I don't blame HF20 exclusively. My comment was just that the HF20 changes were grossly irresponsible and lacking common sense. I maintain that it made the debt situation worse, even if only fractionally so. My point is that the people making these kinds of decisions need to be smarter and stop looking for band-aid solutions that don't actually fix anything.
We can talk about the technical aspects of this problem, but really this is about economics and market psychology. Why does Tether USDT seem to remain stable around $1? Nobody really knows if the money is actually there but for some reason or other the market has confidence in it's stability....thus it is stable. People don't buy Tether speculating that it will moon.
If we killed the SBD Pump with reverse conversions before it gets off the ground then we kill the demand for speculators and HODLers to even buy SBDs in the first place - Thus we don't get a debt build up and it stays as it was intended : As a stable currency used for commerce and off-ramping.
If I can use a crude analogy for implementing reverse conversions - You buy a gun so that you don't ever have to use it. It's a deterrent. I'm not saying we'll never have this sort of debt problem when we have a price decline but maybe the hangover would be milder and not so painful with less market demand for SBD debt. Offering the market a one-way peg creates an asymmetrical trade and it's just not smart.
Because it is possible to arbitrage by depositing and withdrawing USD (most of the time) and has no practical limits up or down in its capitalization. There is probably some actual backing in USD which enables the arbitrary, even if possibly all the USD isn't there. SBD doesn't work that way. The huge differences in the models carry certain tradeoffs.
I was in favor of this although there some details to work out and remaining questions. Including, which I have asked you elsewhere: What happens when you reverse convert up to the limit and the price is still pumped?
I don't agree with you that the print limit change was done carelessly, nor that it is grossly irresponsible. It was considered, analyzed and debated by many people literally for months. It has tradeoffs and isn't nearly as one sided as you claim. And as you have acknowledged, even if it had not been done, under the most favorable of assumptions (no credit for increased conversions attributed to the higher printing; almost certainly wrong) SBD would still be below par right now.
This is a fair point. It is one reason I don't view the 10% rule/limit as a 'failure'. By defining SBD as allowed to go under $1 in certain (reasonable IMO given the nature of backing by volatile STEEM) conditions, this removes the one-way nature of the trade and makes it possible for someone wanting to bet on a SBD pump by buying it at par to lose money sometimes without a catastrophic collapse. While at the same time maintaining reasonably low volatility (strictly lower than STEEM under all circumstances, usually much, much lower).
Reverse conversions with a cap would still create an asymmetric trade.
I understand that Tether utilises a different model. My point was that the market confidently values it at $1 and speculators are not buying it with an expectation of speculative gain. With a slight improvement in the SBD mechanism I think it could also deter a lot of the speculator demand which will give us more stability.
Regarding the cap, I'd question whether you'd want a cap. Yes it is possible that a big conversion could push the debt over 10% and affect all holders, but the converting party would be cutting their own throat in doing so. You could also apply a conversion penalty much like occurs in the other direction - For instance, at 11% Debt 1 SBD can only be converted to 90 cents worth of STEEM and it takes 1.10 cents worth of STEEM to convert to 1 SBD. This will not entirely kill a pump but it would seriously dampen it.
There are no absolutes here. No system is fool-proof and failures will still occur, but it is possible to make any system more robust, more stable against volatility and that should be the goal here. Any step in the right direction - no matter how small - is a help. Any step away - no matter how small (eg HF20) - is a hindrance.
Well not always. It still fluctuates in response to various factors including news/FUD (depending on who you believe) about Tether/Bitfinex, etc.
Sure, I agree with that.
You might be interested to learn that I proposed (among numerous others) exactly this variation, which I called a spread (though I generally envisioned it as somewhat less than 10%, in fact the amount doesn't change the concept). This was not something we were able to reach consensus to implement.
We'll have to agree to disagree, but I confess to being perplexed that you want to allow (possibly) unlimited reverse conversions of any amount at any time, but somehow find looser printing at a steady rate of about 0.19% per month to be harmful and dangerous.
I am interested and not entirely surprised either.
Despite the fact we seem to be argueing relentlessly, I do respect that you are a pretty smart guy and do actually have good intentions for the platform. You've shown a willingness to at least engage on the issues - which puts you ahead of most of the Top 20.
My main issue with HF20 is that I feel it removed a safety "buffer" for debt creation along with the timing and situation around it's implementation. If this had been proposed pre-pump when the debt level was low, I might not have seen the danger in it. But it was done when we already had a massive over-supply of SBDs. It was implemented as a band-aid "fix" to get the SBD printing again when we were already late in the boom/bust cycle and more SBDs circulating was the last thing we needed. The SBD purges were already happenning and disaster was looming. I question the motives around some who were involved in the "consensus" and I question the
thinkingjustification of using HF20 to increase SBD supply to dampen future pumps....when it was coming from the same witnesses who were refusing to adjust their BIAS while the pump was actually happening. I personally believe that some saw it as an opportunity to maximise the asymmetric trade that SBD was offering but you can call me a cynic if you like :)I see how it might have appeared to be that, but it was in fact looked at very carefully by at least some of us as a general long-term improvement to the system (for much the same reasons that you support reverse conversions). It was also not late in any cycle when the concept was first discussed, as I'll cover later.
