Thanks for outlining the issues here @timcliff it is the sort of post that needs to be "pinned" up in the Steem Center
I do disagree with the HF20 changes you've made though, as I see it as a lifting of the Debt Ceiling and I think it makes the next Boom/Bust cycle bigger. This increases the risk of us facing a Haircut on future SBD Conversions during the next Bust while creating a lot of SBD Bagholders (that would hurt our Reputation and Adoption in the long run). If we had the HF20 Debt Limits in place for this last pump we would most certainly be facing a Haircut today.
That said, it is good to see that the Reverse Conversion possibility is being discussed seriously. I personally believe it is the only way to properly stabilise the SBD and remove the Asymmetrical Trading Opportunity that the SBD currently offers to Speculators. Thanks for the link to the GitHub discussion. I note there is nothing there since late June though. Is this a realistic chance of happenning or has the discussion died?
Yeah, I wish there were a way to save posts inside of your acct instead of digging through your blog or comment history....
I bookmark my favorites :)
My bookmarks are already vast, but I don't organize them into folders. That would help immensely! :0
Thx for the suggestion. ;)
Well, to be clear, what I would refer to as the "debt ceiling" (i.e. the "debt limit") is not being changed. The total amount of "debt"that the blockchain will be able to issue is still capped at 10%.
Whether it will increase the boom/bust cycle is purely speculative. With a significantly larger supply, we may actually see less price swings. (It could go either way.)
That is not true. If the change that I submitted to HF20 was in place, it would have no impact during the last "boom". When the price was high, we were way under the 2% debt ratio, so the blockchain was printing SBD the whole time. It only recently started printing STEEM in place of SBD, and the amount it has done during that time is fairly negligible compared to the current total supply.
I will agree on the more broad point though that allowing SBD to be printed up to the 10% debt limit does increase the chance that we will pass it. That was fully acknowledged and stated in the post.
The thing though is that doesn't necessarily translate into SBD holders being "bag holders". Again, that really gets into speculation. If SBD holders fear that they will become bag holders - they should have the opportunity to sell their SBD before that time comes.
I'd say that there is a realistic chance, but not anytime soon. (Unlikely before SMTs if that gives a time perspective.) The main hang-up right now is that there is still not consensus that we should move forward on the idea. Consensus often takes a lot of time to build.
"Consensus often takes a lot of time to build" - how true! Even truer in naturally "egalitarian" communities with no legitimate leader. In a classical system, say the Facebook developer APIs, the community of FB developers, even if their input would be listened to, would logically follow whatever FB decides. In a blockchain environment the witnesses have less inclination to follow STINC and even less to follow any one of them. If they were to disagree, why would, say @jesta's opinion be better than @gtg's ?
That is something unprecedented and very interesting to watch - it makes blockchain eco-systems both more stable and slower to evolve. However my concern is that, in a space that moves at high speed, shouldn't we prefer more flexibility and faster adaptation speed to stability?
And wouldn't that imply that strong (and good) leadership would be a benefit? At any rate, governance remains a major challenge
I would disagree slightly. That may be the case, or it may not. It is still somewhat speculative in that it depends on the extent that SBD remains overvalued and therefore isn't being converted. That in turn depends on both market expectations and on the actual effect of printing more SBD (increasing numerator, assuming SBD is overvalued and not being converted) vs. less STEEM (potentially increasing denominator, if this results in a higher STEEM price than otherwise, as seems likely). Overall the effect on the probability of reaching 10% is not clear to me from first principles.
I'll concede to that. There are certainly some market conditions where the change will make it less likely to exceed the debt limit, and others where it will make it more likely.
The recent downward trend has been one of the closer calls we have had as far as actually hitting the limit, and I'd go so far as to say that with the change in place we probably wouldn't have gotten as close (due to reduced downward pressure on STEEM).
It seems to be on hold at least until after HF20, if nothing else due to limits on developer time and attention.
I don't agree with you in assuming you know exactly what would have happened in some counterfactual with HF20 rules. That's always a very tricky question and a doubtful claim.
Indeed if you look at the graphs you can see that SBD was dropping in price much faster than STEEM right up until the point where the print rate started getting reduced (at 2%). If that had not happened it is quite possible that SBD would have returned to par much sooner, and its supply stabilized instead of continuing to grow. In fact, it is even possible that the pump might not have happened at all, or would have been much smaller and/or shorter, if speculators saw more supply continuing to print in the future instead of less.
Without necessarily debating on what the exact numbers should be, structurally the 5-10% null zone aka void in the current design where printing stops but SBD remains fully backed (giving speculators a one way bet, if one with some limits) is a clear economic flaw to me. It's even worse that not only does SBD printing stop but it is replaced with STEEM printing (adding to more direct selling pressure on STEEM). An alternate rule where, when the market cap is too low, instead of printing STEEM in place of SBD, it prints nothing (a reward holiday until the STEEM price/market cap recovers) would at least not suffer from the second part of the flaw.