SBD Debt Ratio Management Trend Analysis : Who removed our SBD?

in utopian-io •  7 months ago  (edited)

Repository

https://github.com/steemit/steem

In the past summer, exactly on August 10, SBD Debt Ratio exceeded the upper limit of 5% at that time, and new issuance of SBD was stopped.

However, due to hard fork 20 on September 24, SBD Debt Ratio ceiling rose to 10%, and new issuance of SBD resumes.

Unfortunately, with the STEEM price slump, the SBD Debt Ratio is again threatened by the upper limit.

At this point, it is necessary to check whether the SBD Debt Ratio is well managed or not.

Due to the large volume of SBD that have recently been converted to STEEM, the figures at the time of this report (UTC 2018-11-19 16:30) and the real-time figures may be different.


Aim of Analysis


  1. SBD supply balance trend since August 10, 2018 (when SBD issuance ceased)

  2. SBD volume converted to STEEM since August 10, 2018 & Top conversion accounts

  3. SBD (Savings Included) holding balance ranking

  4. Conclusion of analysis


1) SBD supply balance trend since August 10, 2018 (when SBD issuance ceased)


Let's start with the chart below.

0001.png

The SBD supply balance has been steadily decreasing since August 10, when new issuances were discontinued,

SBD supply balance rose again after new issuance of SBD resumed after hardfork20 on September 25,

(Despite continued issuance of new SBD), SBD supply balances have shown a sharp decline in November.

In fact, on August 10, the SBD supply balance was about 15.7 million, which is now about 14.1 million, down by about 1.6 million.


2) SBD volume converted to STEEM since August 10, 2018 & Top conversion accounts


See the table below.

0003.png

As you can see, about 2.98 million SBDs have been converted to STEEM from August 10, 2018 to the present.

It looks a lot more than I thought.

If about 3 million SBDs were not converted to STEEM,

In the same period, SBD increased to about 1.4 million new issues,

It can be assumed that the current SBD supply balance has reached approximately 17.1 million, rather than about 14.1 million. (* 1,410 = 1,570 + 140-300)

Who has removed so many SBDs? Let's look at the top 11 accounts.

0004.png

Anyone can see @ smooth-f, @ smooth-a. Both accounts have converted about 1.96 million.

0006.png

That's 66% of the total. The top 11 account contributed about 95% of the total 264 accounts.

Please refer to the figures in the table below

0005.png


3) SBD (Savings Included) holding balance ranking


In turning SBD into STEEM, witness @smooth's one-man show is great.

But can he do that in the future?

In the table below, let's look at the top-level accounts for SBD holdings. This figure includes the savings SBD.

0007.png

BITTREX has nearly 9 million SBDs. The next one is @freedom with about 700,000. There are also many SBDs in some exchanges and some accounts.

The amount that @smooth owns is insignificant.

Therefore, in the future, he seems to be more aggressive to convert SBD to STEEM in many exchanges such as BITTREX and accounts with many SBDs such as @freedom.

In fact, the conversion feature is missing from the current STEEMIT platform, so it is inevitable for general users to apply for conversion.

Based on the insufficient understanding of the fact that this function does not convert SBD and STEEM on a market basis but returns STEEM of US $ 1 based on STEEM's feed price, some users may see losses on conversion It seems that it was because it was.

Therefore, this conversion is still inconvenient to go through some platforms (eg steemkr) that have not removed this feature, or to use a separate program.


4) Conclusion


① Summary of analysis

Since August 10, when SBD new issuance was suspended, nearly 1.4 million SBDs were newly issued, but almost 3 million SBDs were converted to STEEM, and SBD supply balances decreased from about 15.7 million at that time to about 14.1 million now .

This aggressive mass conversion is mainly made by the @smooth witness that 66%, so I think he is leading. In the top 11 accounts, a total of 95% of conversions were made.

However, the actual @smooth witness does not have a lot of SBD reserves. Some exchanges, such as BITTREX, have close to 9 million SBDs, and some accounts, such as @freedom, have many SBD supply balances locked.

In order to keep the SBD Debt Ratio below the upper limit at the current sluggish STEEM price, the key issue is how much he can convert these locked SBDs to STEEM.

It is necessary to remind that temporarily haircut is also a concern.

While the impact is negligible, it is a good idea for general users to be able to easily switch applications on the STEEMIT platform as well, adding a detailed statement about it.


② Limitations of the SBD Debt Ratio Management Policy

Let's look at SBD supply balance trend from 2016.

0002.png

Since the SBD supply balance was very low in 2016 and 2017, our SBD was able to maintain a price well above US $ 1 with the boom in the cryptocurrency market.

But now that SBD supply balance is not low and STEEM price is sluggish, it is not easy for SBD to maintain US $ 1.

The SBD Debt Ratio is again threatened by the upper limit even though it has been less than two months since hard fork 20.

