I’m calling on all witnesses to take a serious look at the SBD printing that is causing excessive STEEM inflation.
[IMAGE: https://cdn.steemitimages.com/DQmahEHPgBVX2Q85284WrzZkG84cweezNCDH9y4whzSsLnT/inflation2.jpg]
For those that don’t know what SBD is, here is a breakdown.
SBD is a debt instrument. Essentially, you get paid now in debt (SBD) in which the debt is cashed out later (for STEEM).
This creates an incredible source of revenue into STEEM ecosystem. It is a mistake to call it pegged in the whitepaper and goes to show how Steemit Inc doesn't understand economics. Don't get me wrong, SBD is an amazing tool to have. Think of it like the US savings bond. Let's assume that the price of STEEM is over $1.00 and the price of SBD is well over $1.00, then the community cost for that SBD is less than the current price and is a great way to generate commerce and participation which is stimulant for the STEEM economy.
The problem is that everyone thinks that SBD is a pegged currency.
Since the pegs are weak, both Steemit Inc and witnesses have manipulated the supply to inflate it. They did this two ways:
1. They removed the ability to "convert" SBD to STEEM in the Steemit wallet (on Steemit.com). This was done for a good reason (when SBD price was high) but was never reinstated when SBD fell to $1.00. By not having the conversion option available to the majority of the population, the next most convenient option was to use the internal market. This only transferred SBD and did not convert it keeping the supply of SBD high. This prevented SBD from being burned back when the conversion ratio was 1:1.
2. HF-20 removed the conservative print rate cut-off of SBD. This was specifically intended to flood the market with SBD to artificially suppress SBD price if the market turns around.
What really happened is that too much SBD (debt) was created and we Steemians were left holding the bag to cover the cost of SBD conversions by virtue of inflation (paying for the debt by printing STEEM). What is crazy is that the whole idea to suppress the price of SBD is counter intuitive. All it does is cut off the revenue stream into STEEM ecosystem and cause the cost of SBD debt to be more expensive to pay.
Over the last 3 months, there has been over 11 Million STEEM created specifically due to SBD conversions (That is 1/3 the value of the Steemit Inc power down). This is in addition to the existing inflation rate of STEEM to fund the reward pool and the witness pool. The inflation of SBD conversion is much higher than both the reward pool and the witness pool combined. The average daily inflation due to SBD conversion is 1.8 times that of the combined voting and witness pools together. That is every single day (it should be close to zero). That inflation has long term implications. That much new STEEM compounds all future inflation. HF-20 removed the conservative cut-off of printing of SBD. We are currently printing SBD when the price of conversions is high AND when we have dangerous debt ratio (remember, SBD is a debt). This alarming amount of SBD printing can be removed by reversing the HF-20 change to the SBD only.
The Irony:
There has been a flurry of discussions about worker proposal. This is a movement to allow freelance Developers to program software upgrades to STEEM in which they are paid by Steemit Inc and the Community. The largest concern by far by the community is to not introduce another reward pool to print STEEM to cover the cost of the freelance developers (creating more STEEM inflation). The irony is that there is already inflation happening right under everyone's noses of almost two times the size of the voting pool and the witness pool combined. A freelance developers pool would pale in comparison to the amount of STEEM inflation caused by current SBD conversions.
I can no longer sit idly by and watch this continue
If you have any concern about STEEM inflation, please get witnesses involved in reinstating the conservative cut-off to SBD printing that HF-20 removed.
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Please remember to Upvote, Resteem, and Follow. Thank you.
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For a breakdown of how Steemit Rewards system works:
https://steemit.com/steemit/@socky/simple-steemit-rewards-breakdown-how-it-works-since-hf20
For a breakdown of Steemit Keys:
https://steemit.com/life/@socky/do-you-understand-your-steemit-keys
For a breakdown of why Steem Power is Important:
https://steemit.com/steemit/@socky/why-is-steem-power-important-beginners-read
How to improve STEEM payment system:
https://steemit.com/steemit/@socky/introducing-the-hand-shake-and-how-it-can-revolutionize-steem-blockchain
[IMAGE: https://steemitimages.com/50x60/http://steemitboard.com/@socky/commented.png] [IMAGE: https://steemitimages.com/60x70/http://steemitboard.com/@socky/votes.png] [IMAGE: https://steemitimages.com/70x80/http://steemitboard.com/@socky/posts.png] [IMAGE: https://steemitimages.com/100x80/http://steemitboard.com/@socky/level.png] [IMAGE: https://steemitimages.com/70x80/http://steemitboard.com/@socky/comments.png] [IMAGE: https://steemitimages.com/60x70/http://steemitboard.com/@socky/voted.png] [IMAGE: https://steemitimages.com/50x60/http://steemitboard.com/@socky/payout.png]
The rate of SBD or STEEM creation is not based on the amount of posts/votes. Per the blockchain rules there is a fixed amount of STEEM created (currently 8.6% of the total supply per year). That amount is then distributed between SP holders (15%), witnesses (10%) and the reward pool (75%).
The amount of SBD that can be converted cannot exceed 10% of the total STEEM supply (based on the witness median price feed of the last 3.5 days). At the moment the SBD supply equals about 30 million steem.
[Edit]: When the printing of SBD is stoped then the blockchain starts paying out steem instead of SBD (which has the same effect as converting SBD to STEEM).
