD right now, then other assets most likely won't be able to hold a peg either. I would say maybe introduce one, and only one, new asset in parallel: gold. That would ease the inevitable migration from USD to a more dependable asset... and maybe attract some goldbugs to the platform.

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Now you're talking.
The idea of 'supporting the value of steem dollars' against market forces is a bit like asking people to pay more taxes than they ought, just to support the good ol usa, be patriotic. If the 'value' of the steem dollar is less than the dollar, then it is so. Only by improving the value of what the steem dollar represents can the steem dollar increase its value relative to the dollar. In fact, there is no rationale for having any 'peg' or backing to the steem dollar other than what the steem dollar is good for by itself, such as spending it with people and businesses who want to receive it, and using it as a savings account, as it seems there is actually a real return, provided you wait to cash out at the lower 'dollar' valuation, or some other valuation depending on the alternate currency or commodity. Leave it up to the individual to decide what they wish to exchange their steem dollars for, so they can pick the one they like, whichever the best value is at the time, such as bitcoin, maybe.
If there were to be a 'peg', which is just an arbitrary thing anyway, as people can if they like sell the steem dollars for $0.01 each or less, then the 'peg' should be an average of the global currencies and metals, like gold & silver & copper & palladium & etc., and the 'dollar' and the 'yen' and the 'yuan' and the 'euro' and the 'pound' and so on. Average all those valuations, however the money magicians do it, and say your 'steem dollar' is worth that, which technically it is. But people can and always will choose to sell lower and buy higher, and vice-versa.

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The idea of 'supporting the value of steem dollars' against market forces is a bit like asking people to pay more taxes than they ought, just to support the good ol usa, be patriotic. If the 'value' of the steem dollar is less than the dollar, then it is so.

What we are talking about with SBD is a little different though. The idea behind SBS is for it to be worth approximately $1 USD worth of Steem. The proposal is to basically tweak the numbers/formula that is used to calculate how much Steem one SBD is worth, to make it closer to $1 USD.

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Is Steem Silver just an example or are you seriously considering this option?

Why not Steem Gold, then? :)

Anyways, it is a good and prudent idea to move from dollar to something with more lasting value.

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I agree with this. I think it does not matter as much what is used as a peg, just that a peg works. As you outlined in your article it can be improved right now. Thank you for working on this.

i think ultimately there should be different indexes, that Sbd may be pegged to and witnesses or even better SP holders should be able to vote on what the peg will be. I.e. We could implement a rule that 70% of votes need to vote for a new index, for it to take effect, with a transition phase to make it all smooth.

I'm sure in the future a basket of crypto, gold and stock indexes may make sense, but who knows.

The key is that we make the peg work, once that is accomplished, switching the peg to a different indicator should be easy.

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ok i understand 'economics' very well however i don't understand the internal mechanism of the witness system for Steem however my plain simple Question:

  • lets say you do this and it is successfully you get a 1: 1 parity, etc etc things happen and now the USA dollar is 'Bali' money i.e it's the Peso - does the Peg stay for the users that 'choose' it (witness system) or does it naturally float with the market?

in that scenario you should get multiple USD to one SD (in theory) (think Yuan now )

hey a simple Question : what's the current SD ? Yuan cross rate ?

if the Yuan and USD swap in the paper market (swap value) what happens to the peg?

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It can be pegged to anything, for example a basket or so. It would be decided by the community and executed by the witnesses. The goal is a currency with relatively stable value.

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This reply makes me wish for a "reblog" feature for comments.

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Just wondering where your from to be paying so much for milk

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a place that is very Cow sparse.
no Jersey cow dare enter that place.

I believe in Steemit and am doing everything I can to support its growth. I am producing lots of blogs consistently, using my votes for posts that have important and beneficial content and make suggestions as to how I feel Steemit can get better.
My accounts power is very low so in that regard I have little influence.
Though despite that and that Steemit is only still in beta I have already begun to integrate Steem$ as a form of accepted trade on my web sites.
I feel this shows a lot of support for the platform and helps grow the economy as being able to use Steem for more and more things makes it more real and valuable.
It also helps bring comfidence in Steem as a currency, seeing it accepted by merchants for tangible valuable goods.
I am invested in Steemit in many ways and taking risks not just with my time on Steemit but with my other businesses as well, by incorporating SteemPay.
All great success requires risk.
I am excited about the potential and will do whatever I can to support the sustainable growth of this community and help bring value to the economy!

