RE: STEEM and SBD supplies after week 2 of SPS burning [burnsteem100]
I guess I'm aware of 4 possible options for using the SPS as a strategic economic lever:
- do nothing and reserve the SPS exclusively for dev/activity funding, which is what we've done for most of the fund's history.
- burn SBDs
- Use SBDs from the SPS to buy STEEM and burn that
- Use SBDs from the SPS to buy other cryptos in a sort of "treasury reserve" as a diversification tool.
Options 2-4 are not mutually exclusive, so they could be done in combination.
You're right that burning SBDs (option 2) does not reduce debt at current prices, but it makes it so that debt can eventually be reduced (as a percentage of market cap) at lower STEEM prices. It also makes it so that the debt will be reduced faster if STEEM's price climbs above the haircut threshold. Its big benefit is that it's technically trivial, and it requires zero trust.
Options 3-4 would also not reduce debt, but they might boost prices, which might also make debt reduction possible. The drawbacks are that we would have to trust someone to do the right thing with the SPS payouts, and there are technical hurdles that would need to be crossed. Another drawback to option 3 is that it would raise the haircut price which seems to make the eventual path to debt paydown harder and slower.
A final option, call it option 5, doesn't tie to the SPS, but the witnesses could actually pay interest to SBD holders in order to encourage people to hold them, instead of selling or converting. This would actually increase the number of SBDs in and out of the SPS. Just as burning doesn't reduce debt at current levels, paying interest wouldn't increase debt. However, it would raise the haircut price - which means that the price of STEEM would have to rise to an inflated level before debt could be reduced (as a percentage of market cap).
Option 5 could also be done in tandem with 2-4, though it would seem a little weird to burn SBDs and pay interest on them at the same time.
TL;DR: Burning SBDs is not the only strategic alternative for the SPS, but aside from doing nothing, it's the only one I'm aware of that we can implement without working through development and trust hurdles.