Steem Dollars are a liability of the Steem Network. Issuing new Steem Dollars increases the debt/steem ratio and could collapse the entire system if there were not a "debt ceiling". As the price rises and/or people convert Steem Dollars into Steem the network will automatically start paying in Steem Dollars again.
Currently, 57,600 STEEM per day go to authors and curators(voting rewards). Under the proposed changes, 40,012 STEEM will be allocated for those purposes.
The reduced inflation means a higher price, less steem will be compensated by a much higher steem price. The proposal reduces the inflation to 148% now down to 9.5%.
A higher price is only possible with an increase in demand. An increase in demand requires that the game be desirable. A game becomes more desirable as it becomes more fun. Steem Power needs to be desirable in order for Steem to be locked up long term.
So while I'm not really against reducing the inflation rate if that was all they did, but they want to reduce interest on Steem Power and make huge changes which effect the dynamics in unpredictable ways. I would be for reducing the inflation rate and reducing it for all factions equally but the proportions are being changed too and I don't support that part because it's coming at the expense of Steem Power holders.
Now I admit, the biggest holders pretty much own Steem. So they can make these changes but by showing their hand this early on it reveals that anything can be changed by the same mechanism if the minds of certain people can be influenced. So there is no certainty anymore about what certain things represent.
Here's how I understand it as a regular person who is not an economist:
SBD is basically like a note (it's actually a smart contract) that says you will get a dollars worth of Steem at a later date. When the ratio of SBD value to Steem reaches 10% the system stops creating new SBD - this recently happened due to the low price of Steem.
The result is to stop there being an imbalance between the two because it could potentially result in the value of SBD in existence exceeding the value of Steem which could cause an economic crisis of sorts.
That is why the mechanism exists. As soon as the "debt" represented by SBD falls to below 10% of Steem then the SBD payouts will return.
Nicely put! If SBD breaches 10% a conversion would require more steem than is what is in existence and crash the system. Therefore the SBD can only remain pegged as long as the price of Steem doesnt get "too low"...
Not quite, the system won't "crash" until that ratio hits 100% , and the conversion actually creates the steem - and we have more mechanism's in place to reduce SBD debt before that ..
But hopefully these changes have just reversed the trend :)
Steem Dollars are a liability of the Steem Network. Issuing new Steem Dollars increases the debt/steem ratio and could collapse the entire system if there were not a "debt ceiling". As the price rises and/or people convert Steem Dollars into Steem the network will automatically start paying in Steem Dollars again.
sorry quick question will we still get rewards for voting , more rewards for that
Currently, 57,600 STEEM per day go to authors and curators(voting rewards). Under the proposed changes, 40,012 STEEM will be allocated for those purposes.
credit to @smooth for providing these numbers
How is that better? Less Steem is going to them?
The reduced inflation means a higher price, less steem will be compensated by a much higher steem price. The proposal reduces the inflation to 148% now down to 9.5%.
A higher price is only possible with an increase in demand. An increase in demand requires that the game be desirable. A game becomes more desirable as it becomes more fun. Steem Power needs to be desirable in order for Steem to be locked up long term.
So while I'm not really against reducing the inflation rate if that was all they did, but they want to reduce interest on Steem Power and make huge changes which effect the dynamics in unpredictable ways. I would be for reducing the inflation rate and reducing it for all factions equally but the proportions are being changed too and I don't support that part because it's coming at the expense of Steem Power holders.
Now I admit, the biggest holders pretty much own Steem. So they can make these changes but by showing their hand this early on it reveals that anything can be changed by the same mechanism if the minds of certain people can be influenced. So there is no certainty anymore about what certain things represent.
A much higher percentage of the new steem created is going to authors and curators.
Here's how I understand it as a regular person who is not an economist:
SBD is basically like a note (it's actually a smart contract) that says you will get a dollars worth of Steem at a later date. When the ratio of SBD value to Steem reaches 10% the system stops creating new SBD - this recently happened due to the low price of Steem.
The result is to stop there being an imbalance between the two because it could potentially result in the value of SBD in existence exceeding the value of Steem which could cause an economic crisis of sorts.
That is why the mechanism exists. As soon as the "debt" represented by SBD falls to below 10% of Steem then the SBD payouts will return.
Corrections: stop at 5% but not 10%; after 10% one SBD won't be able to be converted to as much STEEM as 1 USD (hard-coded).
@abit Thanks for the correction:)
Nicely put! If SBD breaches 10% a conversion would require more steem than is what is in existence and crash the system. Therefore the SBD can only remain pegged as long as the price of Steem doesnt get "too low"...
Not quite, the system won't "crash" until that ratio hits 100% , and the conversion actually creates the steem - and we have more mechanism's in place to reduce SBD debt before that ..
But hopefully these changes have just reversed the trend :)
Yes hopefully they have! :)