Brilliant request @dantheman. At first, I kept Steem Dollar until it started falling. When it fell, I lost confidence and sold it. If SD consistently remained at $1.00 like you propose, I would keep more of it.

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With the redemption program it's really something that's been beyond speculation value from the beginning and truly pegged.

This should allow the SBD to start gaining traction, however it might not deliver the results expected so soon. When there exist Steem token, where values soar over 1000% once upon a time, and a certain Steem Power to give people the power, everyone seems to feel that SBD are pretty useless.

I believe we need to give the community more time, and start promoting the SBD too. But still, good initiative @dantheman , i'm sure with the new SD/Steem price feed, SBD will get utilised much better in future.

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How much easier it would be to promote Steem Gold these days !

I believe creating more internal demand for SBD can help ease the sell pressure a bit. The post promotion is a good start, though I feel it needs some tweaking so that promoted posts are viewable in a way that doesn't need the Steemit user to click on the promoted tab.

In chat it's been discussed that avatars and blog banner images are untapped resources. Because of the ad-free model of Steemit (so far), avatar and banner additions or changes could be restricted to those who pay SBD for them. This is not unprecedented. I know of community-supported forums that charge money to change avatars.

An avatar is a valuable way of distinguishing one's own account, comments, and posts. I think Steemit could charge a decent premium for an avatar or avatar change. Something like 20-50 SBD perhaps. It may sound like a lot but it's a valuable commodity and would last until changed.

For anyone interested, I have just released a witness feed publishing script with automatic $1 SBD == $1 USD support.

Question: was the steemdollar peg a problem when the liquidity reward was in place (and the bots chasing the reward automatically bought and sold and maintained the peg). If it wasn't, then perhaps a new liquidity reward system needs to be introduced?

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I agree with this; a small liquidity reward, that is given only if you push the market closer to the direction of stabilizing the peg.

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I disagree. As it is now it makes perfect sense... the problem that a SBD is not 1 USD, is the expectation what happens in the next 7 days... if the expected average would be equal to the expected price in 7 days it would be 1:1. Right now everybody expects the price to go lower... I for example expect it to go below dogecoin level, perhaps 10-15 million marketcap before the dumping ceases...

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nice trolling

This is a great idea to keep the value of SBD and it is also very easy to implement.

SBD is currently trading at $0.90, I will adjust my feed to reflect a 10% increase in SBD value.

Thank you Dan, I am tweeting this post!

If people can rely on its value, then there is no reason for them to cash out into their bank account. In fact, there may be every reason in the world to move your money out of your bank account and into Steem Dollars.

You forget the people that don't trust dollars but prefer for example Euro, Yuan or even Gold on their "Bank accounts" even if the Steem Dollar peg works wonderful... Don't underestimate the anti-Dollar-FIAT trend ! We should have more options than SBDs on our platform! let the users choose what "stable" currency they want hold and they will never blame "you" if they fail...

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people that don't trust dollars

People Cryptoheads don't trust dollars. By and large, people outside the cryptohead / libertarian camp do trust dollars, and we want to try to attract those outsiders to the platform. (Whether they should trust dollars is another question which I won't go into here.) Dollars will help Steem get mass adoption.

We should have more options

The problem with having multiple options is that if any one of them has a massive rally relative to the Steem market cap, it'd affect all the other assets in the system. This seems like a hard problem.

BitShares solves this by having a different pool of shorters for each BitAsset. If gold rallies, then the most the BitGold longs can "win" is what the BitGold shorters have put up; they can't start tapping into the pool of BitUSD shorters, or the BTS that didn't short anything at all.

The way Steem is designed has all Steem / SP be the "short side" to SBD's "long side." If you had multiple currencies then you'd have to figure out how to divide up the "short side" among multiple "long sides." In BitShares there were a lot of supply/demand mismatch issues where a lot of BitAssets were very thinly traded, and even for popular BitAssets, often there were either too many, or not enough, on the short side. You'd have to make sure there's enough short side for each currency.

