It is a valid view. To some extent, the whitepaper also says the same: "In a market where 0% interest on debt still demands a premium, it is safe to say the market is willing to extend more credit than the debt the community is willing to take on. If this happens a SMD will be valued at more than $1.00 and there is little the community can do without charging negative interest rates."
I know we have discussed this a lot before off-chain, and I think you and I are more in agreement than disagreement.
I am curious though:
- Given a choice between a stable SBD and a fluctuating SBD, do you not agree that a stable SBD would be better?
- Given that I am not advocating price feed premiums (which harm SBD converters), and am instead offering a way to satisfy the increased SBD demand by increasing the supply (in a way that benefits STEEM holders too) - is there anything about the specific proposal that you are against?
My answer is unless SBD is under $1, less burden on the community is better. The burden includes perceived complexity and potential debt crisis. I would keep the debt ratio lower to prepare another ice age. Winter is coming :)
I think your proposal is much better than feed premium, and I am actually partially agree with you. Your proposal is a good way to switch demands for SBD to demands for STEEM. What I am worrying is more complexity, higher debt ratio, and losing perks for authors (Many authors are enjoying the high price!)
I am strongly against feed premium since it harms the community members when they convert SBD. Now we have no complaints but if premium is applied, we may hear some complaints, saying "I lost $50 after conversion!".
I'm with you. I tread into these waters very carefully knowing full well that we are just one STEEM price crash away from another serious debt issue.
Understood. There are definitely trade-offs. There are valid views on both sides for sure.
Yep, agreed. I stopped my premium the moment I talked to you, and I am very glad I did. I've seen similar complaints as well. I submitted a pull request to the condenser repo too (still waiting for approval) to more clearly communicate to users the potential risks that are there with conversions. Hope this well help too.
Absolutely agree on the condenser changes. People are making foolish conversions right now and have been for weeks (bad for both the user and the system). Anything that can be done to improve that situation is welcome.
Awesome answer, as always :)
I mostly agree with you but I don't think the proposal adds significant complexity. We already have conversions in one direction, it is actually a bit more complex to explain why it can only be done in that one direction and not the other (I have been asked this multiple times).
I agree that harming community members is bad. The problem is that the high SBD value harms community members when they convert, and by not addressing it we are contributing to this harm by inaction. At least two community members converted $200 worth of SBD today alone, each is losing about $100 in the process. The faster we can reduce the high price of SBD, the faster we can stop this from happening. It has been going on for several weeks and community members have been hurt doing this almost every single day! (Thankfully it is now less than before due to education, but that isn't perfect.)
I think we can get much the same benefit without the disadvantages by shifting demand to STEEM and raising the STEEM price. This also reduces the debt concern (maybe not on net, it is hard to say).