Simplify Steem blockchain rewards by distributing 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.
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:
At 5% debt a post would pay out:
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.
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
- Open Market Operations using STEEM Reserve for SBD
The discontinuation of SBD has also been suggested:
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.
How rewards entirely in SP currently appear on steemd.com:
How rewards entirely in SP would appear on steemd.com if the proposal is implemented:
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:
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
Posted on Utopian.io - Rewarding Open Source Contributors