Rewards Paid Exclusively In SBD, As The SBD Printing Rate Grows To 100% Really Fast
In a little over 24 hours, the SBD printing rate went from 1% to 100%. In layman terms, it means that rewards are now paid exclusively in SBD (I'm talking about the liquid part of the rewards, the one that should be split equally between SBD and STEEM, the non-liquid part of rewards is still paid in Steem Power).
This behavior is created by a new modification of the tokenomics of STEEM, introduced in Hardfork 20, which shrinks the interval in which SBD printing is adjustable. Now SBD printing goes from 0% (in practice, from 1%) to 100% if the debt-to-ownership ratio (proportion between circulating SBD and USD value of circulating STEEM) is between 9% and 10%.
If debt-to-ownership is less than 9%, SBD printing stays at 100%.
If debt-to ownership is over 9% but less than 10%, SBD printing goes linearly from 100% to 0% (in practice, at 1%).
Anywhere between this interval, the printing is adjusted linearly, so, for example, if the debt-to-ownerhsip ratio is 9.5%, SBD printing would be 50%.
In other words, in just 1 percentage of the debt-to-ownership ratio, SBD can go from zero printing to 100% printing.
The rationale behind this decision was to protect SBD from being gamed by traders who can benefit from a low supply token and game the price - as it happened before, with SBD trading as high as $13. This new behavior should, in theory, make the SBD supply snappier, hence less prone to low supply price manipulation.
I'm a serial entrepreneur, blogger and ultrarunner. You can find me mainly on my blog at Dragos Roua where I write about productivity, business, relationships and running. Here on Steemit you may stay updated by following me @dragosroua.
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@dragosroua,
It's great to see SBD printing rate goes high and STEEM printing rates goes down! So we can soft peg SBD to $1 and STEEM market supply might be slower with this printing rates! Thanks for highlighting!
Cheers~
Very well explained. Let's wish this 100% printing of SBD stays for some time and that will happen if the debt ration keeps below 9%.
Thank you and Have a great day.
So if the market cap of steem rise it will change the ownership debt and that will force the blockchain to print SBD and that is the case right now but all eye would be on steem, as how will it trade all depends on that.
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actually i still think that while sbd was around 12$ it was one of the best time:) because of it steem pumped too and now while sbd cant be pumped steem is soso.
This is so explanatory,
Well done sir.
Nice to see Steemit healthy enough to see how hardfork works
Is there any reason the bounds are 9% and 10%?
Basically, the need to rise the debt-to-ownership ratio from 5% to 9% was due to the low supply of SBD. If you have only 20-30 mil USD market cap for an asset, that is very easy to be gamed in crypto (or it was, when BTC was at $20,000). So they want it to double it. As for the very narrow threshold, that is to react faster to supply variations. Before that, the threshold was between 3% and 5% if I remember well.
Why have the metric be the debt-to-ownership ratio? If the goal of SBD is to, essentially, be a stable coin with the value of $1 then why not peg printing to the market price of SBD?
SBD is not hard-pegged, meaning there isn't a fiat supply in cold storage mirroring the supply of circulating SBD. So there aren't as many physical USD somewhere in a Steemit controlled bank account as they are SBD on the market.
It's a soft-pegged token, which translates as 1 SBD = 1 USD worth of Steem, which makes SBD a debt instrument. So if the debt of that instrument is too high, the system may engage in a spiral down to complete collapse. That's why the debt-to-ownership is a trigger for printing / not printing more SBD.
Yes. But why not simply print less SBD when the market price falls below $1 and more when it rises above?
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That's exactly what happens, only the trigger is not the price in fiat, namely more or less than $1, but the 9% debt-to-ownership ratio, because that's to what SBD is "pegged to".
Doesn't the dollar value of that, by definition, fluctuate based on the dollar value of Steem?
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Not necessarily. SBD is traded as a separate asset, so it's subject to demand and supply rules.
Great explanation mate.
I am just concerned over the upcoming conversions that will take place. More and more steem...
At times I feel we were better without SBD
Thanks for the information. I noticed it when my rewards came in today.
I don't seem to be able to change my preferences.
is this related?
Might be related to the new API changes.
something else they broke and aren't in much of a hurry to fix?
some of my favorite apps quit working when hardfuck20 happened.
Still broke..