The trouble with SBDs - a poll
SBD price is high! This is good! Sell SBD! Or hold for higher price! Profit!
But is that the whole story? Is this actually a good thing in the long term.
There are some great posts making the case one way, but if I may be so bold as to summarize there are two camps, I would as follows:
Peggers vs Backstoppers
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Peggers
The Peggers think that SBD should be pegged to the US dollar, as was the original intention of Steemit in the whitepaper, as well as many manifest assumptions in the system design and implementation.
Backstoppers
This group thinks that it's great to have SBD as a currency that will always have a value of at least $1 USD but not one with an upper limit of the same, that the value should be allowed to pump as high as it will go.
Others?
I haven't heard many other points of view that couldn't be put into either camp (except people who don't care 😂 ) but I can think of one or more. Maybe you think that SBD shouldn't be pegged or backstopped at all and just allowed to ride? Let me know if you don't fit into either group.
What I think
I'm currently in the Pegger camp. I think that it should be pegged, and I'll go further, I think that if it can't be pegged that we shouldn't have the SBD token at all, we then don't need it.
SBD is supposed to be a crypto dollar, with as much stability as the US dollar. It is intended for use by merchants and general everyday use, not as an investment token to buy and hoard, at least not mainly. The peg is part of this, the most important part.
However I did hear an interesting point made by @aggroed on this: because SBD pays out as the (optional) liquid portion of Steem post rewards, it is a way for people who are engaged to benefit. This is true and I wonder how established investors think of it. Is it fair? Personally I'm very intrigued by it, I've always wondered about what ways can the chain benefit those who are actively engaged. I suppose the downside is that all kind of comment farming has also become really profitable.
What do you think? This is a poll!
The most reasonable voices that I've heard all advocate the same thing - don't do anything for now. So I don't make this post to encourage a change, which is what I usually do 😅 No, I just want to see what people think about this and a poll seems like a nice way to do it.
Upvote the comment below with decline payout which best fits your position and feel free to add any comment to why you choose that. Come on, I'm curious!
BTW
[PSA] Do NOT Use Convert To Steem Option On SteemIt
I think the situation is more nuanced than this. The white paper mentions that SBD is a debt instrument and that the currencies may be unstable if the amount of SBD is to high relative to STEEM (once SBD goes down to sub 1$ range)
I support the peg but the instruments to get there involve increasing the supply of SBD. It's okay as long as the tokens are controlled. The white paper elaborates on this further about how it could go badly (ending in massive steem creation and crashing the value).
I don't fully understand this yet but will be exploring it in a future post.
Increase token supply would not be bad if this were an organic growth. But it is not.
I think this pump may be a feedback loop from whales taking SBD payments to raise your rewards, redeem, rinse and repeat. If that's the case the solution would come from adjusting reward proportions.
Auto-vote and vote buying is everywhere right now. This ain't good long term.
Think about it: It is now profitable to buy SBD even at this insane prices, post some shit, use the SBD to upvote it, redeem.
So you are saying, SBD is desirable now for use in vote bots that upvote any shitty post you make for more than you put in.
This is a good point, so let me see if I can understand what that means for the market.
Actually I'm not sure I understand how this does anything market-wise. Yes, maybe there's some demand for SBD to carry out this procedure but this profitability depends on propping SBD value up and nothing more than that. This feedback loop is not different than the usual speculative pump feedback right?
I may be wrong but I think there's a correlation between irrational SBD prices and the current self-voting situation.
How else would you explain that people are buying a token at 10x the price it is designed to be?
Oh absolutely, I am not disagreeing with you at all. I was saying that just like a regular pump and dump, this is not a sustainable position.
We seem to have to wait for the irrationality to blow over. I realize I also didn't address your main point that in these conditions printing more SBD does not necessarily help, and I also partially agree (we can probably afford to print some more, but the amount I am thinking is probably insignificant in the big picture of the pump).
The best part is this all is that to the credit of crypto, SBD cannot be arbitrarily printed willy nilly. There are controlled processes :)
They are probably buying SBD to buy STEEM? And they are probably doing that because they expect STEEM to rise in the future.
(I am new here; I am assuming that STEEM can't be directly bought in an exchange)
STEEM can be directly bought on any exchange that lists SBD
You're right, those are the instruments available, but anyone I have talked to is extremely reluctant to even consider it, and it appears to be that that is why they adopt the backstop perspective. So what you are talking about, if I could shove it into a category, is still respecting the peg.
Looking forward to your future post.
The problem with having a volatile SBD is that the currency becomes pointless. It is supposed to be stable to encourage trade and economic transactions within the ecosystem. But if STEEM is more stable--which it has been the past few weeks--then what's the point?
Well yes, exactly. Those are the lines along which I am thinking. The counter argument is that it serves a different purpose to the Steem token and brings in value a different way, since like it or not it is effectively backstopped already, more or less.
My position is that it is useful to have when SBD is below a dollar: the white paper advises two actions depending on the debt ownership ratio. In the current situation we just have to wait for stupid to wake up.
If SBD was appropriately pegged and it were STEEM that was running instead, people would get more liquid SBD in their posts. So the active users would still be rewarded.