Arguably this is entirely backwards, as a major overvaluation of SBD indicates not an oversupply but an undersupply. But we may be confusing the timing of the design and development process with the timing of the HF20 activation (the latter being significantly later than the former).
I'm pretty sure that SBD purges in fact did not happen until after the print rate change was already discussed/designed on github, implemented, and finally merged to the source tree and scheduled for HF20. Whether this had any causal effect on the market is purely speculation, but it certainly isn't correct to say that the the purges came before the decision to implement. (As I noted the concept had been discussed, among several ideas, for a number of months, going back almost to the very beginning of the second SBD pump in late 2017.)
Possibly (though I personally saw no evidence of that), but if so then justice has been served.
This may be true, as it is for reverse conversions and other options for modifying the peg mechanism. But you know as well as I that the "consensus" decision was made on this change much later than that - when the late cycle situation was well known.
This is semantics really. Again you know as well as I that a large portion of the demand has been coming from speculation and people trying to take advantage of the assymetrical trade. We had far more SBDs in circulation than the platform users actually needed (or wanted). I'd call this an oversupply.
You are giving the market far too much credit. This is the same market that irrationally bid the SBD up to $17 USD and has been in consistent decline for most of 2018....now you're saying market participants read the github proposals and are reacting to them before "consensus" is being formally reached?
I understand you are trying to deflect and neither of us can prove their case for why things happenned the way they did but you really do appear to be stretching here.
As far as a "final/official" decision, sure. But there was no significant objection to it afaik at the time it was implemented and merged in github (July 20 btw). As a practical matter, it was going to get deployed, the only question was when (which was mostly a function of the rest of the HF20 development cycle).
Even before July 20, it was @timcliff who implemented the code change and he didn't go ahead with doing so until he felt there was already a reasonable consensus in support of it. Maybe he has a better idea of that chronology.
And that speculation was driven by limited/low supply. You suggest allowing for reverse conversions as a source of additional supply, which I mostly support. Printing is another source (which I also support). Both more printing and reverse conversions are a deterrent to speculation, in both cases by holding more supply over the market.
Again, there was no real question about it getting deployed once it was implemented in the code base. There literally wasn't any discussion at all about removing it. None.
Of course, one can absolutely question the rationality of the market and whether people pay attention to github (or even upcoming hard fork/release announcements). But it is also the case that with a print cap, particularly a low one, market participants betting on SBD to pump are not necessarily irrational. Once printing stops, there is nothing short of a hard fork or a market crash to bring the price down.
There were some technical reasons to not support this. I don't remember exactly what they were. It think it has to do with the fact that bias instantly produces more total STEEM (in the form of SBD) while a less restrictive print rate increases the amount of STEEM that is produced in the form of SDB. They aren't equivalent.
The existing system unfortunately has a limited number of knobs and some of them do multiple things at the same time, not all of which are always desirable.
Would the reasons be on the blockchain somewhere? Or were they discussed behind closed doors only amongst our elite?
I recall only about 8 of the top 50 witnesses had a positive BIAS during the pumps. Some even were maintaining a positive APR (which I found astounding) but I don't recall anyone really explaining why they weren't supporting a BIAS.
If you can find a link that would be helpful.
I honestly don't recall where this was discussed. Do you know of a post calling for or discussing a bias at that time? Maybe there are relevant comments. I'm just guessing for the most part.
As for the positive APR, I agree with you. That was stupid.
I found this comment thread
Here is where I commented on the 'spread' concept we recently discussed.
Let me clarify. The reverse conversions is about deterring an SBD pump that I think will keep the debt level low. Objecting to the HF20 threshold changes is about not automatically (and unthinkingly) adding to an existing debt problem.
Reverse conversions could do that, but it also could add a lot to the SBD supply (even if temporarily). You end up with reverse conversions that make sense at the time but then need to be drained when conditions change (not unlike now). Likewise a less restricted supply policy could absolutely deter pumps as well. Consider the original infinite supply policy from the first Steem white paper (and initial launch). Why would anyone buy overvalued SBD, knowing that it will continue to be printed, increasing its supply forever until the price certainly will eventually drop back to $1 and people to start converting it? HF20 is a sort of intermediate step and likely does have some deterrent effect (if perhaps not all that strong).