Witness SBD pegging policy update

I have updated my witness SBD APR parameter from 15% to 20% following the lead of several other witnesses who have done this.

I believe this is the correct policy to improve SBD pegging at this time. As I stated in my last update, experience shows reasonably convincingly that at 10% APR was not enough to encourage holding SBD at par even during non-distressed conditions. Under current distressed conditions, SBD behaves as a covered call on STEEM, a position that one expects to return a significant yield. Without offering such a premium yield, SBD will continue to be dumped as those holding it see more potential for losses than gains.

We need to watch carefully to ensure that SBD debt load continues to be reduced even while also supporting it having a reasonably stable value and viable economics for those holding it and using it.

I encourage other witnesses to consider these issues carefully and make the adjustments they deem appropriate.

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Four years from now, people will read this post and think: "holy moly, they had 10%??"

All it really takes for SBD to succeed is traction, and we can buy it buy having a high APR until we have traction and an ecosystem built around it!

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Agree. This is largely a chicken (usage and demand) and egg (stable value) problem. We unfortunately can't do anything in real time about usage (we can, however, use a higher APR to create demand from adventurous investors and those who already hold it and are willing to continue to do so given a sufficient yield), only work to maintain a stable value so usage and demand can follow. Of course, we also need longer term projects on the usage and demand side. Fortunately there are such projects ongoing, but real progress in usage can only come over time. Building an economy around a blockchain is not an easy task!

I forgot to set decline payment on this, but that was my intent. Reward will be sent to 'null' (burned).

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Send it to Curie or one of the other projects - they can always use more funds and it will then end up supporting new users.

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I intend to burn the reward as SBD. Further helping SBD pegging! :)

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I thought there were no SBD rewards at the moment? Will you convert to SBD then burn it?

Also you could kind of do both by promoting a post by a newbie. Kill two birds with one stone as it were.

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Well I was just going to burn an equivalent amount of SBD that I already own, but trading STEEM for it would be another option. I like your suggestion of promoting a post. I'll find a good newbie post from Curie or something and promote that.

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Awesome, great decision. Thank you.

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Agree! Burning seems like a waste!

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Not a waste. Burning money isn't the same thing as burning real assets like a house. Burning a monetary unit just makes every other unit worth a little more. I have accepted the suggestion from @thecryptofiend to promote a newbie post which burns SBD and also gives added exposure to the newbie, so I think that is a win-win.

Hey @smooth, thanks for your thoughts and leadership on this. I am fairly confident that we can make it through this with the right support from the community/monetary and fiscal policy from the witnesses.

Would you mind sharing your thoughts on witnesses increasing their discounts to an even higher amount? I know on the one side it will encourage more SBD->STEEM conversation, and reduce the amount of rewards for active posts; on the other hand though, too much conversion (if users sell the STEEM instead of powering up) will put more downward pressure on the price. Where do you think the right balance is with the current conditions?

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A larger discount increases the incentive to convert. There is no clear answer on the "right" rate of conversions, nor particularly the right discount (though I do believe that under "normal" conditions a discount of 0% is incorrect, and having not maintained any discount originally is part of what led to the current situation). We have been running roughly 5% per week conversions, which I think (purely opinion) is about right, though possibly on the high side. We will need to monitor the situation as conditions change and perhaps make adjustments.

It appears to be a pretty tough balance to try to maintain enough demand to regulate the value without creating so much that it increases debt - especially in this dropping market.

very nice idea. you are voted by me for witness since some time anyways :)

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