For the last couple of days, SBD showed signs of decoupling from STEEM and keeps going south. The initial plan for SBD was to stay at $1, but for the last 3 months it was heavily imbalanced, trading as high as $13. At the moment of writing, it trades just a little bit over $2.5.
Before going forward with the scenarios for this post, I want to let you know why I support, as a witness, a "stable" currency.
Simply put: for e-commerce.
It's very difficult, if not impossible, to create and sustain an e-commerce business on top of the Steemit ecosystem in the absence of a stable currency, one that is "guaranteed" to have the same value now, as well as in 3 weeks from now. E-commerce is a "long" business, it relies on manufacturers, suppliers, carriers and so on and so forth. It's a chain of operations that must be predictable, otherwise it cannot be done. At the both ends of this chain there must be a stable denominator of the value that gets created, otherwise the chain will get fractured.
And while a token used only for speculation may be attractive, if there is not a real usage for that token, it will sooner or later shrink, both in adoption and in value. I really think that creating and maintaining e-commerce businesses on top of the Steem blockchain will drastically boost both the adoption of the token and the value of the currency, way beyond what we see now, which relies purely on speculation.
On the other hand, I do understand the need for another type of currency, one that is intrinsically tied to the overall value of the platform, one that can be traded heavily, with a high volatility. Something like the shares of a company which were bought during an IPO.
Even more, I support this one as well. I just don't think it should be SBD, but STEEM. While SBD can remain stable and open the door to more business flowing in the ecosystem, STEEM can go as high or as low as the markets want.
Now, back to our scenarios.
I used the rewards simulator I wrote on steem.supply for these screenshots, if you want to play with it, here's the link.
Here's what you get at the current market prices (more or less) for a post receiving 10 STU.
1 SBD = $2.53
1 STEEM = $2.65
Total in USD = 13.24
Total Steem Power = 1.42 SP
And here's what you get for the same post, if SBD would trade at $1, and STEEM a bit higher, around $3.4
1 SBD = $1
1 STEEM = $3.41
Total in USD = $7.5
Total Steem Power = 1.10 SP
As you can clearly see, the rewards in USD are smaller. Almost half of what they are now. The rewards in Steem Power are also smaller, but that's predictable, since the STEEM price used in the second example is a bit higher.
So, what's the benefit of having SBD trading at $1? At the first glance, it seems there isn't any.
Well, first of all, it only seems like that because, for the last 3 months, SBD was imbalanced. But in a "normal" scenario, that's exactly what you should get for a post that receives 10 STU. That's exactly what we got before the SBD pump.
Second, there is a little known feature of the blockchain that will rearrange payments once SBD is trading back at $1, in this way:
- 50% in Steem Power (as it is now)
- 50% in a combination of SBD + STEEM - 25% SBD + 25% STEEM.
Since I didn't see this algorithm working for a long time, I didn't implemented it on the rewards calculation on steem.supply, but I can make a simulation, based on the numbers above.
So, if the rewards will be paid again in 50% SP + 25% SBD + 25% STEEM, you would get the following for a 10 STU post:
Total in USD = $3.75
Total in STEEM = 1.10 STEEM (which is $3.75 / 3.41)
Total Steem Power = 1.10 SP
The situation changes in a very interesting way.
You will get always 25% of your cut in the exact USD amount, and that you can be always sure it's liquid, you can sell it directly or use it on e-commerce sites powered by Steem (which are yet to appear, I'm aware of that), you will also get 25% in the form of tradeable STEEM, and use it for immediate speculation, and you will get 50% in Steem Power, increasing your influence in the platform.
It's a different scenario from the "I will get rich now" approach, but it's a more balanced one, in the long term.
Please note that I don't know when exactly the new payment split will be implemented, but I know for sure that once SBD stays back at $1 for a relevant amount of time, it will be.
Like I said in a previous post about playing the Steemit long game, the hit we may take in the immediate rewards value may hurt. But if you really look at the diversity of options, I think it's worth it.
I'm a serial entrepreneur, blogger and ultrarunner. You can find me mainly on my blog at Dragos Roua where I write about productivity, business, relationships and running. Here on Steemit you may stay updated by following me @dragosroua.
Wanna know when you're getting paid?
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I know the feeling. That's why I created steem.supply, an easy to use and accurate tool for calculating your Steemit rewards |
Great post, @dragosroua. I have been thinking about a lot of the same lately. I do of course not like to get lower author rewards, but I feel like having a stable currency on the blockchain will be much more valuable in the long term.
Right now we see very little trading and e-commerce on the blockchain, but this could change quickly once SMTs are released, and I think it would be nice to have a stable USD backed SBD by then.
I really don't get why SBD is and was pumped. The only real value lays in Steem. The value of Steem should at this moment be 3/1 Steem/SBD in my humble opinion. That's what would the most honest.
Thanks for the examples.
By the way, there used to be a possibility to pay out fully in SBD, but that is gone since that pump... But sometimes I see the little dollar sign in esteem with some posts, so it seems to me people still are able to get paid out fully in SBD, which is a major advantage. Do you know of this?
