So now that the SBD is pegged to STEEM instead of the USD why would anyone still be holding SBDs? At least with STEEM there is no limit on the upside and it can still be powered up and used, but what utility does the SBD now hold…?
Actually (setting aside buying below fair value to immediately convert) there are situations when SBD can do better than STEEM. For example, if STEEM stabilizes (stops dropping) and SBD continues to be converted at a steady rate. In that case the peg target (STEEM price necessary for SBD to repeg to $1) will continue to drop along with the SBD supply, and fair value (and possibly market value, but there are no guarantees) of the remaining SBD will appreciate closer and closer to $1. For reference, the peg target has dropped from I believe 0.415 (when first reaching the 10% cap) to 0.402 (now).
I'm not telling anyone what if any tokens to hold (do your own research) but just pointing out that the above analysis is missing a factor.
those “In the know” were possibly selling hard prior to the news ... but if we’re being honest the STEEM price has been savaged and has under-performed almost the whole market
This has been going on for a year. Of course it is possible there have been some "in the know" about some things happening behind the scenes for quite some time. Excellent transparency and communication has never been a Steemit strong suit, and that creates a perfect breeding ground for insider trading.
’m also hearing some grumblings from the Witness ranks as the earnings from producing blocks (which are paid in STEEM) have dropped below the cost of running the underlying infrastructure.
Probably true for backup witnesses but not for top 20.
It looks to me like an attempt to re-assure the market and stem the bleeding, but I do think it’s positive that we’re finally seeing some greater transparency and communication from the #1 stakeholder. Let’s hope it succeeds in calming the market and Steemit Inc can deliver on these new promises.
What he said. Hopefully not too little, too late.
@smooth, you're one of the people who know the most about how the Steem blockchain works, so maybe you could ask a (slightly) related question: why are the rewards being paid out assuming a median price of $0.40 when the 3.5 day average has been well below that for a week now? Is that also because SBD is now pegged to Steem?
Steemnow
It is a glitch in the UI that is being investigated. In fact the rewards are being paid out in the correct amount but the UI is displaying them with the wrong exchange rate (yes, indirectly caused by the SBD peg switch).
I appreciate your insight on this. I wrote a post talking about this stuff, but no one seemed to know.
I'm limited in the programming knowledge that I have and the tools that I know how to use, so I just look at sites like SteemWorld and then compare to Steemit.com. From what I see on Steemworld, for my last post that paid out, I received 0.55 STU as my portion. You can see from my rewards at the top of this screenshot that I received 1.38SP for that post. So I divided .55 by .4 (the listed median price) and got 1.38. So to me it seems like it's actually paying out at the .4 level.
I doubt-checked this with my pending rewards in my Steemit.com wallet which shows that I have 1.475 SP waiting to be claimed which is the SP from the post, plus the unclaimed curation from my votes. (There's another .01 not in the screenshot, but taking rounding into consideration, it's the same.)
I claimed the rewards and the SP in my account increased by 1.475 which is the amount that SteemWorld said (and that's not as much as it should be if it were based on the actual median price.)
So if it's just a UI issue, when does the other SP go? And when does it get credited to our accounts?
There is no extra SP. The reward fund is in STEEM from start to finish, and the share allocated to the payout is equal to the amount that ends up paid out. The STU/$ value is just something that the UI estimates and the steemit.com UI (along with most if not all of the others) is estimating it incorrectly.
There will always be an arbitrage play when the Market Value differs from Par Value on conversions. My logic is that for conversions to be happening (to reduce supply of SBDs) then Market Value needs to be lower than Par Value. In this scenario a regular Steemian is still better off converting to STEEM than HODLing SBD - even though the underlying value of SBD might creep up due to the debt reduction.
However, a lot of this is too complicated for regular Steemians to get a good handle on fringe cases.
Yes, I was talking about the Witnesses collectively. I think if we lost the Witnesses outside the Top 20 we'd be in serious trouble. It's not just about centralisation (since we really are already fairly centralised), it's about having fail-over / redundancy and a robust network that can self-heal.
If you are performing conversions yourself, then the comparison between holding SBD and holding STEEM is irrelevant. Go ahead and convert.
But if you aren't converting (say because there is no discount at the moment, or because you just don't want to), then holding SBD is very likely to outperform holding STEEM because the conversion/peg value will creep up to $1 (as conversions occur when the SBD price dips below par) even if STEEM remains unchanged, and if STEEM rises, until the peg value reaches $1, SBD still either rises with it or outperforms it (for the same reason). At some peg value near $1, one might prefer STEEM, because of the possibility that STEEM suddenly jumps to well above the repeg point, but at this price it is a negligible factor.
The 'creep' is not insignificant. The peg-to-par price for STEEM has dropped from 0.415 to 0.401 over the past several days. That's a few percent outperformance for SBD.
The high ranked backups who serve as (somewhat) immediate fail over still do okay. They get 5x per block compared with top 20 (which was put into place exactly for this reason), and 1-2 blocks per hour. That's still well above server costs. It is the lower ones who get only a block or two per day who are are struggling. They need to operate very lean (maybe a laptop at home) or quit, or accept the (small) losses for community participation.
Anyway, low STEEM prices are painful for everyone (except shorters if there are any).