RE: Thoughts on a Proposal to Buy and Burn STEEM using the DAO
Interesting. I agree with your three points: (i) I'd like to see the SBD peg actually work, and that would be good for the ecosystem; (ii) Simple supply and demand would suggest that the value might shift from overvalued SBDs to STEEM under this regime, and it can be stopped at any time if problems are observed (at least in theory); and (iii) the current high value of the @steem.dao wallet could attract hackers and other bad actors. Adding to that, I'd also note that it would probably reduce the virtual supply, which would reduce the daily inflation.
But, there's no such thing as a free lunch. Here are a few tradeoffs:
- I recently realized that a high-valued DAO might actually put a floor under the price of STEEM since low-priced STEEM would encourage someone to buy more in order to gain influence over SPS distribution, and this market action would drive the price of STEEM upwards (see here). By reducing the value of the SPS, we'd be reducing one factor that might motivate people to buy STEEM.
- I don't like the idea of trusting a single account holder to do the buying, selling and burning. We saw what happened with the @sbdpotato account when well-intentioned people (myself included) trusted someone with control of funds for the purpose of stabilizing SBD prices. I agree that the Blokfield team has a good track record, but we never know what tomorrow brings. To me, relying purely on "the honor system" for that much value is a non-starter, no matter how reputable the intermediary might be.
- With proposal-86 from @the-gorilla, we are in the process of proving that DAO funds can be used productively. It would be better to use those funds to fuel growth than to cannibalize them, as long as they're managed effectively.
Overall, I guess I am in favor of giving it a try, but only if the trading activity is managed with multikey wallets that require agreement from multiple independent parties. I might also suggest starting with a lower amount, maybe 6-1200 per day.
I reserve the right to change my mind, though 😉. I've only recently starting thinking about the idea of the SPS providing a floor under STEEM's price. I'd like to see more data as time passes. Not sure where that's going to lead.
Interesting thoughts here. The idea is to start with 100 SBDs sold per day and then if there are no hiccups ramp up to the proposal amount of 2,400 per day. And yes I agree with multikey wallets being used. There won't be a situation where one person can enrich themselves at the expense of everyone else, and on that note remember we can remove votes from the proposal if things do not go as planned.
Your point about the DAO being robust gives STEEM value is interesting but probably not one that is currently playing a factor. Perhaps if the price of steem were to get low enough this may come into play, though.
The odds of this proposal burning all the SBDs in the fund is likely slim to none, though we won't know until we try it. Currently there is roughly 2,400 new SBDs flowing into the DAO every day and the fund has almost 4.6 million SBDs total. My guess is SBDs get back to a dollar long before we chew through that many SBDs. Especially considering we are doing a proposal for 2,400 SBDs per day. And remember, we aren't burning an asset for the sake of burning an asset, we are transferring that value over to STEEM where we will be buying off the exchanges (buying on internal market but that supply comes from Exchanges) and likely positively impacting market prices.