There is always variables and nothing is ever certain, but there is a case for applying some common sense and diligence to try and give the system some stability to prevent this sort of outcome.
It has been an entirely predictable bust and it's hard to argue that the HF20 printing threshold changes were not grossly irresponsible. If you go back and have a look at some of those old conversations with @dan years ago you'll see there was concern about how best to prevent this sort Black Swan event even back then. It's all recorded on the blockchain...
How do you explain blaming HF20 when the supply was already essentially just as high (and not being converted) long before HF20?
This makes no sense!
Let's look at this another way. Total STEEM inflation is about 8.5% per year. 75% of that is the reward pool, of which 75% goes to authors and 50% of that is SBD. If we printed flat out all the time, at a constant STEEM price, SBD would only increase its ratio by 2.39% per year. This is a very slow and entirely manageable rate. This rate played out continuously during Steem's entire 2.5 year history would only produce an ending SBD ratio of 5.98%! (These numbers, explain, by the way, why HF20 is irrelevant. After about three months, HF20 has contributed an additional 0.60% to the ratio. Again, not at all significant, especially when we consider that it may have been responsible for helping to bring the price down which then encourages conversions.)
In fact, the real issue here is not printing, it is price changes and lack of conversions due to SBD being overvalued that lead to the SBD ratio ever becoming high. Even before this week, the price has decreased from a high of about $6 to a recent range of 70-80c. That's a decrease of about 87.5%. That would, in the absence of conversions and NO new supply, take a 1% debt ratio all the way up to 8%, or alternately take a 2% ratio (the low end of the previous print slow-down range) up to 16% (of course impossible due to the 10% cap).
I agree with you that the old discussions bear relevance but they are almost entirely about the need for the 10% limit and the peg switch (from USD to STEEM), not print stopping. You can not use print stopping to significantly protect against a high ratio, it just doesn't numerically work (unless, perhaps, the stopping is at an extremely low ratio like 0.1%; in fact I once opened a github issue suggesting that the hard and soft limits were too close together, but after subsequent consideration I realized this is not a useful approach either).
With neither printing (i.e. once printing has slowed or stopped due to a limit), nor reverse conversions, the result is inevitably some sort of pump which stops conversions and forces a build-up of supply, at which point the system is inherently vulnerable to price declines. Much more vulnerable than it would ever be to 2.39% PER YEAR of printing.
IMO the way the system works now is about the best that can be expected. Substituting reverse conversions for printing would be okay, but also can't really leave a significant void (nor would a small void protect much against price changes, as above).
In short, common sense is not a substitute for analyzing something in detail. Once we do that we can easily see that print limits are just not helpful in solving this problem.
I don't blame HF20 exclusively. My comment was just that the HF20 changes were grossly irresponsible and lacking common sense. I maintain that it made the debt situation worse, even if only fractionally so. My point is that the people making these kinds of decisions need to be smarter and stop looking for band-aid solutions that don't actually fix anything.
We can talk about the technical aspects of this problem, but really this is about economics and market psychology. Why does Tether USDT seem to remain stable around $1? Nobody really knows if the money is actually there but for some reason or other the market has confidence in it's stability....thus it is stable. People don't buy Tether speculating that it will moon.
If we killed the SBD Pump with reverse conversions before it gets off the ground then we kill the demand for speculators and HODLers to even buy SBDs in the first place - Thus we don't get a debt build up and it stays as it was intended : As a stable currency used for commerce and off-ramping.
If I can use a crude analogy for implementing reverse conversions - You buy a gun so that you don't ever have to use it. It's a deterrent. I'm not saying we'll never have this sort of debt problem when we have a price decline but maybe the hangover would be milder and not so painful with less market demand for SBD debt. Offering the market a one-way peg creates an asymmetrical trade and it's just not smart.
Because it is possible to arbitrage by depositing and withdrawing USD (most of the time) and has no practical limits up or down in its capitalization. There is probably some actual backing in USD which enables the arbitrary, even if possibly all the USD isn't there. SBD doesn't work that way. The huge differences in the models carry certain tradeoffs.
I was in favor of this although there some details to work out and remaining questions. Including, which I have asked you elsewhere: What happens when you reverse convert up to the limit and the price is still pumped?
I don't agree with you that the print limit change was done carelessly, nor that it is grossly irresponsible. It was considered, analyzed and debated by many people literally for months. It has tradeoffs and isn't nearly as one sided as you claim. And as you have acknowledged, even if it had not been done, under the most favorable of assumptions (no credit for increased conversions attributed to the higher printing; almost certainly wrong) SBD would still be below par right now.
This is a fair point. It is one reason I don't view the 10% rule/limit as a 'failure'. By defining SBD as allowed to go under $1 in certain (reasonable IMO given the nature of backing by volatile STEEM) conditions, this removes the one-way nature of the trade and makes it possible for someone wanting to bet on a SBD pump by buying it at par to lose money sometimes without a catastrophic collapse. While at the same time maintaining reasonably low volatility (strictly lower than STEEM under all circumstances, usually much, much lower).