This is leaving aside the massive implementation problems, because in a great number of places, the code is written in a way that assumes there are exactly two liquid assets in the system, STEEM and SBD -- replacing this with a system that could support N assets would be a massive task in terms of the code that would need to be rewritten.

I'm very glad to see you guys actively building and improving on this system. Very glad indeed. Thank you! And yes, improving the peg would be one of the most effective uses of time as alot of people feel it's "broken" right now. Glad you guys know whats going on from the ground up.

Stay safe when trading your currencies or sharing important information!

Big ask probably be ignored. My friend recently got charged for undeclared income. They followed his history and thats how they got him. Anyone holding, trading or selling anything crypto and not paying tax's (not sure what tax that even falls under) should use this to avoid detection as well as protect all data.

https://steemit.com/nsa/@egjoshslim/how-to-hide-your-identity-online-i-p-and-user-agent-simple-and-straight-forward-say-no-to-the-nsa-mass-surveillance

I never send a large amount of anything without doing the above, please protect your information people. It can save much bother. Especially when governments try nd scrape every penny they can from you.

Seems a bit random me posting this here but as people make more money and more get involved in crypto currencies i find more and more unaware of their own information security.

Please, Please don't allow the governments to take the piss out of you!

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hmm must've used a bank, I remember when Wells Fargo tried to steal or erase a btc coinbase sale deposit from me

It's interesting. Can the witnesses use any method they want to create a price feed? That's a little scary. it seems like it could be abused. Perhaps witnesses should be required to include their price feed method on witness voting page. ( a link to a witness info page?) sunshine is best disinfective!

Was this the reason the @SteemIt account just sold out the buys down to $0.05 per steem? To promote people holding SBD as buy walls?

https://steemit.com/steem/@vi1son/rain-of-steems-today-with-price-0-05-sbd-per-steem

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That embarrassing mishap was a fat-finger.

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Fair enough. Thanks

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Dang.. didn't noticed that.

steemit paid 100 STEEM for 5 SBD from alittle

I was wondering why the orders disappeared, thought they're expired.

In my two years plus in crypto. I have learned many people don't like to hold long term, at least whales. They like to come in, make their money and then get the hell out. Except Steem is not the usual crypto. Since it's made to be held longer term. From what I learned. My friend @kingarbinv and I are part of the Coin2 Crypto for gaming. Our core holders are holding long term till we get out games out. Yet we faced the same that Pump and Dump the heck out of our coin2. I see Steem as an awesome currency, and the kind that can't just be dumped, like so many. I still have a lot to learn. Yet I believe I'm starting to understand it more with every word I read from all you smarter people. thanks for this info @dantheman , its really good.

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There is no way to get out of steem, your SP will always grow whether you cash out every week or not which is why the system is flawed

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Wrong. If you cash out every week, but do nothing else, you'll be out after 2 years, entirely.

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That's why smooth and most of the whales have done just that and their steem power is higher than 2 months ago. Just do the math, divide your SP balance by 104, then see how much steem power you earn in one hour multiply by 24 then again multiply by 7 and you will end up with a number higher than the first number you got by dividing your balance by 104 which means you earn more steem power every week than what the actual power down gives you, so your balance is growing regardless.

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It's an illusion.
You need to DO SOMETHING to earn more underlining VESTS. If you're doing nothing and you're powering down, your VESTS will be converted to STEEM linearly every week. Which means you'll get more STEEM every week than last week for same amount of VESTS converted. After 104 weeks your VESTS will become zero, thus be out completely.
Check this link: https://steemdb.com/@smooth

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Indeed VESTs are an illusion. They are of no use, you can't trade them and they are diluted over time anyway. What's the point of trying to have more VEST than others ?The only thing that matters is how much your steem power are worth, VEST are useless even more so when there is unlimited SP to kill the price.

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The 2 year power down is calculated based on your steem power not VEST but even assuming you meant out of VEST entirely after 2 years. Then you will still have a lot of steem power so you won't be able to get rid of all your steem power ever, they will always grow and so the price of steem will always go down. That was my point

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On the contrast, number of VESTS is the underlining/basic data. Another basic data is VESTS:STEEM conversion rate.
The Steem Power number shown on steemit.com is a derived data, which is calculated with a formula : SP = VESTS * rate. It just has better looking.
So when you have no VESTS, the number of SP will show zero.
All those voting / curation reward calculation are based on number of VESTS.
When you have not enough VESTS, you can't vote.
When you have no VESTS, you do nothing. Yes, nothing, can't post, can't transfer..

