RE: Simplify Steem blockchain rewards by distributing only STEEM and SP but not SBD

[josephsavage]

Looks like you left out the bit about pairing it with reverse conversion, and that's what people are noticing. His response was actually my first reaction until I read further through your proposal and found that you wanted to pair it with reverse-conversion. That bit is actually pretty crucial.

I think that it would actually be better to put energy into pushing for reverse conversion, and then it would clear the obstacles to simplifying the reward model through removing SBD from it completely.

Comments

[mkdouglas]

Reverse conversion as a proposal has been around for a while and yet it has not been implemented despite its obvious potential to fix the peg. The potential risks have outweighed the potential benefits.

My beef was specifically with SBD as rewards. On GitHub, I think I managed to make a better case for the dissociation of SBD from the rewards system:

A less drastic action to take to stop distribution of SBD as rewards would be to gradually lower the 5% debt limit at which no more SBD is distributed. This way the market could slowly adjust to the reducing supply of SBD. If no severe negative consequences are experienced, then the limit could be gradually lowered to 0% to effectively stop distribution of SBD as rewards.

The SBD market is much more irrational than the rest of the cryptocurrency market. When the supply of SBD is increased in an attempt to fix the peg, the market could just conclude that SBD is no longer a scarce asset and demand for SBD could just as well fall. The falling price of SBD could also bring down the price of STEEM because of their their relationship.

Other than increasing SBD rewards, the supply of SBD could also be varied through reverse conversion or STEEM lockups such as those of Bitshares for BitUSD. These are solutions that have been discussed but have not yet been implemented due to the drastic changes they would bring. They are not even guaranteed to work to fix the peg! If these solutions happen to be implemented but fail to fix the peg, the dissociation of SBD from the rewards system means that SBD would no longer complicate the rewards system.

For the peg to have a chance at working, I believe the entire supply of SBD needs to be as agile as its demand. Regardless of the implementation of any other solution to vary the SBD supply, continuing with SBD as rewards would hinder that agility because of the delay in varying a portion of the SBD supply. In short, both demand and supply of SBD should be determined by only the market.

As the dissociation of SBD from the rewards system would eventually need to be done, why not do it now in order to improve the user experience. Fortunately, this dissociation could be done gradually by reducing the 5% debt limit at which no more SBD is distributed.

Again, develop the Steem blockchain for user experience and not for the current irrational speculative market. The true value of STEEM depends on network effects and network effects depend on the number of active users.

https://github.com/steemit/steem/issues/2140