Witness Update for @bacchist (2017-05-30)
Price Feed
I have always manually updated my price feed, until now. I am a proponent of using the price feed to stabilize SBD, on both the high and low ends of the spectrum. I found that @pharesim's price feed script dynamically reports a bias in an effective manner. So for the first time ever, my feed is automated.
Peerplays
I have been working with the Peerplays software, with the intent to become a witness when the blockchain officially launches. As it is based on Graphene, a lot of the experience I am picking up can be applied to my role as a Steem witness, as well. As @timcliff suggested, I will be using Steem to publish my Peerplays witness announcement.
No More Missed Blocks
In a previous update, I mentioned that my node was experiencing higher than normal latency, which led to several missed blocks. Since then, I have not had any more problems.
Thanks for the update! Looks like you are 40 on the list right now. I just checked in to make sure my vote was already in for you. It is!
Thank you for the support!
Do you think adjustments when SBD > $1 could introduce systemic risk by creating too much debt in ways that are different than when SBD < $1?
Not in the current situation, where the debt load is very low.
@jesta added the a debt load feed to steemdb.com, back when the debt levels were dangerously high (at least relative to the haircut at 10%).
At half of a percent, it's incredibly safe to produce more SBD and take on more debt. It will likely continue to be for a long time, even if the price of STEEM drops a lot.
Considering the observed relationship between the STEEM and SBD prices, SBD tends to lose and gain value roughly in tandem with STEEM. So if the price of STEEM declines, SBD will draw closer to the peg and temporary measures to increase SBD production will slow down or halt.
I guess I'd prefer a solution which doesn't feel like going from one emergency to another or that doesn't require intervention and adjustments. It wasn't that long ago that many were quite concerned about the amount of debt. Debt brings systemic risk. The lack of debt doesn't.
If we had conversion tools in both directions, arbitrage could keep things pegged with no efforts or adjustments needed by the witnesses. The point of a pegged asset is trust. If someone has to do math and look up what the adjustments are... I think that gets too confusing for most people.
I do think something should be done though. The SBD to STEEM conversion right now is broken and that's a problem for sure. Maybe a rate adjustment could work as a temporary solution? On the other hand, I think most Steemit users don't really understand the SBD to STEEM conversion process as it's a bit confusing.
All I'm advocating is for the same mechanism that witnesses used with some success during the fall and winter to maintain the peg. A negative bias (discount) was used to support the price of SBD in the face of consistent STEEM price declines. The same process can be used in the other direction as well, to hold the peg on the top end.
I guess it comes down to whether you think that holding the peg is worthwhile, or if you think just trying to provide a floor for SBD is good enough.
It's also not detrimental to STEEM to use a higher bias to hold down the price of SBD. But using the discount does harm to STEEM for the sake of propping up SBD... The dead weight loss of using a discount is not a problem for a premium. In fact, the premium represents an economic benefit. Essentially it would capture the excess value that traders are attributing to the SBD market.
It can be, but IMO creating debt has more potential downsides, especially if the market shifts quickly (as it has been doing the last month or so). To say they are exactly the same seems to ignore the potential risks.
I think someone can want a peg wile still discussion various options to obtain it. I don't think a floor is enough if what we're going for is a peg.
The impact of changes to SBD on the STEEM price is important for sure, but it may be a separate (though definitely related) goal to maintaining the peg. If we had a reverse conversion, I'd imagine the demand for STEEM would go up as people want to get cheap SBD they can then sell. I still need to read through the whole discussion in the chat as well. I'm glad to see people posting about this to keep the discussion going.
I generally support the two way conversions, with some caveats... some of which I mentioned in @timcliff's thread. But I think it's important to realize that both methods are a way of increasing debt significantly enough to impact the market price. Whichever way you create enough SBD to push down the price, you will be adding to the debt limit. And I'm not convinced that reverse conversions would add less to the debt limit, or more effectively bring the price down. After all, you note the possible increase in demand for STEEM, which has the tendency to carry over to SBD.
I support more debate and I'm confident we'll all arrive at the best course of action. :)
I had a chance to refresh my memory on what the white paper says about this and left a more detailed comment here.
I actually read that earlier. I think a lot of the whitepaper is a bit obsolete, and perhaps a bit ambitious or optimistic. SBD trading at 0.99-1.01 is the exception, not the rule. The suggestions for witness policies are not comprehensive, and quite often ineffective...
I do agree with taking a measured response and addressing long term trends... But we may differ on what kind of time frame that means.
One thing that's healthy, in regards to that, is that many witnesses have agreed to only change their apr parameters on the first of the month. So that grants some stability and certainty for users.
But, the white paper has its limitations... It obviously doesn't realize the implications of the recent hard fork which resulted in an SBD supply shortage. Or the one prior to that, which instituted a 10% debt limit and the associated "haircut"... Both situations require a more proactive approach, to some degree.
At the end of the day, though... the blockchain works with medians and a critical mass of witnesses (or more accurately the stake they represent) have to adopt a policy before it is enacted. So there is some resilience built into the system.