Simplify Steem blockchain rewards by distributing only STEEM and SP but not SBD

in #utopian-io4 years ago (edited)

I propose for the Steem blockchain to stop distributing rewards in SBD but instead only distribute rewards either entirely in SP or as a combination of SP and STEEM.

SBD.jpg

Image source

Component: How rewards are distributed on the Steem blockchain

The Steem blockchain distributes its rewards in the following three forms:

STEEM - Primary cryptocurrency of the Steem blockchain

SP - STEEM Power - vested STEEM that gives holder privileges proportional to the amount held

SBD - STEEM Backed Dollar or Steem Blockchain Dollar - Secondary cryptocurrency of the Steem blockchain that can be converted in 3.5 days into STEEM worth 1 USD according to the price feed from the Steem blockchain's witnesses

Curation rewards are said to only be in SP while author rewards are said to either be entirely in SP or a combination of SP and SBD. Knowing this, I was confused when I also got STEEM in addition to SBD and SP as author rewards.

Explanation by @TimCliff

After the SBD passes 2% of the STEEM marketcap, the blockchain starts producing STEEM for a portion of the author rewards instead of SBD. It does more STEEM and less SBD linearly up until 5% debt, at which point it is doing 100% STEEM instead of SBD.

At 3.5% debt a post would pay out:
50% SP
25% SBD
25% STEEM

At 5% debt a post would pay out:
50% SP
50% STEEM

https://github.com/steemit/steem/pull/2135

The STEEM rewards added to the confusion already caused by the failed 1 to 1 SBD peg to the USD that makes the $ value indicated on posts not related to the USD value.

The main confusion point is the "$" displayed by default near the rewards by Steemit (and busy, and eSteem). This "$" is not a USD. It has nothing to do with it. It's also not a SBD. So, what is it? It's what I'l call from now on a "Steem Token Unit", or STU. This is different from SBD and STEEM as currencies, and it's actually the expression of the underlying value storage in the STEEM blockchain, which goes under the name vests.

http://steem.supply/rewards

The rewards system was already complicated before the failure of the 1 to 1 SBD peg to the USD. The fluctuating price of SBD only increases the complexity of the rewards system.

Suggestions have been made to try and fix the 1 to 1 SBD peg to the USD:

  • Reverse Conversion from STEEM to SBD

https://utopian.io/utopian-io/@jga/steem-proposal-possibility-to-transform-from-steem-to-sbd-in-order-to-reduce-speculation

https://steemit.com/sbd/@timcliff/saving-sbd-proposal-to-restore-the-usd1-usd-usd1-sbd-peg

  • Open Market Operations using STEEM Reserve for SBD

https://utopian.io/utopian-io/@mkdouglas/decentralized-autonomous-steem-central-bank-for-maintaining-the-1-to-1-sbd-peg-to-the-usd

The discontinuation of SBD has also been suggested:

https://utopian.io/utopian-io/@jbn/why-sbd-should-be-dropped-from-steemit-platform

While the SBD debate continues, the complex rewards system is confusing and discouraging users, especially new users.

Proposal: Rewards of only STEEM and SP but not SBD

I propose for the Steem blockchain to stop distributing rewards in SBD but instead only distribute rewards either entirely in SP or as a combination of SP and STEEM. In the same way rewards are calculated entirely in SP is the same way they should be calculated as a combination of SP and STEEM with the only difference being that half of the SP should be in the more liquid form of STEEM.

Existing SBD should continue to be:

  • in users' wallets

  • transferable between users' wallets

  • convertible in 3.5 days into STEEM worth 1 USD according to the price feed from the Steem blockchain's witnesses

If you ignore the time value of money, STEEM and SP can be considered the same cryptocurrency with the same value. Therefore, potential rewards can then be easily calculated by multiplying the STEEM/SP amount with the market price of STEEM. UIs such as steemit.com, busy.org, utopian.io etc. should do this calculation so that the $ value indicated on posts can again be related to the USD value.

Compatibility with other suggested solutions

This proposal aims to dissociate SBD from the rewards system and buy more time for the SBD debate to continue. This proposal is also compatible with some of the suggested solutions:

Reverse Conversion from STEEM to SBD

SBD would only be created by converting in 3.5 days from STEEM worth 1 USD according to the price feed from the Steem blockchain's witnesses. SBD creation would therefore only depend on market demand as it would no longer be created through the rewards system. SBD could also be made to function in a similar manner to the pegged cryptocurrencies of the Bitshares blockchain which have held their peg much better than SBD.

If the reverse conversion from STEEM to SBD fails to fix the 1 to 1 SBD peg to the USD, the dissociation of SBD from the rewards system means that SBD would no longer complicate the rewards system.

Discontinuation of SBD

All SBD would either be forcefully converted into STEEM or SBD holders would be allowed time to convert their holdings into STEEM. The latter option would most likely result in some SBD not being converted into STEEM due to apathy, lost keys, deaths etc.