If the @smooth witness and some of the top conversion accounts did not have a very aggressive conversion response, the SBD Debt Ratio might have already reached the upper limit.

So, raising the upper limit of SBD Debt Ratio from 5% to 10% means that it was only a short-term prescription.

In order for us to continue to use SBD in the STEEM ecosystem, I feel that we need some more long-term, reliable policy design in relation to the SBD Debt Ratio.

Thank you.


The Data and Queries


I did this analysis by connecting to the @steemsql db with MSSQL client(Microsoft SQL server management studio)

Refer to My Github

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Hi @lostmine27, great work! You've picked a topic that is very present for all of us and provided great insights into the happenings in the background. I wasn't aware that such large conversions were already happening in the last few weeks. It seems Steemit was well aware of the situation and tried to mitigate the problem. Most of the SBD funds on the smooth accounts were already converted until now, so there's not much room for further adjustments. Maybe freedom is next in the queue? I doubt that exchanges take part in the conversion steps, since the funds there are typically owned by exchange users, not the exchanges themselves.

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Thank you for your kind feedback. Your opinion always gives me a good inspiration.

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Thank you for your review, @crokkon! Keep up the good work!

  ·  7 months ago (edited)

However, the actual @smooth witness does not have a lot of SBD reserves. Some exchanges, such as BITTREX, have close to 9 million SBDs

I do buy a lot from exchanges. The idea is to steadily drain those exchange holdings (which is where most of the big supply from last year's huge SBD pump ended up).

You are correct that we have no hope to meaningfully reduce the supply without getting at the (very large) portion of the supply being held on exchanges.

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Thank you for your honest opinions and support you.

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If we manage to get SBD back to 1 dollar at some point, to provide further stability, could we see effort towards creating a market making script, that as many people as possible, could start easily using if they wish to?

Keeping SBD close to its peg in times like these would make people feel a bit easier, knowing they could always turn their Steem that's volatile to SBD and wait for storm to go over.

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  ·  7 months ago (edited)

I believe there are already some open source market making scripts, although they are somewhat old and may need to be updated to the latest APIs. I recall clayop and riverhead both doing work in that area.

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Dude, you are doing a wonderful job, keep it up buddy

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Thank you

Prescient post, as, of course, we now have the price tonsure (aka haircut). Firstly, there was no good reason to increase the SBD debt ratio to 10%. Secondly, and even more disruptive, is having two different mechanisms triggered at the same time: the drop in SBD printing rate and the "price freeze" mechanism.

This latter was put into place to protect the system in the case in which STEEM's price was very low compared to that of SBD thereby making it theoretically possible that the SBD debt could be greater than all the existing STEEM. This mechanism should be a rare event, not something that happens every time we hit the (new) debt ceiling. This will continue to happen as the ratio will always overshoot its target because of post payouts in the pipeline.

Anyway, thanks, good analysis.

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Thank you for your wise comments. It's late, but happy new year.

We need Steem prices to go up soon otherwise a haircut is possible which won't be good for the ecosystem. I think Steemit Inc needs to consult an expert in order to decide on the economic model for Steem and Steem dollars otherwise this may have a very bad impact on the entire ecosystem.

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I support your view. I do not know if Steem, Inc. is consulting or responding to the situation right now, but it seems that at least the witness smooth is constantly buying SBD. It is possible to see through his reply to my article.

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So what would happen in this haircut?

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The backing of SBD is reduced to maintain a 10% maximum debt ratio. Currently each SBD is backed by about $0.88 worth of STEEM rather than the usual $1. This will continue (with the amount fluctuating according to conditions) until the SBD supply is reduced and/or the STEEM value increases.

  ·  7 months ago (edited)

Thank you for the great analysis.

I am an example of someone who lost on conversion due to the lack of my understanding of the whole process - I didn't realize that feed price might take sooo long to get closer to the market price.

Less than an hour ago, conversion was done based on $0.58 per steem, while the market price was below $0.5 for a long time.

Now I am not sure what this "feed price" really means - I guess it is a price level that witnesses "believe" to be "fair".

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I am sorry to hear that you suffered losses in the SBD conversion process.

Maybe that's one of the reasons why STEEM, INC. removed the SBD conversion menu from the current steemit platform.

Your last sentence is particularly impressive and some sympathy.

The "Feed_price", which is a virtual price using the median of 3.5 days, seems to have a strong intention to prevent many steemians from being overly speculative by the short-term market conditions.

It is in the same context that steempower is recommended for long-term price stability.

In the end, "Feed_price" should not be regarded as current STEEM price. Especially when there is a high volatility.

Thank you for your great feedback.

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What I got wrong was the "median of 3.5 days" part. I thought of it as "median price 3.5 days later"(so median at a single point in the future), but after reading your article it seems that "median during 3.5 days"(median during a 3.5 day period)

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I understand. The latter is correct.

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