Tnx
things rarely go as planned. if steem was to be the main currency then rewards should be paid in that. its obvious that people are driving up the price of sbd because thats what their rewards are. so higher sbd price means higher rewards.
if SBD was to be for ecommerce it should have been used for that and not rewards. then one could trade steem they have earned for SBD and buy things with it from online stores. (alas this will require a whole new platform and reworking of the code.)
All rewards are paid - the liquid part - only in SBD now. For an explanation of how rewards paying is split, have a look at this post.
I know, I've read the post. But I have seen posts from other users that are paid out 100 % in SBD. How is that still possible?
It's not possible, you are thinking of posts that pay in 100% Steem Power (not desirable at this time)
If it goes to $1, then i am going to buy atleast 1000 SBD with a hope that it may again go to at-least $5, which seems possible now. If many people thinks the same then it will ultimately push the SBD prices higher if it reaches $1. And good thing about SBD is that it has no upper limits and the lower limit is set to $1, so investing in SBD's at $1 would be the safest bet.
yeah am agree with you dude lets see what happn
If it will be pegged to 1$, then it won't go up, no matter how much SBDs we are going to buy. I guess it will be something like USDT...
You might be able to do this. Makes sense even... I just hope you'll invest some of your time/money/energy into the long game too.
I would love if you added the tag #witness-category here, a lot of the witnesses have a different view, there is too much emphasis on short term gain vis a vis inflated post payouts.
done
Thank you for the analysis, it was really a great one. I currently don't get so much rewards on my posts so I can easily sacrifice a part of them for SBD to stabilize at 1$, especially if it will help the platform more. What really intrigued me is your words:
Do you mean that you are sure that e-commerce sites using Steem will start to appear?
Yes, if SBD will stay at the peg.
Okay, this sounds amazing, let's peg it then!
Hey @dragosroua I have a question for you
Please, correct me if I'm wrong, I saw post with reward predictions of 0.003 SBD and 0 SP that in the 7th day did not receive any reward. I guess it was related with the 0 SP. (Is that correct?)
So.. if the scenario is this, what about if some day steem get 100 USD? Post with rewards below 0.2$ will not be paid?
I didn't see any case like this. If you'r in doubt, add ".json" to the end of a post URL and look into the metadata, there you will see exactly how much is to be paid.
Thanks for the tip!
My doute is more about if, some day, steem get 100$, SP tends to 0...
I think SBD price is fine like this for now, we are still on a early stage and if SBD gets pulled down too early, the interest in this platform will decrease, because the rewards will be much smaller. But of course, a stable coin has its benefits, especially attracting different areas like you said.
It's interesting to see all the consequences of the different scenarios @dragosroua and, whilst I understand the need or stability I still can't help wishing for higher rewards again. A bit childlike I suppose but when you're working hard and seeing less and less coming in it's a challenge to keep going.
What is you view on keeping up the same number of posts. I've heard it said that it's good because, as fewer people are posting, we'll get a bigger share of the rewards pool but I am certainly not noticing that.
Since the massive jump last year where SBD was trading at $10 - $13 dollars it does seem to have stabilized. I can see the argument that you make but I don't see SBD pulling back to $1 unless something is specifically done to peg it there. Recently SBD and STEEM have both been sitting on roughly the same price which from a market sense i can understand. If people are getting paid in SBD and using it to buy Steem it makes sense that the prices are linked.
it is. A few witnesses, me included, are adjusting their price feed bias so more SBD gets printed, until the price will settle to $1.
Good to know. It won't affect me massively as i convert most of mine to SP anyway but it has been great to make such gains over the past few months. Without the inflation it would have been very hard to grow the account but as your article said it's better in the long run.
We really do need one stable currency to work from especially if SMTs come online it would be great to have a base to trade from.
Ohhh. I just learned today that that's how adjusting the newly generated supply works. I'm curious to know what has caused the last SBD pump? Were some witnesses doing something over the price feed responsible for that pump? As I can see, the volume of SBD and liquid STEEM supply pretty much dictates the price between the two coins today. SBD inflation can help bring the balance again.
Nothing on that side, on the contrary: when SBD broke the peg outside of STEEM internal market, a few witnesses reacted to adjust to SBD supply (i.e. increasing it).
Whoa. I had no idea there was a payment split that works that way! This sweetness! I was thinking the only way to get liquid steem would be to power down, but now I know it isn't!
Thanks for this. Now I can go brag to my friends!
This is a great discussion, It's unfortunate more people don't agree with you. We accept Steem/sbd in our eCommerce store selling semi-numismatic silver bullion, we would love to expand and be able to offer other bullion, but it's impossible to offer low margin products with the current volatility.
@dragosroua I hope I don't tell BS here, but i think you got a mistake on steem.supply. It says For 1 SBD you get 1.026 STEEM, while it is the other way around: For 1 STEEM you get 1.026 SBD.
Hope i could help.
Nope, the price is correct, but it's pulled from Coinmarketcap, not from the internal market. Often, there are small differences between the two sets of data.
for steem to remain at $1 peg wont it run into the same issues tether is running into now? as far as accounting, liquidity and auditing?
