Why Trading SBD For STEEM On The Internal Market Is Fundamental During This SBD Pump

in steemit •  8 months ago

As you all know, the SBD peg is broken, right now you can get more than $6 USD for 1 SBD. I won't gloss over why this is happening, suffice to say that I've updated my price feed twice in the last 24 hours, following other witnesses, in an attempt to restore the peg.

But what worries me more than that is the volume on the internal market. If in the first few days of the pump the volume was consistently over $15,000, in the last couple of days I saw volumes under $5,000. I don't think this is a good thing.

Here's why.

When witnesses are adjusting their price feed bias, they're actually shifting the amount of SBD you get in your rewards. Ideally, you would get 50/50. But if you look in steem.supply you will see immediately that we're shifting significantly towards a 65/35 ratio or more, in favor of SBD.

The reason?

By "printing" more SBD, we increase its total supply, hence lower the price, ideally to the level of the peg. The total supply of SBD right now is $3.5 millions, which, at the current numbers in the crypto universe, is considered extremely low and very easy to manipulate.

So what I think it's happening is that a lot of users who are generating more SBD are rushing towards exchanges, taking 6x profits and being happy about that. That doesn't help the ecosystem much. I totally understand the exhilaration, don't get me wrong, but it's not very wise.

If you want to take a bit of advantage of this pump - which is totally understandable - a more supportive approach would be to use the internal market and exchange SBD for STEEM. At the current prices you can get as much as 7 STEEM for 1 SBD!

There are at least 3 strategical advantages of this:

  • by using the internal market you exchange at the price feed set up by witnesses, enforcing their monetary policy and thus helping them restoring the peg, eventually you exchange at the market rate set by the internal order book, not the one set by an external exchange, thus helping the internal ecosystem.
  • by using the internal market you help increase the liquidity inside the ecosystem, making it healthier and more resilient to future potential pumps.
  • by exchanging SBD for STEEM you acknowledge that you understand one of the fundamental pillars of the future of the Steem ecosystem: the Smart Media Tokens will be directly exchangeable via STEEM, not SBD. So, the more STEEM you have, the better you'll be.

I tried to make it clearer than that, but I just couldn't.


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.


Dragos Roua


You can also vote for me as witness here:
https://steemit.com/~witnesses


If you're new to Steemit, you may find these articles relevant (that's also part of my witness activity to support new members of the platform):

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Great heads up and nice to know that witnesses are responding.

On the other hand, I'm not so sure it will do much good, and I'm even less sure about it being in our best interest to even try and keep SBD down. Apart from my thinking that it's impossible long term, I don't think a hard cap should exist on possible appreciation since I think it's much better PR to have an SBD that outperforms the USD - so much better that we guarantee it will never go lower! That's just beautiful to me. You'll find my full rationale in my recent post: A SBD-USD Hard Peg? At What Cost?

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STEEM having a finite supply -> not really, the yearly inflation will go down from 9.5% to 0.5% in 0.5% yearly increments (i.e. in about 20 years) and it will stay there, so there will be a 0.5% inflation every year after the first 20.

Apart from that, I think some sort of a debt instrument (which SBD actually is) to act as a buffer to gross price manipulation is necessary. For now we have SBD and it is pegged to the USD. Maybe in the future it can be pegged to BTC or ETH, who knows. But for now, as a witness, I implement the current white paper and the current set of rules in the current hardfork.

I'm very open for a discussion about a new way to use debt instruments or other instruments to have a safer monetary environment, after SMTs are released.

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STEEM having a finite supply -> not really, the yearly inflation will go down from 9.5% to 0.5% in 0.5% yearly increments (i.e. in about 20 years) and it will stay there, so there will be a 0.5% inflation every year after the first 20.

I did mention built-in SP inflation, but next to the USD, for all intents and purposes, STEEM is 99.99% finite. As I said in reference, a drop in the bucket. 😉

It's not exactly a full peg. It's only pegged from falling below the USD, not from rising above. It would be a shame to see SBD hog tied to something that's only going to lose value forever. 😐 I should have also mentioned my first post on the subject in my first comment above. What is going on with SBD?

I really think SBD is perfect as is, and if the USD were to go into a free fall, and the SBD go to $100.00, that would be great. It's a great investment: guaranteed to never go below the USD, but with an uncapped upside!

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guaranteed to never go below the USD, but with an uncapped upside!

yes, that I agree with :)

I like your point of view. But can we change this now and implement this.

Cristal water man, well explained!

I so sorry i was so sure i voted you as a witness;well did it now. Keep up the good work :)

I'm taking advantage of the broken peg while it's there.
I notice that both the price of steem and steem dollars are declining.
Obviously I wish that Steem was not.

on a different subject.
(sorry about that)

I have a request for SteemSupply.
you and I have posted and comment numerous times.
that CUMULATIVE number is easy to find.
How bout adding to SteemSupply
the number of Posts.
AND the number of comments.
SEPARATELY..

steem on.

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Good call, will add it to the queue.

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getting kinda long is it?

Yep this is like a golden opportunity to better distribute steem in the platform. If all content creators took advantage of this for the next week or so we could see a ton of steem power into the hands of a lot of more voters. Drastically improving curation of content.