Reverse conversions with a cap would still create an asymmetric trade.
I understand that Tether utilises a different model. My point was that the market confidently values it at $1 and speculators are not buying it with an expectation of speculative gain. With a slight improvement in the SBD mechanism I think it could also deter a lot of the speculator demand which will give us more stability.
Regarding the cap, I'd question whether you'd want a cap. Yes it is possible that a big conversion could push the debt over 10% and affect all holders, but the converting party would be cutting their own throat in doing so. You could also apply a conversion penalty much like occurs in the other direction - For instance, at 11% Debt 1 SBD can only be converted to 90 cents worth of STEEM and it takes 1.10 cents worth of STEEM to convert to 1 SBD. This will not entirely kill a pump but it would seriously dampen it.
There are no absolutes here. No system is fool-proof and failures will still occur, but it is possible to make any system more robust, more stable against volatility and that should be the goal here. Any step in the right direction - no matter how small - is a help. Any step away - no matter how small (eg HF20) - is a hindrance.
Well not always. It still fluctuates in response to various factors including news/FUD (depending on who you believe) about Tether/Bitfinex, etc.
Sure, I agree with that.
You might be interested to learn that I proposed (among numerous others) exactly this variation, which I called a spread (though I generally envisioned it as somewhat less than 10%, in fact the amount doesn't change the concept). This was not something we were able to reach consensus to implement.
We'll have to agree to disagree, but I confess to being perplexed that you want to allow (possibly) unlimited reverse conversions of any amount at any time, but somehow find looser printing at a steady rate of about 0.19% per month to be harmful and dangerous.
I am interested and not entirely surprised either.
Despite the fact we seem to be argueing relentlessly, I do respect that you are a pretty smart guy and do actually have good intentions for the platform. You've shown a willingness to at least engage on the issues - which puts you ahead of most of the Top 20.
My main issue with HF20 is that I feel it removed a safety "buffer" for debt creation along with the timing and situation around it's implementation. If this had been proposed pre-pump when the debt level was low, I might not have seen the danger in it. But it was done when we already had a massive over-supply of SBDs. It was implemented as a band-aid "fix" to get the SBD printing again when we were already late in the boom/bust cycle and more SBDs circulating was the last thing we needed. The SBD purges were already happenning and disaster was looming. I question the motives around some who were involved in the "consensus" and I question the
thinkingjustification of using HF20 to increase SBD supply to dampen future pumps....when it was coming from the same witnesses who were refusing to adjust their BIAS while the pump was actually happening. I personally believe that some saw it as an opportunity to maximise the asymmetric trade that SBD was offering but you can call me a cynic if you like :)I see how it might have appeared to be that, but it was in fact looked at very carefully by at least some of us as a general long-term improvement to the system (for much the same reasons that you support reverse conversions). It was also not late in any cycle when the concept was first discussed, as I'll cover later.
Arguably this is entirely backwards, as a major overvaluation of SBD indicates not an oversupply but an undersupply. But we may be confusing the timing of the design and development process with the timing of the HF20 activation (the latter being significantly later than the former).
I'm pretty sure that SBD purges in fact did not happen until after the print rate change was already discussed/designed on github, implemented, and finally merged to the source tree and scheduled for HF20. Whether this had any causal effect on the market is purely speculation, but it certainly isn't correct to say that the the purges came before the decision to implement. (As I noted the concept had been discussed, among several ideas, for a number of months, going back almost to the very beginning of the second SBD pump in late 2017.)
Possibly (though I personally saw no evidence of that), but if so then justice has been served.
There were some technical reasons to not support this. I don't remember exactly what they were. It think it has to do with the fact that bias instantly produces more total STEEM (in the form of SBD) while a less restrictive print rate increases the amount of STEEM that is produced in the form of SDB. They aren't equivalent.
The existing system unfortunately has a limited number of knobs and some of them do multiple things at the same time, not all of which are always desirable.
Let me clarify. The reverse conversions is about deterring an SBD pump that I think will keep the debt level low. Objecting to the HF20 threshold changes is about not automatically (and unthinkingly) adding to an existing debt problem.
Reverse conversions could do that, but it also could add a lot to the SBD supply (even if temporarily). You end up with reverse conversions that make sense at the time but then need to be drained when conditions change (not unlike now). Likewise a less restricted supply policy could absolutely deter pumps as well. Consider the original infinite supply policy from the first Steem white paper (and initial launch). Why would anyone buy overvalued SBD, knowing that it will continue to be printed, increasing its supply forever until the price certainly will eventually drop back to $1 and people to start converting it? HF20 is a sort of intermediate step and likely does have some deterrent effect (if perhaps not all that strong).