RE: Law of Supply and Demand Definition and Explanation OR Why the @sbdpotato experiment just won't work
I am still going to dig a bit deeper on this to try to understand better and come up with a way to make it easier to understand.
But from what I know so far, the debt ratio is a relation between steem total value x sbd total value (circulating), and a change on any of the assets value will have an influence over the debt ratio, so I was talking only about one side of the equation, Wich is related to what @sbdpotato is trying to achieve.
Yes you are right about this part.
But about the conversion of sbd to Steem there is 2 different things:
1 - trading sbd x steem on the market doesn't take sbd out of circulation. It only exchanges the ownership.
2 - there is a conversion function somewhere on the blockchain destroy the sbd, removing it from circulation, but I think that very few people know about it and/or use it.
But that doesn't actually matter, because the supposed effect of price increase due to low supply won't have a real effect, because the market will adjust it self, and a downward pressure will start to build, because there is no real reason to own sbd.
I'm talking about the conversion function, of course. And those in possession of the largest amounts of SBD do know about it.
I disagree on there being a reason to own SBD. While imperfect, SBD has many times lower volatility than STEEM. That is the reason SPS funding is paid out in SBD. STEEM is so unstable you can't base real world projects on pay in STEEM.
I could say that lower volatility is a feature, not a function of SBD. And this the main reason SBD exist, and not only STEEM.
The issue here is that the majority of the community see sbd the wrong way, because there isn't a good and clean explanation about the blockchain economic model.
And this is where there is a lot of missed opportunity being missed to add value to the system as a whole, and project/experiments based on wrong premisses, like @sbdpotato keep appearing.
Damn, I even think that Steemit inc. don't actually understand what sbd function should be in the network. Maybe they didn't fully understood the white paper.
My hope here is that those with bigger influence around here understand what I am trying to say, and we start having a culture shift.
I think it's clear Steemit, Inc intended SBD to serve as a stablecoin to enable merchants to set up shop on Steem more easily. Most of the time it has worked reasonably well.
@sbdpotato is a good project, the only flaw of which is in my opinion the fact that the creators of potato posts should set up more placeholder comments to help distribute the rewards so as to keep the posts out of Trending. There is nothing else wrong with the project.
"There is nothing else wrong with the project."
The whole project is wrong. It won't achieve what is intends to, it's directing funds(rewards) to something that is totally useless and no necessary, and if it eventually succeeds, it will make the SBD market looks like a really elaborated pump n dump scheme.
Steemit doesn't have a exactly good image when seen by outsiders, so this can be damaging Steemit reputation more than helping.
Also, this make direct big STEEM stakes to "mine" curation rewards with very little effort, wich disincentivizes them to look for other ways to have investment returns.
Burning SBD is not useless and unnecessary at least if you think SBD shouldn't exist.
Non sequitur.
The posts in Trending? I agree. That's why they started to post more frequently so as to keep the rewards per post smaller.
An internal stablecoin that works better helps everyone. SBD needs stability for SPS funding to work better.
Let me phrase it another way:
Reducing supply is useless if there is no demand.
Sbd have a reason to exist, and I don't think it should cease to be exist, they the community use it is wrong.
Proper arguments still on the works. For now it's just a feeling based of past knowledge.
It's not only about trending page. It's how the blockchain ecosystem as a whole (and this includes trending, market prices and movements, and projects built using the blockchain)
If a usd stable coin on the blockchain is really needed, why not implement one that actually works as a usd stable coin? SBD isn't designed for it. It have stability properties, but not USD equivalence stability.
Let me repeat one thing: SBD was designed to be a stablecoin. It does not work well enough but that does not negate the fact that the original intent behind its introduction was precisely that. Its very name suggests that: Steem Backed Dollar. It's supposed to represent the US dollar on STEEM and be backed by STEEM to keep its value. The downside peg has, in fact, worked pretty well considering the abysmal depths STEEM has descended into.
There is demand for SBD. It's useful for anyone who wants to use a currency much more stable than STEEM.
A currency for what? There doesn't seem to be a lot you can buy with SBD.