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RE: Fairer Price Calculation

in #smartsteem6 years ago (edited)

Thanks for the comment. Very much appreciate it.

I fully agree that the root-cause was the pump. If that wouldn't have happened, SBD wouldn't have been massively printed in the first place.

However, my concern was and is with the decision by some witnesses to alter the pricefeed with a positive bias.

Let me quote a part of your highly valuable comment from 11 months ago:

The only conceivable method that exists (outside of reward-based initiative such as my @burnpost) would be a positive bias on the price feed, and that is not a good one because it amounts to increasing inflation above the defined paramaters, with not even any future remedy to absord the newly created coins. It is neither widely supported by stakeholders nor recommended by the white paper (which admits that in the original, flawed design, little if anything can be done if SBD is valued about $1).

https://steemit.com/witness-category/@reggaemuffin/witness-discussion-sbd-price-and-reverse-peg#@smooth/re-ats-david-re-reggaemuffin-witness-discussion-sbd-price-and-reverse-peg-20180124t044257100z

Maybe I'm wrong there, but isn't that also a reason, that we've printed more SBD due to the positive bias on pricefeeds?

I'm not sure how much influence this had, since not all witnesses decided to do this, but based on these posts (one from 9 months ago and the other from 6 months ago) at least 2 TOP 20 witnesses (at the time) had a positive bias.

6 months: https://steemit.com/witness-category/@dragosroua/adjusting-my-price-feed-bias-again-sbd-is-creeping-out-from-the-safe-zone
9 months: https://steemit.com/witness-category/@dragosroua/adjusting-my-price-feed-bias-down-to-50-from-250

And this is exactly what I was referring to. It's probably not as big of a deal in terms of influencing the SBD printing percentage as it has been due to the pump alone, but it's still a misdecision of witnesses in my book. (Let me quote @clayop's post here - https://steemit.com/witness/@clayop/three-reasons-why-we-should-not-support-feed-premium):

Printing lots of SBD can be toxic when market is bearish
Printing SBD is actually printing STEEM. If we printed 20000 SBD yesrterday, it can be said that we printed $20,000 equivalent STEEM, which is about 20,000 STEEM at the current price. The thing is when STEEM price decreases 50%, 20,000 SBD will equal to 40,000 STEEM. Winter is coming (as said always), and we should keep this fact in mind.

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However, my concern was and is with the decision by some witnesses to alter the pricefeed with a positive bias.

Ah yes I agree. However, not enough witnesses did that to make any appreciable difference.

Remember, the blockchain takes the MEDIAN of the witness values (middle values after sorting), so only two witnesses making the adjustment wouldn't do much if anything. The biased values all will end up at one end of the sorted list and not be used. (The purpose of using the median is to discard outlier or inaccurate values that are submitted for various reasons including, as in this case, non-consensus policy opinions, as well as malfunctions, delayed updates, etc.)

Ah yes I agree. However, not enough witnesses did that to make any appreciable difference.

Yes - I thought it was more, but 2 of 21 is really not that much. Appreciate the conversation :)