By far the best post discussing the sbd peg, yet. Thank You, Luke! One factor I would love to see some statistics on is how much value is being added to steem itself because of the failed peg. Surely users are powering up more now than, ever. This is a boon, in the short run of things.
It's really hard for me to imagine any kind of stable peg in the type of market we currently face. In the next few years I expect the market for the largest tokens to stablize quite a bit. But we may be chasing the dragon on this atm.
This is a hell of an article/post. Honestly, I understand the issues at stake very poorly and really haven't any strong opinion on the matter.
I've been studying on it for quite some time, enough to understand how it's currently working...
Ultimately to maintain a peg, I believe, we would need a dynamic volume of sbd. Inflating supply as more demand is put on it, and deflating supply as the demand weakens. Allowing conversion both ways is a mechanism that would allow for such a thing..
the problem is that those conversions are up to the will of the user base. Even allowing for reverse conversion, it would (I believe) require a number of users with high liquidity who were determined to maintain that peg. We would also need to be able to trust that users wouldn't use that reverse conversion to take advantage of the blockchain. In order for it to work properly I almost imagine a governance being necessary for the maintenance of the peg via conversions rather than leaving it to the users at large to implement.
In the very short term, the converters could do so at a profit, but they would quickly begin to "lose money" by converting Steem to sbd, while increasing the value of steem (by reducing supply)....
The more I think about it, this might be a perfect opportunity for the 1% of steemit to reduce stake a bit while boosting the value of Steem as a whole, by enabling a peg, while reducing how "top heavy" Steem currently is.
Lots of thinking left to be done on this.
Will be grateful for corrections or furthering the thought process.
What are some of the ways you think this might be possible?
The whitepaper outlined that pretty well. The way I see this working best is via some governance method as I suggested above. Trusted individuals who's role would be to maintain the peg via conversions... Then again, one would thing any large stakeholder willing to convert large quantities of Steem to sbd would be inherently trustworthy. Would we need to pool Steem together from said stakeholders? Does it all just work because individuals volunteer to "sacrifice" large portions of their Steem for sbd? Would this voluntary system then empower "bad actors" who don't choose to do conversions to have a much larger sway over the rewards pool? Or perhaps Steem itself might volunteer to convert a large portion of stake, thus allaying investor concerns of a disproportionate control over Steem?
Current market cap: $49,144,061 USD
Minus Current supply of SBD: 7,099,445
-------------------
41,840,540 % $6.4 (price of steem)
Steem required to convert to peg : 6,537,584.375
likely much less as market reacts.
help me out if I did that wrong
I don't agree that it did.
It assumes that a trader who 'sees a big spike' not only knows that the price is going to go back down but that it will go back down in precisely the right rate and timescale to line up with the 3.5 day price averaging window that is built into the conversion process. What happens if the spike was actually the first leg up of a big bull run and is followed not by the price going down, but by another big leg up? The trader loses his or her shirt.
If this were a real issue (it isn't because no one can predict prices that accurately), it would already exist with the SBD to STEEM conversions. A trader who sees a big spike down could convert SBD to STEEM at the low prices and profit as the price recovers. That doesn't work either.
The mechanism of not setting the price for some time in the future is quite effective in combating these schemes.
No, it is assumed (reasonably) that people would buy up STEEM to convert into SBD. It is a good bet when SBD is worth more than $1 that converting $1 worth of STEEM will be profitable. Is it guaranteed? No, because SBD may not be worth $1 by the time the conversion finishes, or because the STEEM that was converted might then be worth more. But it is a good bet and people able to take the risk will do it.
Not necessarily. Prices fluctuate and it doesn't necessarily translate that way. Today when SBD fluctuates from $7 to $6 or from $7 to $8 that does not mean that millions of dollars were poured into it or drained out of it. That could be a much smaller amount being exchanged among traders to set the new price.
Shifts in supply and demand are what moves prices, not necessary a set market cap difference being spent. The actual amount needed is impossible to predict. The best we can do is have the right mechanisms in place and give them an opportunity to work.
Yes, may be a way for some to reduce stake and therein diversify themselves, but overall the process sounds more intricate and requires more diligent consistency than a lot of seemingly haphazard things that occur here, not sure if there can be enough consensus to implement competently, imho. Ty
Yes, may be a way for some to reduce stake and therein diversify themselves, but overall the process sounds more intricate and requires more diligent consistency than a lot of seemingly haphazard things that occur here, not sure if there can be enough consensus to implement competently, imho. Ty
Agree with these thoughts as well. It may be that steem and SBD are such a small ecosystem at this point that it really cant support a peg. I also was thinking of the term "chasing the dragon", I would hate to see such an important decision rushed.
It may not be big enough yet, but the flip side of that is if SBD grows too much more and continues to increase in value, will we completely lose the opportunity and have to make a tougher decision in the future if we do want a stable peg? Also, if the peg is fully broken for a long period of time, why would this blockchain even bother having two speculative coins? It's just confusing.
The challenge with statistics to create stores is, well, we're still stuck with stories. Those stories may or may not directly be proven by the data. I think it's quite difficult (impossible maybe?) to know exactly how much the high SBD value is impacting things verses the whole STEEM ecosystem driving things up on it's own both in terms of user adoption and rewards pool value via an increased STEEM value.
We may be chasing the dragon, but I also think if we start now and show a long history of something that actually works and secure, that's really valuable. This is world domination stuff after all, right? :)
Yes, and because of this post I'm finally starting to grow the whole idea a bit better. Way to post this as I was about to go to sleep :)
Hahah. Get some sleep man. The blockchain will be here when you come back. :)