Can we have a truly pegged currency that is not backed by a government/bank?
Probably you meant SBD, not STEEM. And no, it won't need any intervention because it's not backed by hard cash, it's a soft peg.
Ah that makes a world of difference. I wasnt aware of that fact.
As much as I like getting the larger payouts for SBD, I believe it would be better for Steem in the long-term to have SBD pegged to $1. Like you said, it will encourage people to use SBD for commerce... AND people could use it like USDT, except backed by something... the Steem blockchain. There's more I could say, but I'll leave it at that for now.
I think if you're looking at the long-term, then SBD being rooted to $1 is for the best. It may seem counterproductive in the short term as rewards may be lower, but I'd rather that be the case and Steemit perform well for years to come.
I appreciate the tools you have developed and use them quite a bit... all I know is that the price of Steem and SBD has risen well and I think more steadily than other cryptos, in the 21 moons I have been here. And the slow and steady wins the race idea is in play comparatively over other cryptos... as this is all a new market, wild swings in value are natural. (I did however enjoy the SBD Pump, yes I admit it).
Thank you for this article.
My thoughts exactly.
I want a stable currency for trading and commerce.
With such a volatile currency there is no future except for speculation.
One needs to look outside of crypto to see, how real trade works.
No one does trade in some weird currency, that could drop or skyrocket the next day.
Dollar, Euro, Yen. Those are the big stable names.
Yes it is Fiat money.. But stable.
Resteemed your article, because it is essential for the Steemit community to understand that a pegged SBD is a good thing for the platform, even if the payouts drop in the short term.
I invest money and time into Steem, and I want to see it prosper over the long term. We can have s strong platform only if we have Steem and SBD working as supposed.
Since I am on Steemit I have not seen SBD trading below Steem. But it is coming :)
It's interesting
I completely agree! It is hard to have a marketplace where the value of everything is constantly changing. That is why some vendors have stopped accepting Bitcoin.
Good job man Great post I like it thanks for sharing I have thinking the same
You did it good
The market seems to stabilise a bit. Hope it doesn't go down now and reaches a all time high.
Thank you so much for the beautiful post. We learned a lot through your post. You have done very well analyzed.
You said a great word...... I agree with your words
You need to know, There are a number of fixed STEEM created by blockchain with the help of witneess every week to be shared with steemit users as rewards in a rolling 7 day period. At any given time, this system makes an estimate of how much you will be paid based on what percentage of upvote and adjusted to the strength of Steem owned by the person who provided your postal outflow.
And your point is?
I do not see it's happens SBD and STEEM are to strong to get to 1$ if it is happens i will make sure to get some :)
stable currency is what even i prefer for the long term growth
So looks good to accumulate SBD and maybe in the next six months it explodes again. That was what happen near the end of last year. Time to accumulate SBD, lol. Thanks!
long term balance perspective is the great approach
it looks great but eventually after the prices come down to $2 from $13 it is not that great
lots of difficulty will arise lately for sure you explained very nicely with examples long term is the only way to go
Hi - how much power do the witnesses have to 'print' more SBDs at a faster rate and thus bring back the peg? I assume there are limits?!
Is there a post or two you could direct me to that outlines this...?
Thanks!
Thanks for explaining what is going on with the payment process. 🐓🐓
Do you know how things are working in the STEEM blockchain and what SBDs are? There is a difference between SBD and STEEM, both in supply and in the way they are created.
In the current rewards strategy, as SBD goes back to the peg, the rewards are shifted towards STEEM, so it's 50% Steem Power, 25% SBD (as a stable coin) and 25% STEEM (at whatever price it is).
A situation in which SBD is stable at the peg and STEEM is at whatever price the market sets up (and it can be $2 or $20) can generate higher rewards, actually.
From where do you get the idea that "me and other witnesses" want this platform to go down, play god, or other nonsense like this?
As for users making less than $2, do you have any case studies? I've been blogging for 10 years and in my first 2 years I made literally nothing. Back then, $2 per month would have been something.
That's the thing, we're not rigging anything, that's why I asked you if you know how things work. Usually, I would explain it, but this time I would politely send you to the white paper. And that's because you assumed that I'm doing something fishy by trying to act as a honest and transparent witness. Can you please try to make your homework, first?
FWIW, I always said: "market is always right", check my blog posts feed. If market says SBD trades for $100, then that's the price. But the whole system is designed in such a way that there is a peg between SBD and an external currency and I'm doing my best to cope with it. I'm not extremely happy with the situation either, but I'm not the one who designed it, I'm just a person who believes in decentralization and in the blockchain technology, and who knows that, as "rigged" as you think this system is, it's still a gazillion times better than any Facebook out there. I even proposed a variable peg, in which we can set up various layers, at $10, $100, or whatever, and adjust the supply based on that. Especially because the market is always right and if the market wants to trade an asset for $10, then the best we can do is to try to maintain the supply in such a way that the price will stabilize around that area.
Is this system perfect? Far from it. But it can be perfected, if people will act together, constructively.