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RE: 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
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.
Thanks so much! Finally I am starting to understand it, lolz.
Now, a follow up question - why 9? Is this a constant value or it could change under some conditions?
80k STEEM minted for 23 hours, wow (on a separate note)
The
9is constant (at the moment – this could only be changed by a hard fork).I quote from the code comment:
Yes, we are currently experiencing very high inflation, even though inflation from the block protocol has been decreasing. This is because the virtual supply is currently very high. However, less STEEM will be printed in the near future, as can be read here.