SBD Burn Proposal – Let’s Get Rid of What We Don’t Need -- Burn of 1.05 Million SBD to Strengthen Steem’s Economic Foundation
Hello All,
Steem Dollars (SBD) are not a typical stablecoin. They function as a short-term debt instrument issued by the protocol, backed only by the network’s ability to convert 1 SBD into $1 worth of STEEM over 3.5 days. This makes SBD a liability of the Steem economy, with STEEM holders ultimately bearing the risk.
Currently, the Steem DAO holds approximately 5.2 million SBD—a significant portion of total supply. These funds are not actively deployed, generating no utility, and serve only to increase the network’s debt exposure. In times of market stress or low demand, this idle supply can exacerbate downward pressure on both SBD and STEEM.
We propose a controlled, transparent burn of 1.05 million SBD over a 30-day period:
- 35,000 SBD per day sent directly to the
@nullaccount - No conversion, no intermediaries—permanent removal from circulation
- Begin immediately upon community and witness alignment
Why This Makes Sense
- Reduces systemic debt: Lower SBD supply = lower liability burden on STEEM holders.
- Supports SBD price stability: Scarcity can help restore confidence in the $1 target, especially if SBD is trading below peg.
- Improves reward economics: A healthier SBD/STEEM ratio may reduce pressure to over-issue SBD in rewards.
Holding millions in an unused, depreciating liability serves no strategic purpose. Removing it strengthens the protocol’s fundamentals and signals disciplined economic stewardship.
Let’s use this opportunity to make Steem leaner, more resilient, and better positioned for long-term growth.
Please goto : https://steemitwallet.com/proposals and vote for proposal Number : 116
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Submitted in the interest of Steem’s economic health
Since the debt is capped at 10%, as long as the price of STEEM is below the haircut price, the size of the SBD supply doesn't actually increase the network's debt exposure (see here). Instead, SBDs are just devalued if new ones are printed. Ironically, then, the 10% cap also means that burning them would not even destroy any value unless/until the STEEM price goes above the haircut price.
I still favor burning them, though. What it would accomplish is to lower the haircut price, and that would proportionately increase the value of the SBDs that remain.
There are only two ways to get the SBD back to the $1 peg: (i.) get the price of STEEM above the haircut price; or (ii.) lower the haircut price below the price of STEEM. Burning SBDs from the SPS could help towards the 2nd.
Yes , The debt is capped to 10% , now its around 12% i think , and the burn helps decrease the Virtual Supply . Also It will help to pull down the Haircut price i Believe . The market may react positively on this and SBD can increase in value . Anyway Discussing all this , It definitely does no harm and will only do good to all of steemians
Externally, yes, but from the blockchain's perspective SBDs are still going to be valued at $1 and paid at a conversion rate of [the (internal) STEEM price / the haircut price] if haircut pricing is in effect.
I don't think so. To my understanding, as long as STEEM is priced below the haircut price, the burn does not help decrease virtual supply (again, see here and/or here). When SBDs are burned, the haircut price is lowered, and this is exactly offset by a corresponding increase in the number of STEEM per SBD for the SBDs that remain. The two effects combine to hold the virtual supply constant.
If you're expecting to look after 24 hours of burning and see the virtual supply reduced by 35K SBDs worth of STEEM, I don't think that's going to happen. The SBD supply will go down, the haircut price will go down, and the blockchain will start paying a higher conversion rate, but the virtual supply will be unaffected.
As I understand, the virtual supply would only go down as a result of burning SBDs if/when the price of STEEM eventually crosses above the haircut price, and the 10% cap is no longer relevant.
IMO, burning SBDs is still a good strategy in order to drive the blockchain back towards a healthier state where the debt is under the 10% cap, and it's paying $1 for SBD conversions. But, if you don't see the virtual supply go down in coming days, that doesn't mean it's "not working". I think that's the expected behavior.
Maybe I'm wrong, but fortunately we don't need to wait long to find out. ;-)
You are right.
I also pointed this out in the witness channel. This applies in any case to the amount of SBD planned here.
We'll not be able to reduce this sufficiently with the measure to allow new SBDs to be printed for authors again. I have calculated that we would have to burn around 4.4 million SBDs for this (assuming the SBD price remains unchanged).
However, it is possible that we may briefly fall below the 10% debt threshold. We observed a similar situation during the conversions. Do you remember?
Perhaps I'm wrong with this. I can't imagine it, but I wouldn't be sad about it either.
Yup, I remember that. I intentionally glossed over it for my reply 'cause it was getting too long, but I agree. We might see short bursts where SBDs start printing while all the counters are stabilizing after burns. In the end, the virtual supply should land back where it started, though (unless the price of STEEM coincidentally goes up enough to close the gap).
I didn't do the calculations, but that's consistent with my mental estimates. "back of the envelope", I was guessing that we'd need to get the SBD supply down to about 5 million. In fact, now that you mention it, we can sort-of see that in rows 3-5 of the table from here. The Steem supply has increased since then, but it's roughly the same order of magnitude.
I have now calculated it again.
Since the 35K SBD are spread over 24 hours, the hourly amount is quite small. The short-term reduction will therefore be very small. Every hour, the debt rate will fall to around 9.9985%. It is therefore unlikely that new SBD will be printed.
Isn't that also somehow related to STEEM price? I've seen many times before, I receive SBD as rewards only when STEEM > $0.25
Yes and no.
It has something to do with the STEEM price. If the price is higher than the "Internal Median Price", SBD will be printed. You can find the price on Steemworld:
But the internal median price is variable and is no longer $0.25.
It is calculated as follows:
9 * current_sbd_supply / current_supply. The price therefore depends on the amount of SBD and STEEM. Since proposal #116 reduces the supply of SBD but leaves the supply of STEEM unchanged, the median price falls.BTW: The screenshot clearly shows that my calculated debt ratio (9.9985%) actually came true.