Wow, I hadn't thought of that. Great point 👍
Actually the amount of SBD doesn't depend on the peg, just the price feed. At least from my understanding. But yes that steem going up is going to increase the amount of SBD rewarded.
I'm mostly agnostic but lean towards being a pegger, so that's how I voted.
There are a lot of moving parts, but from tracking my curation rewards in recent weeks, it seems that the high SBD price may be having a slightly negative impact on curation rewards (for voters who don't focus on self-voting, anyway). IMO, Steem/steemit needs quality voters more than easy-money spammers. High SBD does nothing to encourage voters to search for the "diamond in the rough," but it may be discouraging that behavior.
I also agree that if it can't be pegged reliably, then it's unnecessary complexity, and should probably just be scrapped.
Wow again, a great point that I hadn't thought of, awesome to hear of your experience (though, you know, not an awesome experience). Glad also to see that it's not such a wild idea to scrap it if not working as described.
Hey all, I'm pretty sure the SBD price does not affect payout. Please see my latest post for my thoughts about that.
I read somewhere that the witnesses have shifted payouts from 50/50 to 65/35 in order to try to restore the peg. Not sure if that impacts curation rewards, though.
Either way, I'm pretty sure that high SBD prices affect voting behavior. You only earn SBD if you're an author, so it's just more incentive to vote for yourself instead of someone else.
The way they shift it is by adjusting their price feed up, so yes. I didn't quite understand when they first mentioned it. However, they need enough witnesses to follow suit for that to take effect and I don't believe it happened (or my interpretation of the median is wrong).
Agreed on your interpretation of affecting voting behavior though.
No you're right, those parameters are set my median consensus.
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I think introducing the reverce convertion option would do the trick )
I've heard this one in chats too. I have to admit I'm not exactly sure how that would work to put downward pressure on the price, can you elaborate?
It would increase supply, wouldn't it ?
Right now everybody would initiate reverce convertion to get 1.7SBD for 1Steem after 3.5 days.
If after 3.5 days the SBD pump is still there you sell your new printed 1.7SBD for 20 Steem. Repeat )
For me, the current situation makes a joke of the 100% power up that i had commited to in order to invest in the platform and help with curation. If id gone 50/50, id have been able to put far more back into steemit by converting the SBD into steem. I've switched back to 50/50 but everything will be going back into powering up.
Right, and this brings up the broader question of what about those investors who powered up but are also holding Steem, or converted SBD to Steem previously. Of course the blockchain should not protect any individual in particular, but for all users who were led to believe that SBD would be pegged to $1 by witnesses (and the implication that they had these tools) it signalled that Steem was the token to hold and SP was worth having for that (and other) reasons.
Abandoning the peg in my view, or as a witness refusing to use the tools to apply downward pressure in the medium to long term, is a fundamental change of policy that shouldn't just be drowned out in conversation by the fact that some people (especially active people and those who spread their token ownership) are reaping the rewards in the short term.
Your article prompted me to put up a post yesterday to briefly consider the perspective of some of the non-author stakeholders.
Not sure which of these categories I'd fall into, but backstopper might be the closer fit. As far as I understood, the value of SBD is secured by the ability to trade it for approx $1 worth of STEEM at any time. So speculators can speculate the price to the moon, and anyone holding SBD will benefit ... but at the end of the day, each coin is really just an IOU for the STEEM equivalent of $1.
Get rid of it altogether. The intention was good but it has failed to be stable so has become useless and just adds confusion and complication. It has a very small circulation and market cap so it should be too hard to kill.
Why give up so easily? A pegged crypto is possible. Look at bitUSD
We shouldn't give up easily, I agree completely. Make no moves in the short term. But I think we need to keep an eye on this. The peg is only possible within a dynamic market if witnesses are willing to do what is necessary to keep the peg. This post was written in response to some witnesses saying they would abandon the peg.
That's where my mind is going. Counter point: the crypto coin sphere is going crazy right now anyway and there is widespread volatility. Can we really expect SBD to not experience some of this? Or in other words, maybe ... just maybe ... it'll all work out? Especially when (the mythical "when") people start to use it as a dollar, in everyday purchases. Though, as we're seeing with Bitcoin, it is that very volatility that puts merchants off accepting it.
My thinking in this situation is as follows:
If we peg SBD to 1USD we become no better than the fiats we seek to distance ourselves from. The option to democratically lower/raise the interest rate and the market price for SBD is a great option for Witnesses and the community.
Lets be honest though. There is no "better" solution. Every approach to this current situation in the market is circumstantial to the user and their core views. What might be better in my eyes may be worse in your eyes.
Ideally the whole split of opinion on this topic will shake the seats of the current witnesses and weed out the ones the majority of the community aren't represented by. Hopefully also igniting more of a conversation around how individual users influence the market
I don't agree. I think it's a useful stepping stone on the way. Many merchants in the world use USD so it's helpful to have a frictionless way for them to migrate to using crypto as their currency of trade, this is what the peg is about. No need to throw the baby out with the bathwater.
Congratulation
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Wow thanks for the reminder. Usually I think these automated comments are very spammy but in this case I think it's actually useful and really nice. 😎