Go home SBD, you're drunk! How to maximize your author rewards
Well now I'm wishing I hadn't sold all my SBD at $1.70. Today for a moment SBD surpassed $6, and at this point there's no particular reason to think it won't go higher, because the old dollar peg seems to have been completely forgotten:
![Screenshot 2017-12-06 18.53.08.png](https://steemitimages.com/DQmZpGeMnVVzmx9chNApkep4nF5Z4teypQWZ5gV1wHkGFVN/Screenshot%202017-12-06%2018.53.08.png)
Last week I wrote a post talking about this issue (back when $1.40 SBD seemed like a screaming good deal!), and the main point I tried to get across was that you shouldn't hit the convert button when SBD is worth more than $1:
![Screenshot 2017-12-06 18.58.15.png](https://steemitimages.com/640x0/https://steemitimages.com/DQmZJ9Qn1ZaoZYYQETK4RLx2szTpropDXfgwBBCB7fm5xcA/Screenshot%202017-12-06%2018.58.15.png)
Today I'll talk about a slightly different issue:
Take your rewards as 50/50. Do not take your rewards as 100% Power-up.
![Screenshot 2017-11-29 16.13.44.png](https://steemitimages.com/DQmSquE2sKKssiB9HhehxnzFHUfvVPMQHcoFuhx1zmZjcTm/Screenshot%202017-11-29%2016.13.44.png)
Why is this?
The reason is that when Steemit gives you your payout, it can't actually tell that SBD is trading at a very high price, so it just assumes that SBD is worth $1.
Suppose that after eSteem and curators take their cut that it says you're entitled to $10 of author rewards. I'll run through two scenarios to see how much you'd actually earn in that case.
If you take 100% power-up
Scoot over to steemd.com, scroll down, and find this:
![Screenshot 2017-12-06 19.10.20.png](https://steemitimages.com/640x0/https://steemitimages.com/DQmXLb2zEVwDUtrKTA1pB9p2TbJZpgWb6YqedGf2uxUacjB/Screenshot%202017-12-06%2019.10.20.png)
That number 1.386 is the "price feed." It tracks the value of Steem denominated in real US Dollars with about a 3-day delay. If Steemit.com says you got paid $10, what it actually means is that you got paid that amount divided by the price feed. So 10 / 1.386 = 7.21 STEEM
. If you took your payout as 100% power-up, you'd get 7.21 STEEM POWER, which is worth exactly 7.21 STEEM.
If you take 50/50 SP/SBD rewards
Here, you get paid half the $10 right off the top as SBD; then it converts what's left over to STEEM and gives you that in STEEM Power.
So in this case, you'd get 5 SBD
and 3.6 STEEM
. How much is that worth in STEEM? Well, in the market, you can currently get about 14 STEEM
for those 5 SBD
! See:
![Screenshot 2017-12-06 19.17.35.png](https://steemitimages.com/DQmShe5Bt3Zgps37qm6rmRhPdnyrfNoxAeBbPdzjqofYHpj/Screenshot%202017-12-06%2019.17.35.png)
So here's the comparison:
100% Power-up: 7.21 STEEM
50/50 Split: 18 STEEM
You'd make more than twice as much by taking your payout as a 50/50 split!
Right? It's just been crazy! Hey, you know I'm using pocket to let my followers vote for their favorite puns? I'm so glad POCKET exists. It's just such a fun tool!
https://steemit.com/pocket/@improv/friday-is-pocket-friday-use-this-steemit-based-currency-to-vote-for-your-favorite-puns
Thanks for continuing to use Pocket! It was a fun thing to build, and I hope to add to it soon.
Ooo! I can't wait to discover more functionality!
The trouble is that there was never a dollar peg. There was a dollar floor.
If SBD was trading at 50¢ on the exchange, you could use steem to convert the SBD to steem at $1.
Yep.
Well, I'll say this -- there probably was a weak ceiling enforced informally by market makers. I, for one, had a personal policy of always selling when the SBD price went over $1.10.
I'm guessing any pegged currency has layers of support; market-makers keep the price steady in the short term, but you need fundamental mechanisms to have stability in the long run.
What actually happened is some trading pool or pools in Korea juiced SBD bc it was juicable (light trading, hard to sell by those who own a lot of it). Really nothing to do with the $1.00 mechanism or steemit accounts. We can see this by the trading volumes on exchanges which allow SBD trading, look for the volume and you can see who's doing the "juicing".
Everything to do with the mechanism. If the mechanism had a means of rapidly printing SBD to suppress the price, SBD wouldn't be "juiceable."
Glad you wrote this, as it changed the way I took rewards on my personal account, @damonhudac. Under what conditions would you ever use the "convert" button, or choose to be paid 100% in SP? If I understand your articles correctly, if SBD is trading under US$1, then it would make sense to convert, or get paid 100% SP. But since SBD is trading around $6, then it's a bad bad move to do it that way.
You got it, that's exactly right. Converting and taking 100% SP is the right thing to do when SBD is trading below $1.
Now I kind of regret following your advice earlier :P
It's really strange to see the SBD rise to high while the regular Steem value is just slowly rising. Something is going on, and I don't understand what or why!
Yeah, sorry about that - but if I had to do it over again I don't think I would have done it differently, because sustained trading at $5 is unprecedented.
What's happening now is just a consequence of the SBD not having a supply-increasing mechanism. Compare it to bitUSD, which can be printed at will to control its price. Its chart shows a nearly constant price, but a massive run up in supply in the past days.
Don't apologize; I still think it was good advice at the time you gave it, and I don't think anyone could have anticipated it to skyrocket like it did.
Do you have any idea why people are buying so much SBD by the way? I don't really see any good reason besides a pump & dump scheme.
I've just been assuming that SBD is caught up in the recent crypto frenzy. I'm not a technical trader so I don't quite get the mindset, but a lot of the technical analysis I see just completely ignores fundamentals of an asset.
But in this case, there's not any fundamental reason why SBD shouldn't trade above $1 because it has no mechanism to quickly increase the supply to push down the price. As @smooth says, SBD is only "half-pegged."
Alright, that makes some sense! Thanks for taking the time to explain all this :)
Great article for a newbie like me! Thanks and have a good day!
Wow, what a huge difference your payout choice makes! Resteemed to my four thousand followers. 🙂
It's not usually true, but with SBD so expensive it really really matters. Thanks for the resteem!
What is it that drives the price of SBD? At the time of writing, it's valued at $7.33
See my reply above for my thoughts about it having to do with liquidity and total current in circulation. Anything that is more liquid tends to be seen as more able to be used for transactions
I'm not reading too much into the crazy price other than that all cryptos have crazy prices right now. But I'm no expert on such matters, could be something else is going on.
Thank you thank you thank you 1 million times. I just used the market button and got way more steam. Thank you, resteemed!!! 🙏🎃🙏
Gracias por esto, lo entendí perfectamente, ahora tengo una pregunta....
Pocket va bien, pero no gran valor :)
Por donde puedo hablar contigo en un chat amigo?
Upvoted and resteemed! Great article, @biophil!
Cheers!
@mitneb