It's in the code.

Have you read the whitepaper? Link is here: https://steem.io/SteemWhitePaper.pdf

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When you have not enough VESTS, you can't vote.
When you have no VESTS, you do nothing. Yes, nothing, can't post, can't transfer..

The number of vest needed to participate is ridiculously small, the free steem power when you register covers it anyway.

Basic or derived data it doesn't matter, if the data is correct then it means that my steem power will keep growing while my vest will keep decreasing which means I will have unlimited steem power. I did the math with the data I was given from the site. Someone who have 1700 steem power will earn 70 steem power every week and will be able to cash out 16 steem power per week so it means that even when cashing out every week the steem power will grow.

If the data provided by steemit.com is false and that I actually have a lot less steem power than my wallet displays then it is a totally different story but i doubt it very much since nobody is complaining about it.

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I'm telling you the math..

if the data is correct then it means that my steem power will keep growing while my vest will keep decreasing which means I will have unlimited steem power.

If you're powering down, every week the same amount of VESTS are converted into STEEM for you. You'll be left with less VESTS although it probably "worth" more STEEM (shows as SP). You won't have unlimited steem power, since there is a turning point.

When you started powering down, you get MORE liquid steem every week. For example, if you have 10400 STEEM worth of SP at first (which is actually X amount of VESTS but the exact X doesn't matter), now you started powering down. To be simple, assume the conversion rate increases by 3% every week (actually current value is about 4%, but the speed of increment is slowing down day by day, the final speed at equilibrium is about 0.7%)

  • the first week you'll get (10400/104)*(1+3%)=103 STEEM out, leave 10400*(1+3%) - (10400/104)*(1+3%) = 10400 * (104-1)/104 * (1+3%) = 10609 STEEM worth of SP in your account
  • the second week you'll get (10400/104) * (1+3%)^2 == (10609/103)*103%=106.09 STEEM out, leave 10400 * (104-2)/104 * (1+3%)^2 = 10,821.18 STEEM worth of SP
  • the third week you'll get (10400/104) * (1+3%)^3 = 109.273 STEEM out, leave 10400 * (104-3)/104 * (1+3%) ^3 = 11036.543 STEEM worth of SP
  • the forth week you'll get (10400/104) * (1+3%)^4 = 112.551 STEEM out, leave 10400 * (104-4)/104 * (1+3%) ^4 = 11255.088 STEEM worth of SP
    ...
  • the 50th week you'll get (10400/104) * (1+3%)^50 = 438.391 STEEM out, leave 10400 * (104-50)/104 * (1+3%) ^50 = 23673.093 STEEM worth of SP
    ...
  • the 100th week you'll get(10400/104) * (1+3%)^100 = 1921.863 STEEM out, leave 10400 * (104-100)/104 * (1+3%) ^100 = 7687.453 STEEM worth of SP
    ...
  • the 104th week you'll get(10400/104) * (1+3%)^104 = 2163.074 STEEM out, leave 10400 * (104-104)/104 * (1+3%) ^100 = 0 STEEM worth of SP in your account. But if you didn't set withdraw route in advance, you can't even transfer the 2163 STEEM to another account. However you can stop/cancel the powering down at any time before your VESTS hit zero, but after that when you restart powering down, it need another 104 weeks to complete, which means you'll get out less STEEM every week (in comparison to the number before stopped powering down).
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In regards to this:

The number of vest needed to participate is ridiculously small, the free steem power when you register covers it anyway.

Currently, if you have only 3.5 SP, you can vote a few times a day. If you have more you can vote more times. So for tiny accounts, it's able to participate, but the level of participation is limited.

And, if you've read the whitepaper, you'll know there is another bandwidth limit designed in the system which will only show when the system is getting much more busy than present, however I don't think we'll reach that limit in the near future, so we can just ignore it for now.

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Shhh... Steemarians will have none of this logical talk!!

