RE: The Real Role Of SBD In The Steem Blockchain
I disagree with this part of your essay:
Because of massive power downs, the market was flooded with STEEM, so the liquid rewards were paid in SBD only (which is still happening). But ideally, you should get your 50% liquid rewards in SBD and Steem, (and the remaining not liquid 50% in Steem Power). Until HF 16, this was the norm.
Whether you get your rewards as SBD or as liquid Steem depends on the price of Steem. If the Steem price is high, you get paid in Steem Dollars. When it is low, you get liquid Steem.
Here is an explanation of this from 9 months ago:
It wasn't the amount of Steem on the market that was crucial - it was the price. (and notice that the increase in supply of steem on the exchanges did not depress the price because speculators stepped in).
If you carefully read both articles, @ausbitbank's and @dantheman's you will see they talk about market cap, not only the price. Market cap is a function of supply * value. If the supply grows too fast that usually impacts the value, so the final price will be lower (this happened a lot after HF16, following massive power downs).
The Market Cap includes Steem that is locked up as Steempower. So it doesn't matter whether that steem is drawn down and on the exchanges or locked away in Steempower. And of course new Steem is generated at a constant rate.
The crucial component is the price of steem. If it drops, the rewards are made in liquid steem, and if it rises the rewards are made in steemdollars.
Yes, it does: it drops the price. If you dump too much Steem on the market, its price will go down.
According to my calculations, in the Coinmarketcap site, the total market cap is derived only from the circulating supply of Steem. Feel free to share your calculations as well.
But the price hasn't dropped though, that's the point. It's increased from the 7000 satoshis it was just prior to HF16.
You were complaining that people were being paid in Steemdollars - but people are only paid in steemdollars when the price is high. If it was low, as you claim it is from HF16, then we'd be paid in liquid steem!
He he, I'm not complaining about anything, I'm just pointing out that the reward ratio was different.
And yes, the price of Steem dropped significantly after HF 16, which happened around 8 months ago. An uptrend in the price of Steem was observed only after 3 months since the HF 16 implementation, when all the big whales already had their first power down cycle.
P.S. How's that market cap thing? It still includes all the existing Steem, or only the circulating supply?
P.P.S. I'm just debating, don't take it personally :)
But that shouldn't have made any difference, should it? It hasn't changed the supply in circulation, has it?
Your thesis is that HF16 increased the supply and tanked the price. But the price is higher than it was, despite the increased supply on the exchanges.
HF16 also removed the inflation in new supply. That was what was depressing the price before.
The way it has been designed, people won't be paid in liquid steem until the price crashes back down to 7000 satoshis. And we can go back to that by reversing HF16 and increasing the rate of inflation again... Is that what you are arguing for?
The only point I'm trying to make is that SBD is not really a token, it's a debt smart contract and it should be use with care. That's all.
As for that, it's just a fact. You have the charts and the dates of HF16 and of the first power up round, you can do the math.