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RE: Steem experiment: Burn post #243
By converting SBD using the blockchain function @burnpost helps support the SBD price (since converting destroys the SBD and reduces the total SBD supply).
I don't know of any other way to do so without selling STEEM (to buy SBD) which would violate the rule that @burnpost will never sell the STEEM it receives, only power up or burn.
I agree with you that the volatility in SBD is not ideal. As I mentioned I expect it to decrease over time but I can't guarantee anything.
Is there a better way we can peg it? IE what about setting up a bot on the exchange where it is mostly actively traded? There are not many exchanges where it does a lot of volume. What about setting up a bot with a lot of inventory with the mission of pegging it at a dollar on that exchange, is that doable?
I think these systems just need time to mature. Sure if someone wanted to throw unlimited money at a problem they could peg anything, but that isn't realistic. My focus has always been on solutions that are economically viable and self-sustaining (for example, voters voluntarily choosing to support @burnpost).
Mostly cryptocurrencies need to mature and become more widely used at which point they will naturally have more stability, and not be subject to price swings on the basis of one or two traders making a big move, or for that matter even a modest, if short term, swing in market sentiment as a whole. This applies to all of them not just SBD.
SBDs are now trading at $.92. Roughly 10% below the peg. What can be done to help bring prices back up?
There is a difference between structural imperfections in the peg where we can reasonably discuss tweaks that might improve it, and STEEM cratering because its value is not well-regarded by the the market. SBD isn't pegged by magic, it is ultimately backed by the value of STEEM.
To some extent this is related to structural imperfections, specifically the lack of an upper peg which led to rampant speculation and an explosion of the SBD supply far beyond what people actually needed for stable value. Attempts by some of us to make improvements to actually peg SBD to $1 and shut down the pumping were met with push back from people who loved the idea of overpriced SBD as a free lunch for authors. We warned about a boom-bust cycle and that is exactly what is playing out (specifically the bust part now).
Nevertheless, in the short term, there is little that can be done other than hope the STEEM price goes back up, or at least holds while the SBD supply is wound down. In the future we can think about introducing an upper peg to stop these boom-bust cycles, if we can overcome the objections of the free-lunchers.
So you are trying to tell me that SBD is now trading down around $.92 BECAUSE there was no upper peg on SBD? That doesn't make a whole lot of sense...
In fact it makes almost zero sense.
It is trading freely on exchanges, which means it will deviate quite wildly from it's intended peg on steemit.com, no?
But I wouldn't go as far as to say the reason prices are currently trading at $.92 is because there was no upper peg. NO, they are trading at $.92 because they are trading freely on several exchanges, and everything is going down right now that is trading on exchanges.
It may not make sense to you but it is absolutely correct. The only reason the supply got over 15 million and stayed there was the massive pump and continued holding after the fact in the hopes of another pump. Why else would people buy SBD at $5 (and then $4 and then $3, etc.) unless they thought it has going to go back to $10? And the whole reason for thinking it may go to $10 is the lack of an upper peg.
There is now over 9 million on Bittrex alone with $100K+ being sold every day after day because the pumpers and those who got burned by the pumpers (and/or their own greed to be fair) have finally thrown in the towel. Eventually this overhang will get resolved as the bust part of the boom-and-bust cycle plays out, but it won't happen instantly.
That's not how it is suppose to work. The conversion feature is supposed to provide a floor on the price because people will buy cheap SBD (say at 99c) and convert it. That does indeed work for reasonable quantities, but it doesn't work when the SBD supply gets absurdly bloated in a boom and then too heavily dumped in a bust.
How does one convert SBD to steem these days? It appears that feature is gone from my wallet now.
You have to use either cli_wallet or steemconnect. Here is a guide to using steemconnect: https://steemit.com/sbd/@timcliff/how-to-convert-sbd-into-steem-using-steemconnect
And now it looks like SBDs hit $.90