Mockups

How rewards entirely in SP currently appear on steemd.com:

0 SBD, 0 STEEM and 4.475 SP.png

How rewards entirely in SP would appear on steemd.com if the proposal is implemented:

0 STEEM and 4.475 SP.png

How rewards as a combination of SP and STEEM (with the indivisible 0.001 biased towards SP) would appear on steemd.com if the proposal is implemented:

2.237 STEEM and 2.238 SP.png

Benefits: Simplicity

The Steem blockchain rewards would be easier to understand and the need for tools such as steem.supply would diminish. The $ value indicated on posts would again be related to the USD value.

The actual market value of rewards would initially decrease as the market's valuation of SBD has been higher than the Steem blockchain's valuation which is at par with the USD. In the long term, the simpler rewards system would attract more users to the Steem blockchain. More users would then attract more capital which would push up the market price of STEEM and eventually increase the market value of rewards.

For more on this proposal

https://github.com/steemit/steem/issues/2140



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This is an interesting idea. Simplicity is always preferred to complexity, and complexity should have a strong justification. The complexity for rewards distribution was driven by the desire to peg SBD to the dollar. When that broke down, the hard peg was disavowed by Stinc, treated instead as a soft floor.

Without a commitment to the hard peg, the complexity of distribution is no longer justified. You present a more elegant solution, which (ironically) actually will strengthen the peg, as your solution incorporates reverse conversion.

Very elegant. Good luck convincing the witnesses!

Thanks.

Is there a chatroom/platform where one can directly submit proposals for consideration by the witnesses?

I believe the growth of the Steem blockchain has been inhibited by the complexity of how the system works. People have generally been advised to consider complex cryptocurrency systems as scams or unviable projects.

Those types of proposal are submitted and debated on the GitHub.

Thanks for the info.

I think I read somewhere that @utopian-io uses the user's synced GitHub account to automatically open issues on GitHub for posts accepted on utopian.io?

I have checked all 306 open issues by just their titles but I cannot find anything related to this post.

You have to actively sync it. I haven't done that, but I'm sure there is a guide.

Do Utopian posts generate GitHub issues?

According to @jestemkioskiem via email:

We used to, but due to the GitHub policy this system can only be opt-in for projects. As such, we're working on developing a way for projects to opt-in into this system.

Oh, interesting. So Steem hasn't opted in, I guess.

github.com/steemit/steem does not even allow suggestions as GitHub issues:

Enhancement Suggestions

Do not use the issue tracker to suggest enhancements or improvements to the platform. The best place for these discussions is on Steemit.com. If there is a well vetted idea that has the support of the community that you feel should be considered by the development team, please email it to [email protected] for review.

https://github.com/steemit/steem/blob/master/CONTRIBUTING.md

You have to actively sync it. I haven't done that, but I'm sure there is a guide.

Those types of proposal are submitted and debated on the GitHub.

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Why 3.5 days to convert sbd? Please explain more?

Mitigating Timing Attacks

Market participants have access to information faster than the blockchain’s three and a half day moving median conversion price can react. This information could be used to benefit of traders at the expense of the community. If there is a sudden increase in the value of STEEM traders could request conversion of their SBD at the old, lower price, and then sell the STEEM they receive a the new higher price with minimal risk.

Steem levels the playing field by requiring all conversion requests to be delayed for three and a half days. This means that neither the traders nor the blockchain has any information advantage regarding the price at the time the conversion is executed.

https://steem.io/SteemWhitePaper.pdf

This only benefits traders/crypto savvy and not the majority who just have the ability to blog. I believe the current system though flawed, offers a move even ground for all parties.
What the original developers failed(and are still in denial) to acknowledge is that the value of anything(in this case sbd) will always be subject to market forces of demand and supply and hence price fluntuations. Limiting steem Power withdrawals is already sufficient to pad the steem ecosystem. Doing the same with sbd will only frustrate the general public.
One of the "benefits" of crypto over fiat is supposed to be instant transactions

SBD can still be traded in the open market. You do not have to do the 3.5 day conversion into STEEM. I believe nobody does because, as you say, market forces have pushed up the price of SBD beyond the price offered through the 3.5 day conversion into STEEM.

So is it safe to say that SBD rewards have confused your Steem blockchain experience?

thanks for the mention!!
I still have the hope that the SBD will once again be linked to the dollar. If so, then Steemit would grow much more, since this currency is very striking.

I believe SBD should be redesigned to work in a similar manner to the pegged cryptocurrencies of the Bitshares blockchain which have held their peg much better than SBD. For this to happen, I believe SBD has to be separated from the rewards system.

After trying a novel way and failing, they should just consider replicating what has so far proved to work.

Thank you for the mention.. i have been a huge supporter of dropping sbd from blockchain. It is not serving its intended purpose and its been played around for quite sometime now.. good suggestion..

The proposal to drop SBD entirely from the blockchain might receive more resistance than the proposal to drop SBD from only the rewards system. This would be a less drastic change to the ecosystem that would allow for more time to learn whether the complexity of having SBD justifies its existence.

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this is good idea, i find it so interesting

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Resteemed. . Good work but nobody will read it. Sorry to day this .... i even myself did not read it. But it is a good post will be krpt in the memory of the google archive...

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