CONVERT TO STEEM FEATURE - aka "The Haircut"
Whether this is economically a good option we will not comment and we will leave that up to commentators of this post. However the community asked for the user interface and we added it. (It's been a feature of the blockchain for a while)
WHAT WE RELEASED
- The ability to initiate it (aka send your sbd away to get converted)
- The ability to see the results (which btw are 3.5 days later)
Don't use unless you are sure you want the results?
Me (@jarvie) well I'm not even sure why people call it "Haircut" and I hear rumors there are good times to use it and bad times to use it... and the uncertainty is perhaps why steemit removed the feature.
WARNING? If you have a warning message we should put on there that's short and to the point put it in the comments.
So we suggest only use this feature if you have a solid understanding of it and read multiple articles and maybe some people will list them below. Aka @intrepidphotos ?
HOW TO INITIATE?
- You click the extra options next to SBD and just click on convert to steem.
- Use steemconnect to sign the transaction with your active key
- Then 3.5 days later you get steem.
We don't make the blockchain rules we just make awesome interfaces for them. haha
Oh and btw Witness Vote for @steempeak? VOTE HERE
Supposedly....if SBD is on the external market bellow a dollar, you can buy it there, and convert it into Steem.....with the conversion calculating the SBD at $1 USD and the STEEM at external market rate...so.....
You get EXTRA Steem.
But the witnesses must have changed the SBD input price...
I tried it two weeks ago...with SBD ON EXTERNAL MARKET AT $0.58 and Steem at $0.23. Each SBD should have given 4.34 STEEM. IT only gave 2.52 Steem for each SBD....As if each SBD was $0.58.
So the LOOPHOLE has been closed. You CANNOT game the system and profit from a low SBD price.
Probably a good thing that it was changed.... But I am not sure I agree. It was setup to convert that way for a reason. Feels very centralized that it could be changed....
And I couldnt find any info announcing the change....not cool. Maybe I missed it. Steem blog is hard to navigate.
But if the witnesses made a change that wasnt announced....that is dangerous. Could they arbitrarily change an input amount that would allow them to convert at a huge percent gain....take a huge profit and bail before anyone but the witnesses was the wiser??
Anyway...I probably just missed something.... But we need a central location with these changes and details accessible in an easy format.
Hope it isnt too bad for me to tag @lukestokes
@timcliff
@blockbrothers
Etc
Thank you kindly for your attention! Hope you are all having a great Holiday week!!!
So...to conclude:
I can see no reason to use this feature.... Maybe to just get a forced cost average. I lost a few Steem doing the deal because I got a slightly less favorable rate for SBD on the external market than if I had just bought Steem. So after the conversion I was down 2 or 3 or 4 %.
I've been told there are good times and bad times.
@tcpolymath and @intrepidphotos are the ones that have said they love this feature i think.
So i'll wait to hear some more good input.
Thanks for tagging some friends. TCPolymath shared a bit of useful info. Also...Luke Stokes just shared that piece of info on a Post 3 days ago.
Learning so much!!!
Peace
Yeah.... Better stay safe on thia one until the debt ratio gets to be less... Then approach at your on risk.
Keep going forward Steemians!!! Will 2019 or 2020 be our year??
If the SBD experiences downward market pressure on external exchanges pushes the pice down (to say 95 cents) but the SBD/STEEM debt ratio is still less than 10% the conversion feature will make you some arbitrage. This is what keeps SBD In the peg. In the recent run down this was quite profitable. Once the steem price collapsed such that the 10% debt ratio was hit the conversion rates were lowered and some people lost money converting. It is important however that this function is available as it keeps the SBD supply lower though conversions and limits the chance of future debt hangovers.
There wasn't a change. What you're seeing is a failsafe that has been in the system from the beginning to prevent SBDs from becoming way too large a percentage of the total system valuation, triggered by the Steem price drop. It caps the total value of SBD at 10% of the market cap. (And @jarvie, this is what "haircut" means - the system doesn't see SBDs as worth $1 anymore.)
That valuation per SBD, while not $1, remains predictable and relatively static, and it's still possible to make money by buying SBDs when they're cheaper.
I just saw Luke Stokes post explaining that 10% debt parameter.
Cant say I fully understand it all.....but I see what they are doing and realize it wasnt some secret Witness change.
Thanks for the reply @tcpolymath
Happy New Year!!
You should share the @lukestokes post about it.
If the debt ratio is above 10% then the blockchain haircuts the conversion so the total SBD liability is 10% of the STEEM market cap (ie you will get less than 1$ worth of steem). In short if your posts are not getting paid with STEEM rather than SBD the conversion feature will haircut (this is why the SBD peg broke this past couple of months). Also if SBD is above $1 it is always better to trade on the internal market .
i am sure that i missed something, the prices look pretty similar to market prices. maybe on a large scale it is a big difference.
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Hi @jarvie, it's called the haircut when 1 SBD < 1 USD. You know cut means short, less, and such :) It's just a financial jargon.
Thanks for adding the feature. btw, is there any plan to make steempeak open-source?
I know we have some plans on working on specific features as open source. They are some pretty big features and we'd love people checking them and working on them with us.
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