Except its not a conversion, its a sale.
The steem is not burned, but added to/replaces the inflation created by block production.
We could burn an amount equal to what the blocks produced to lower overall inflation to match demand, if that is desirable.
The procedes from sales goes to the sp holders, witnesses, and authors in the percentages now used.
This turbocharges sbd creation buy selling them directly to anybody with one usd of steem.
As determined by the x day average.
In order for sbd to be adopted there needs to be enough of them to matter.
15m barely makes payroll at one pro hockey game.
With none left over to use for concession sales.
Nobody can buy a jersey because all the sbd went to the players.
By selling them directly supply can meet demand.
Tether has ~2.5b? in circulation, with luck we can match that.
By putting the steem derived from sales into the inflation pool, all stakeholders benefit.
I know there isnt an actual pool, and i dont know how to tie sales to block production like regular inflation, but i was thinking a bot to power up the 25% that gets paid in sp, and adding the balance to the rewards pool.
What i am unsure about is what happens when demand drops and the price of steem goes down.
Existing sbd would have been paid for with one usd of steem, except those paid out as author rewards which have time value attached.
Does the peg hold or does steem defaulting cause sbd to crash, too?
Right now the usd is down 98% but it is still accepted more places than silver.
I guess the trick would be to get enough into circulation that sbd holders refuse to take the loss and continue to use them in commerce on par with the usd.
Okay so you are proposing something like the hyperinflationary model which existed earlier in Steem. That is, greater STEEM supply, but a lot of it distributed back to stakeholders so they don't lose ground.
The three problems I see with this are:
Overall I think destroying STEEM to create new SBD demanded by the market is better (sending the price of STEEM on an attractive upward trajectory instead of downward, reducing inflation instead of increasing it, and encouraging, or at least being neutral with respect to, speculation rather than punishing it), though both may still have some issues.
If there is not enough demand for STEEM and its market cap drops, the peg will not hold. There is no substitute for a platform that attracts and retains investor interest.
I wasn't here long enough to have a feel for the math when steem was hyperinflationary, but i sure liked watching my sp grow.
Yes, many moving parts to steem.
Inflation would be in sbd, provided the debt ratio is maintained author payouts are in sbd, the only steem created is witness pay and sp interest, both initially locked in sp.
Increasing pressure to hold sbd?
If the use case for sbd is as a dollar/euro substitute there needs to be enough of them to capture even 1% of the market.
Current inflation will never provide enough sbd to do that.
Let alone provide enough to put pressure on the dollar.
15m is puny in a 100t market.
As crypto matures as a market speculators will leave anyway.
The question is the condition they leave the price in.
If demand for a pegged asset exceeds current liquid steem supply then the pressure is upwards.
That demand will cool at some point so switching from sales to conversions will likely have to occur.
Provided we are open about the current inflation being temporary, and that at some future point we flip to deflationary, the speculators can plan accordingly.
I guess the math to be done is demand for sbd divided by current liquid steem.
Can we sell enough sbd to exceed the speculator's selling?
This will always be the case?
Holding liquid steem is a guaranteed loss in a stable price environment?
Even holding in sp gets diluted, too.
Lol, if we are gonna play crapitalism, its good that we have some of the best in the world batting for our team.
I would think that, given the changes i propose, opening the sbd spigot would give the speculators the best chance of selling at the top.
If they hold too long, that is on them.
Presuming we can sell sbd as a dollar substitute, i think this plan puts more upward pressure on the price than doing nothing.
Yes, at some point, we have to change from inflating to burning, perhaps we can build that into the code.
Say when the debt ratio is too high steem are burned and when the ratio is under x% the steem from sales augments rewards?
We can make it a linear mix of the two.
I think sbd competes favorably against the dollar.
It eliminates banks, and backlash against the banksters is growing.
Even in a greenback environment sbd moves nearly instantly and without fees.
Banks would have to match that condition or lose market share.
I really like the idea of alternating burning and augmenting rewards.
Opening a spigot gives us a chance to create enough coins to compete on a global scale, and burning proceeds from sales keeps the price from dropping, while augmenting rewards puts upward pressure on sales.
My problem with crapitalism is that it is a fraud designed to impoverish workers and enrich money changers that contribute nothing to the production.
Just like it is mathematically impossible to repay the fiat debt, it is impossible for wages to buy back their product.
The way to profit from these is to exploit the ignorance of the masses.
Shameful, if you ask me.
Like taking candy from a baby.