Why SBD Should be Dropped from Steemit Platform
Preface
I am bracing myself for a massive backlash from public by posting this contribution since a lot of people (including myself) have been making a ton of money by selling their SBDs in open market for the last 2-3 weeks. Thats because SBD has been on bull run in cryptocurrency market despite being envisioned to remain tethered to USD with very little to no price fluctuations.
Recently we have seen SBD go as high as 17-18 USD value which is extremely bullish for a coin that has a very little market cap. Even at the moment of writing this, SBD is trading at 15$ as per coinmarketcap website.
However, along with SBD, Steem also had a rather upward trajectory and is currently trading at 3.20$ as per coinmarketcap website. But does it truly reflect the actual price of steem since SBD has broken its peg of 1$ and is sailing way beyond its designed limits?
How does SBD Work?
I hereby produce following flow chart to describe how the SBD works in Steemit and why it was created in the first place:-
Considering the above pasted flow chart, it is evident that SBD's job was to keep the balance in steem market by remaining pegged to USD or around 1$ value. The Steemit users are paid in SBD that is created out of parts of steem block.
But that doesn't seem the case at all right now because the idea mentioned above was formulated on this condition that SBD remains around 1$ value. But peg is long broken due to pump in local exchanges, SBD has sky rocketed and for the past 3 weeks, it has been trading at least @10$ or above.
What happened when the SBD broke the Peg
Well for starters, Steemians made a lot of money (Read : Steems) from their SBDs including myself. I remember selling my somewhat 20 SBDs to get almost 100+ Steems from it. Thats Massive...
But while we are all celebrating our little feat here by buying tremendous amounts of Steem with our SBDs, Steem value rose as well due to high demand.
While it looks good on surface, it is really bad for the steemit as a platform. This much volatility in SBD and (also in steem) makes the entire system volatile. When Steemit was designed, it was envisioned to be stable with steady and solid growth with respect to market cap. We came here on platform as bloggers and not as investors. Yes, Steem is still a cryptocurrency that can be traded on coin exchanges yet the platform itself should have grown with pace due to its increasing popularity rather than because of pump and dump schemes in local market.
Will SBD come back to its original value?
Yes it will, sooner rather than later, it will come crashing back down to 1$ value. But whats worse is that it will also take down steem with it. Right now, as steemians, we are the ones who are actually pumping the steem price since we are creating a high demand for it by selling our SBDs. But when the dust settles, the Steem will crash (I hope it doesn't crash back to 1$ as well along with SBD).
So the problem that has been created here is high on/off ramp and sudden price fluctuations in SBDs that are affecting Steem and hence the Steemit platform in long term.
Solution
I here by suggest that SBD should be killed on steemit platform since there is no way to create SBD other than on being Steemit and getting author / curation rewards.
Even though there are methods to control SBD price and to keep it tied down to 1$ value, yet SBD is and will always be regarded as a cryptocurrency in coin exchanges that can be bought and sold off as long as it lives. And we all very well know that a crypto can be pumped and dumped causing it fluctuate massively and end up getting destabilised.
So the solution I propose is that payouts can be given in 50/50% Steem and SP instead of SBD and SP with an added option of having payout as 100% SP. With SBD out of the picture and steem being the sole coin of steemit platform, the value of steem will become better as the network grows, thus depicting the true picture and value of steem in general and steemit in particular.
I conclude my contribution here...
Posted on Utopian.io - Rewarding Open Source Contributors
You have made a very nice contribution via utopian. You used the wrong repository which you need to change to
steemit/steem. Please kindly edit your contribution to reapply for approval :)You can contact us on Discord.
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Repo has been changed to steemit/steem and contribution has been submitted.
I am really sorry, most of the time i get the repository wrong..
Contribution approved
No worries my friend :)
A bit radical move, don't you think????
Yupp.. but its worth it.. we may be happy right now that sbd is well over 10$ and steem is above 3$ mark. But i am sure i will see some really long faces when sbd comes back to 1$ and it will take steem with it which will also go down to 1$ or may be even below that.
All of those who are happy that their vote worth is now something, it will be gone.. the account values will reduce again. And then they will blame steemit platform for that..
So in order to avoid all that, sbd should be killed right now.. as long as it remains a currency, it will be traded in local exchanges and outsiders will pump and dump it.. the real loss will be of platform..
Yes you are right...May be a moderate approach is more suitable like
Create some buffer between steem and sbd...Sudden SBD Kill will have far reaching effects...
Or You can unlink SBD from steem..SBD mining can come into play....
From a stability point of view, I agree that the whole market at Steemit has been bamboozled by SBD. It has broken the peg and is flying way higher than its intended price.
Do you know that Steem/SP pair used to be the standard reward system on Steemit? But the value of Steem dropped dramatically (to $0.07) so SBD was given as a better liquid option for economic and survival reasons. SBD saved Steemit then.
It's Christmas and people are buying presents with their SBDs. If Steemit Inc. intends to drop the liquid SBD option, I would request them to wait till the holiday season is over. Let Steemians roll with their SBD money.
The rise in value of SBD may be good for now, but if it remains like that for long, it would be bad. Like you said, you can gain a lot of STEEM power by converting your SBDs to STEEM power. But since everyone is able to do so, everyone would end up with high STEEM power, which would in turn devalue STEEM power.
Yes sir.. you are very much right. Also in addition to this, such high price of sbd always makes steem unstable. Like yesterday, sbd was @ 15$ and steem was @3$. When suddenly sbd dropped to @11, steem went down with it to @2.1$. that is why sbd should be killed.. for good..
May be you are right! But dont you think that ways will be devised to exploit steem & SP?
Absolutely not. Steem is not meant to be pegged to 1 USD. Infact when SMTs are launched, Steem market cap will rise manifold, it will create demand for steem and will drive the price higher. That will be a stable growth. SBD on the other hand is meant to remain around 1 USD and pumping and dumping of SBD on a massive scale is causing steem to become volatile.. and once this pump and dump of sbd is over, and it comes back to 1$ value, steem will go down with it too. And it will hurt the platform..
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