Great information for people just getting their feet wet in cryptos. My steem will remain that wy for some time to come. I am invested in Steemit, so I am here for the duration.

Interesting .. never thought about it that way. But I doubt people will listen, since the internal market is slow. I hope they do, as of all the cryptos out there, STEEM, by using Steemit and other social media on its blockchain, can really work, not only as money, but it has an actual product behind it.

(oh, and small nitpick... millions is not a thing in english. there is only million :p Scuze!)

Oooh, I did not know that the feed is making this kind of adjustment, that is good news. But what about posts that go straight 100% power up? Those type of posts don't contribute to this I suppose?

And just for my understanding, the amount of Steem in the rewards pool is fixed in the algorithm, and it's just the conversion to SBD / SP that can vary based on the market? (And apparently the price feed?)

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AFAIK SP only posts are not into this game. And yes, the amount of STEEM in rewards is fixed per day, what is shifting is the SBD / STEEM ratio.

In tune with a post by @denmarkguy - I'm kind of surprised the SBD peg is so out of whack. I've been going for 100% power ups for my posts but I think I'll switch to 50/50 and use the internal market as you suggest. Thanks for bringing this to our attention. Resteeming.

yes this is great advice from you @dragosroua, the price of SBD is crazy right now and I am sure we need to get the peg back ! than ks for informing the younger users of this necessity !

by using the internal market you exchange at the price feed set up by witnesses, enforcing their monetary policy and thus helping them restoring the peg, eventually.

False. You exchange at the internal market rate set by the internal order book. The price feed has nothing to do with this aspect of the peg.

Other than that, Nice Post!!

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Yes, I stand corrected, thank you!

I got nearly 120 steem with 18 sbd yesterday...I traded via blocktrades. Does steem have its own market?

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OF COURSE! Right hamburger menu and go to "Currency Market" or choose "Market" from any drop down menu in your wallet.

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I am wondering why I didn't know it till now.
Thanks to you!!

As soon as I realized that I could get more Steem on the internal market rather than converting, I jumped on it. I am okay if folks want to dump Steem to take profit, I am using it to build my future here. BTW, love your Steem.supply. Voted for you as witness!

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Thank you, appreciate your support!

another advantage of using the internal market.
it's easier and quicker and provides less chance to screw the pooch.

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absolutely :)

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one thing I like about the internal market is that after a few times using it I can do so VERY easily and quickly...like about a minute.

it's also free to use...no transaction fee...

I sell SBD's as quick as I notice that I have them...no matter how small the amount..
a little bit here..a little bit there...eventually we're talking about REAL MONEY.

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That’s what I do. Trade as soon as I get them!

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Precisely, you can sell even pennies and that's a very nice thing. A few SBD pennies now can go almost to 1 STEEM.

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fractions of pennies...like .001 SBD...
good practice...if I screw up I've only lost .001 SBD...

nother good thing about the internal market.
it's fail safe.
if I screw up it just doesn't work.
no sweat

just did it..

As you stated trading outside Steemit is bad for the community .I am happy I have never traded outside the internal market.

The internal market yesterday gave me a great deal of Steem for just 1 SBD..

I even wrote a post encouraging minnows to Power Up by converting SBD to Steem...
Anyone can check out my post on my blog.

Interesting and made things a lot clearer for me, I have seen many talking about sending SBD to an exchange and selling it there only to then buy Steem and return it to make more of a profit, I did ponder that breifly but decided not to for two reasons

I am not big on using exchanges yet and the whole process seemed complicated

and secondly if just felt to me for a reason I had no idea why better for the syetem to use the internal Market

your post if I read it right seems to say my second reason was actually logical and best for the Steem ecosystem so I am glad that is what I have been doing

@dragosroua,
You are absolutely correct! Now I am ding it :D

Cheers~

So bad that I don't have anymore SBD...

Here for the duration so I invest in where I spend my time, Thank You!

Thanks for the info, I didn't knew about the change in the rewards ratio in favour of SBD

Yes this sbd pump is certainly unpredicteable, and in just two months i think steem has proven constant

great information share,thanks for the post @dragosroua

thanks for great sbd news sharing @dragosroua

It was crystal clear :)

thanks for the explanation. I could not figure out why the Steem dollars had jumped so in price while the increase in the value of Steem was much more moderate.

but going to exchanges can get you steem worth $13 steem as compared to internal market on steemit

I have read all about the news you send very interesting and helpful to all of us, you are a very nice person I have ever known, because you explain what we do not know, you are a good person, worth talking to.

been doing that every time i had some sbd. i'm in for the long haul not the send out and make funds, i power down each week at the moment but only send out the steem when the price is high to convert to dash/ether or bitcoin if i need some funds. kinda loving the low price of steem and ultimately steem power at the moment ;)

i converted 1 sbd today here on steemit and i was waiting for 6 steem but i only get 0.500 , is there a mistake or something ,

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Nope, there's nothing wrong and no mistake, you should wait until your order is filled. I think your order was just partially filled. Sometimes there isn't enough liquidity. You probably have the rest of your SBD in an open order.

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thank's for the fast reply , ill wait some time and see what happen , maybe there isn't enough liquidity , like u said , thank you again :)