You are talking about merchants and adoption. All of us as Steemit users can help support the growth, adoption and evolution of STEEM. Please support my idea of crowdfunding one WooCommerce STEEM +SBD payment plugin creation. This will help adoption for sure! Thank you! https://steemit.com/steem/@cryptojoy.com/community-support-for-woocommerce-steem-merchants-let-s-crowdfund-the-first-steem-sbd-woocommerce-payment-plugin-1

I really enjoyed this post like you

Hello Dan,

Great explanation now I understand why raising the interest rate would not help.

I have one question, is there a possibility, that people who are earning on Steemit just need the money, so they sell at 0.9 or 0.8 $? If I am hungry, I don't care if the price is at 0.9 or 0.8$ I will sell to buy food ;)

But I agree, if SBD was always around 1 USD, many people might keep their SBD in the wallet.

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Of course you can sell your SBD. It wouldn't be worth anything if you couldn't use it to buy food. The comment about not wanting people to sell it revolves around people selling it because they don't have confidence it maintaining it value relative to USD. By maintaining the peg better we can remove that reason to sell and turn it into a reason to buy (beause it does maintain value and also pays interest).

@dantheman thank you for addressing this . Keeping the Steem Dollar pegged to the dollar I believe will be a big help in building confidence in steemit .

I really like the idea of Steem Silver. That could be really important in the future if market indicators, and rumors/speculation are true. With big fianciers pulling out of bank and buying gold (including big bankers themselves) and with the wort that October 1st the Yuan will be a world currency with the IMF which has not happened since WW2 when the Dollar became the world reserve currency. That very possibly could have dramatic impact on the dollar. Having currency backed by something that could be converted to any currency might be a good idea.

I am glad to see you guys thinking this far ahead. It doesn't surprise me that you are thinking this, but it does please me.

Keep up the good work. All steem ahead.

well is so thorough and well put together
thanks for this post!

Please remember, as coded, if total Steem Dollar supply become more than 10% of total Steem market cap, value of one Steem Dollar will be less than one USD no matter what price witnesses will be feeding into the system.
So the key is PUMP.

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I am not sure if that is the right approach ...

Thanks for expressing this dan. I agree with most of what you say here.

I'm doing my part to create demand for SBD / STEEM by getting the steemd and cli_wallet proprly documented and listed on payment gateways that easily integrate with existing e-commerce setups.

I will start holding on to what SBD I do not need for every day expenses.

Also as part of my witness campaign launched recently I'll take this information to heart and begin watching the price feeds more closely. Currently still working on setting mine up properly.

Also I would like to add perhaps a small adjustment of interest rate upwards might coax users to hold them longer? Is this even possible?

Sorry but the way the platform is built now :

  1. either it was too early to be released
  2. either it doesn't give enough guarentee for people to hold the SP. 2 years is way too long. Even hundreds of $$ is too much for me to hold that long.

Great to see this being discussed. I think the solution you propose seems reasonable. What are the downsides of using the normal price feed after the 7 days for the conversion? Thank you.

Witnesses already have a lot of power. Anything that gives them even more control over the platform will inevitably lead to further centralization of influence, and potentially collusion. Just my opinion, though, feel free to disagree or prove me wrong!

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this isn't that much power, they have a clear mandate to keep SD trading around $1.00 so it is a relatively objective metric for the community to judge their performance.

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In principle this isn't at all a controversial suggestion. Witness accountability is quite low in practice, with only a small minority of active accounts voting for any, and even fewer ever changing their votes once they approve some accounts. We need a better mechanism to get Steemians involved in witness voting.

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Its own spot in the Menu bar would be a start.

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I have just checked the feed prices and there is a delegate who has a feed price of $2!
But It seems most of the top witnesses have feed price under market price. Which is great for SBD!
Time to buy SBD! :)

I am fully behind many of the points raised in this article. I believed that increasing the interest rate was a good solution but you showed me otherwise. As @anyx said, it was a known method but I believe that due to this post and other factors it will begin to be more utilized. In my opinion, the real question is... how do we adjust the price feed?