It's important to note that the conversion and the printing of SBD uses the median price feed of the last 3.5 days which always lags the market if there is a trend (up or down). That is bad to SP holders if the price of STEEM tanks and viceversa.
With the current market conditions I can concede that it is not good if a significant amount of the SBD supply is converted and the additional STEEM in circulation is sold on the open market (that is obvious). To be honest I am not sold on the print rate rules change from HF20. To be specific, the slowing down of the print rate starting at 9% is too close for my comfort.
The number of posts does not influence the amount of rewards that are distributed. If the equivalent of 100 steem is allocated from the rewards pool per day then:
- If 100 posts receive payment then each post will receive an average of 1 steem.
- If instead we only have 10 posts then each one will receive 10 steem on average.
In either case the amount of SBD or the equivalent liquid steem would be the same (assuming each author selects 50/50 between liquid and SP).
What you are saying is correct, if nobody selected the 50/50 option then no liquid steem or SBD would be created but instead the equivalent amount of vested steem would take it's place in the form of SP.
I know I am over-simplifying in the example above, in reallity the rewards distribution takes the 30 day average from the reward pool (I am might be wrong it could be some other metric and not an average but I can't find the post where that is explained).
In lieu of actually looking at the code of the blockchain I am going to make the conjecture that the oficial Steem White Paper is an accurate description of it.
From page 26 of the Steem White Paper
>75% of the new tokens that are generated go to fund the reward pool, which is split between authors and curators. 15% of the new tokens are awarded to holders of SP. The remaining 10% pays for the witnesses to power the blockchain.
From page 17:
> When a post receives a pay out it takes the form of 50% SBD and 50% SP.
> Users also have the option to be paid in 100% SP, as well as decline payout on posts.
If 75% of the inflation goes to the reward pool and 75% of the reward pool goes to author rewards it follows that the liquid portion of the post payouts comes from that same reward pool.
Now, over time that distribution may not be equal to the intended percentages due to the fluctuations of both the price of the Steem token and the 10% ceiling of debt ratio of Steem/SBD.
I understand that the above reasoning is not the same as showing empirical evidence. We could take two posts as samples. One with an SBD print rate of 100% and one with 0% to see if those percentages hold true. The tricky part is knowing what was the median price feed at the time of payout. But it's late and I need to go to sleep.
Too bad that https://steemdb.com/ is down (maybe it's being decomisioned?). On the front page it had stats showing the actual distribution of the tokens for the last 30 days.
>When SBD are converted the amount of STEEM in circulation reverts back to what it would be if SBD did not exist.
This isn't true. Not sure where you're getting this idea.
The amount of Steem created in SBD conversion is entirely related to the price feed at that time and has no connection to the price at time of SBD creation.
>STEEM wraped in a smart contract.
It's not Steem wrapped in a smart contract, its' Virtual Steem in a smart contract. 1 Virtual Steem at payout (where it's locked behind SBD) can potentially become 2 Real Steem at conversion, or 10, 20 or 100. It entirely depends on the price feed.
>STEEM inflation is not caused by SBD printing, it's hardcoded in the blockchain and it goes from 9.5% to 0.5% in about 20 years, at 0.5% decrements yearly.
Steem inflation does not follow that schedule precisely, because of the virtualization of Steem at point of payout.
Pre-payout Steem follows a specific schedule, but the actualized inflation can be different precisely because of the issuance of SBD (where some Steem is virtualized, and 1 Virtual Steem can become potentially 10 or 100 Real Steem later down the line, based entirely on the Steem Price Feed).
There are two points at which Steem gets created. The first is the normal point of issuance where witnesses are paid, Steem is added to vesting fund and reward fund etc. However a portion of Steem in the reward fund gets virtualized for SBD, where it later gets realized in the second point of creation for Steem: SBD conversions. 1 Steem virtualized at point of payout can become 10 or 100 Steem at conversion if the price falls enough (and the haircut threshold gets pushed down enough).
The first point is governed by the inflation rate you described. The second point is determined by the market (Steem price which informs price feed, and conversions), and can't be precisely predicted.
@socky | Jan. 28, 2019, 11:44 a.m. | Votes: 1 | [
VOTE ]
I am fully aware of the convert operation availability. However, the majority of people that had SBD did not take it upon themselves to figure out how to use the advanced wallet since they barely understood their wallet. Most people only know how of the Steemit.com interface to their wallet. The next best option for them was to use the internal market. This was something that was intentional by witnesses and Steemit Inc. They intended for people to take the option of using the internal market instead of using the conversion option so the supply of SBD would stay high.
You are mistaken about the STEEM inflation. It is currently not following the inflation rate as you described. This is why there is over 11 million new STEEM created during the last 3 months on top of the normal STEEM inflation.
[IMAGE: https://cdn.steemitimages.com/DQmdeJTU6eZuHiqPauuDnDUbjqD7u5HsRk1nRS8DNFEze62/image.png]
The inflation rate you described would appear like a straight line. Just look at this chart. This is the actual data taken ever single day since the middle of February of 2018. By the way, the inflation rate you described is only an approximation. To be exact, it started at 9.5% and is reduced by 0.01% every 250,000 blocks. Current inflation is 8.59%. Now you are equipped with the current inflation rate, go out and collect the data yourself and do the math. You will be shocked.
