Witness SBD pegging policy update (and more)

I have backed off a bit on my witness SBD APR parameter from 20% to 15%. This is the current APR on the network as set by the median of witnesses on the network.

I believe 15% is possibly a viable APR to achieve and maintain a 1 SBD/USD peg as the debt load has continues to decrease (including the effect of a massive 300K SBD conversion by @abit). This is somewhat a wait-and-see policy for now. If the SBD market does not strengthen sufficiently to achieve and maintain a 1 SBD/USD peg, then I will further increase my APR and recommend that other witnesses do the same.

In addition I have begun purchasing SBD using my own personal capital (not witness funds). This SBD will be held and managed by my witness subaccount @smooth.witn.ssf as a SBD Stability Fund, and you can see the current balance on the wallet page. Currently my target is to accumulate 25K SBD, but this will be reviewed over time. Once SBD achieves and maintains a value close to a 1 USD value for a meaningful time period, the SBD Stability Fund will be used to provide liquidity and stability using an automated trading system (peg bot) currently under development that will engage in purchases, sales, and conversions to keep SBD as close as possible to that target on a real time basis, as long as doing so does not incur large losses (which should usually be the case).

However, attempting to "force" SBD to a particular value using trading alone, when the underlying economics don't support it, will incur losses and that is not within the charter of the fund. Witnesses will still need to maintain sensible policy parameters and adjust them as needed to keep SBD close to 1 USD in value with sustainable economics over a sustained period.

I applaud the efforts by other witnesses including @clayop and @riverhead engaging in similar actions through market trading, as well as all witnesses who have supported the peg by making appropriate parameter adjustments.

I believe that SBD is potentially one of the greatest assets of the Steem network. The (potential) stable value, fast transactions, high throughput, accessibility through a user-friendly web site (and several mobile apps), and wide distribution through social media rewards is a killer combination that no other cryptocurrency can match. It is up to witnesses to ensure that weakness in the stable value component does not undermine this potential.

One more thing.

If you use the internal market ("Market" option in the menu on the web site) to exchange between STEEM and SBD, you may have noticed that the spreads (difference between bid and ask price) have been extremely narrow for the past few weeks. This has made exchanging small amounts such as routine social rewards, Curie finders fees, etc. at a fair price easy, instant and free.

The very tight spreads (always under 1%, often a lot smaller) are the result of my @teamsmooth-mm market maker bot, which has been operating during that period in stealth mode, but I'm now announcing as "open for business" after a having a successful high volume trading day with no mishaps. The bot is still under development and in time I expect to be able to increase the size of instant exchanges that it can support. The strategy of maintaining a constant tight spread under all market conditions loses money at a controlled but steady pace. Those losses, along with the initial and ongoing development of the bot, are supported by my witness rewards as a service to platform users, and with a goal of making both STEEM and SBD easier to exchange and use.

I welcome any and all feedback on my work as a witness.

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The value of the full rewards (both liquid and vested) from this post as well as the previous post will be used to "promote" some deserving newbie posts.

It looks like steemit platform "health" improved.

Thanks for your hard work, smooth. I know many have been encouraged by your efforts, sometimes seen, sometimes not.
The SBD fund is amazing. What a great contribution. The bot is too.
I get confused on the SBD APR. At a time when Steem was falling, many of you increased the percentage. Doesn't this make SBD more attractive? Doesn't making SBD more attractive put it in competition with Steem? And doesn't that promote a greater debt to equity ratio? What am I not understanding?

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Each potential store of value competes with all others. So in a sense SBD competes with STEEM, but it also competes with BTC, USD, gold, etc. This means the effect of directly competing with STEEM is minimal, since STEEM is only one of many choices investors may use to store their capital.

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Thanks.
I see. That makes more sense. I hadn't thought of that, but only the debt ratio.
Steem as a store of capital? Hopefully the upcoming changes will make that realistic, outside of SP.

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It's possible, and I'm sure it will occur at least on a short-term basis. It will still have a pretty high inflation rate as currencies go, but not absolutely punitive as it is now.

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