How can a witness make a good guess about the offset they should use? I think this all come's down to policy. In the end, this could replicate the different ideals and policies of political parties. Another factor to take into account when voting for a witness... economic policy. It's interesting though for sure. Thank you for raising awareness! :)

Paying interest for holding SBD is a very good idea but I don't understand why people need to move SBD out of their account in order to get the interest. Three variables in get_accounts play a big role: sbd_seconds, sbd_seconds_last_update and sbd_last_interest_payment. Could you give a quick explanation how the interest is calculated from these three ? Thanks in advance.

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I think you can read the code? Link is here: https://github.com/steemit/steem/blob/v0.14.2/libraries/chain/database.cpp#L3472-L3481

basically,

  • sbd_seconds = your_sbd_balance * how_much_seconds_you_have_held_it, and
  • interest_you_earn = interest_rate_per_second * sbd_seconds

last_update is there for better performance, to avoid computing the sbd_seconds increment on every new block.

I agree that the need of moving SBD to get interest is not so good. I have an idea to automate the interest collecting work: https://steemit.com/cn/@abit/steem-dollar-compound-interest-collecting-bot

I had been postulating inside my own head the best way to do this for weeks as I saw the price of Steem drop daily... I think what you are suggesting is the best possible solution.

We must restore (instill) confidence in the currency! :)

Dan, I will make you a promise right here and now. I will never cash out my Steem Dollars, (as if I expect to ever have any).
Steem Dollars is not why I'm here.
I'm here because I'm hoping I read and learn something that changes my life. And I'm hoping that I read and learn something that I can share with someone else and maybe change the world a little bit. That's the only reason I'm here.
I'm also hoping that my upvoting helps others. Though I don't pretend to understand how it could. But if it helps, know that if I ever earn a Steem Dollar. It's going to stay right where it is. Where ever that may be.

Thank you for the disclaimer. Despite saying it is for all posts, it is a great thing to have every post, too easy to be read as direction otherwise, considering the source

Uh-uh!

But sweet/yummy... potentially! :)

Hi @dantheman
This is the closest post I can contact to you , here, I have discover and please reinstate @loveangel
Follow my link
https://steemit.vlj.lt/uncool/@bullionstackers/steemit-attorney-help-desk-third-case-unjustice-downvoted-by-dantheman

Also, the check box for being paid in all STEEM POWER would "Reduce SBD Creation Rate". I am all in for STEEM POWER and will be using this check box every time. If more users also use this feature, this will subsequently help the SBD.

Do exchanges earn interest on customer SBD?

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They do.

Dan, you have been working for BitShares, where BitUSD trades quite close to parity. Why didn`t you implement the same algorithm for STEEM USD?

It is always better to under promise and over deliver.

Agree with what you are saying, although for people to not SBD out or bring USD into SBD would require some market place. And I think, we can start building market place where people can spend their SBD without withdrawing SBD...

The thing about pegs...they never end well. History attests to this fact.

Honestly, STEEM will trend toward $0 due to ridiculous levels of inflation having been designed into the system, period. Demand will also wane as STEEM continues to melt down, which will cause even more people to run for the exits.

99% of the people on here have very little to no clue about basic economics/finance, and these are the people taking the bait, hook line and sinker as whales continue to dump...

Sbd based future betting (augur) will increase sbd demand

Why did this get flagged? This is a really great post and a really great idea...

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There was an informal decision among the whales to keep the 'official' Steemit posts payments down, so that they do not take rewards out of the community reward pool, and there is more to pay out to user's posts. It has nothing to do with the quality of the post.

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Thanks for sharing. I did not know that. That is good news for the rest of us :)

You could also just shorten the redemption period from 7 days to 1 or 2 days.
Great post though! I only found it because it got reblogged by @onetree

Thank you for posting this. Coming from a place of not knowing much about steam economy this helps me out a lot.

This certainly gets my approval. I have been steadily powering up from the start and it would make it even more valuable for me to continue.

#witness tag missing. I thought I could help :)

This was actually a known idea for quite some time, see this post here.
I briefly discussed this issue too in my last witness update, and I am glad to see some more attention to this!

For the past few months I have operated my price feed at a discount related to the difference in SBD to USD (currently 10% discount). Of course, it doesn't matter much as I am a back up witness, so I hope the top19 will adjust as well.