No-Brainer SBD Potato Top Up Proposal

in sbdpotato •  5 months ago  (edited)


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By now you are likely familiar with the @sbdpotato project, if not please check out the intro post. In summary, the @sbdpotato project name was inspired by this image where a potato brings balance to a stack of coins.

The essence of the project is to create a sustainable cycle of purchasing SBD on the internal market using post rewards and then placing the SBD into the conversion process, converting it back to STEEM over a 3.5 day period and then repeating the process to continually remove SBD from the market and lower the debt ratio to below 10% so the rest of the community can start helping to convert without fear of loss due to the haircut rule being in effect.

Currently, there has been positive support for the project and there are regular supporters of the daily post, yielding over $90 per day towards the conversion cycle. There is circa 1,500 SBD in conversion and 7,200 SBD converted since inception.

While these figures are encouraging; they are not enough to make a dent in the debt ratio; at the time of writing BTC has dropped below 7000 USD and SBD is sitting at 0.59 USD while the STEEM price has dropped to 0.12 USD according to https://coinmarketcap.com. The current @sbdpotato funding model is going to take some time to accumulate enough funds to make a meaningful impact which is why I am proposing this proposal gets funded.

The Proposal

Daily rate: 250 SBD per day
Period: 100 days
Total: 25 000 SBD
Recipient: @sbdpotato
Purpose of Funds: To be used to support the SBD peg via a cyclical market-buy-conversion process as detailed above and in the @sbdpotato posts.

Funds Return Mandate: Once the funds are no longer required to stabilise the SBD peg to 1:1 to the USD, the funds will be returned in full to @steem.dao which makes it a "No-brainer" vote as it will, in the end, be like a return proposal.

The DAO will also benefit from the spin-off effects of a stronger SBD which means less SBD is required to fund proposals with USD costs that need to be settled.

Further Compartmentalised Funding


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Should the this proposal funding be insufficient to correct the peg in a reasonable timeframe, it is recommended that additional trusted parties, witnesses, whales, project owners etc also submit proposals for a similar value and run the open source code on a personal Heroku instance.

For example, 250K SBD in custody of a single person is significant counterparty risk; however, 25K SBD across 10 different custodians achieves the same economic effect with decentralised risk.

(Credit to @smooth for the discussion that led to the formulation of the above.)

Conclusion

It is my sincere hope this proposal will be funded and thereafter, others might make similar proposals to catalyse the repair of the SBD peg through the power of unifed community.

Sincerely,

@thecryptodrive [Witness]

Proposal Voting platforms:

https://steemitwallet.com/proposals
https://steempeak.com/proposals
https://steemproposals.com/proposal/66

Beneficiary Disclaimer: This is a 100% @sbdpotato beneficiary post.

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Voted :)
But I would prefer you to keep the funds and:

  • continue conversion if SBD drops below 1 USD again
  • sell SBDs if SBD prices goes above 1 USD

Then maybe in the future the process could be decentralized by building it into the blockchain like @steem.dao. The more systems the stablecoin has to keep the peg the better.

Thanks so much, some stakeholders would like some certainty as to what happens to the funds when they are no longer needed which is why I clarified that point. It would also be better if it was handled at chain level in future using the dao as a conduit.

Layer 1 smart contract platform wars are likely the narrative for 2020, after the SMT HF I would strongly vote for smart contract ability on Steem so that much of this could be automated at chain level and remove custodial and counterparty risk altogether, once we have a bulletproof SBD peg we can diversify into things like SBEUR and SBJPY etc, i believe there are almost 3 times as many Euro based crypto users than US, so makes sense.

Dear @thecryptodrive

It is a great proposal my good friend.

But I have a question, it will be that individually each of us can start buying SBD,
I think that can also help true .. ??

Because of the haircut rule, the conversion will likely make you a loss, also there is loss potential on the market due to slippage, so for now if you did it with your own funds while the debt ration is > 10% you likely will make a loss each time.

It would be nice to have SBD close to or at $1 again as I'd much rather pay for Steem Monster cards and packs with SBD then I would Steem as Steem has a much higher likelihood of increasing in value over a token who is supposed to be worth $1.

I mean at this point SBD is just an ongoing problem. there is no real fix to it, so instead of pumping in money/time maybe we all should think long and hard about whether steem really needs it, and if not, global settle and disable it...

It’s too risky to make a big code change to remove SBD in the next SMT HF, so we are at least a year away from being able to shed SBD if we wanted to so we may as well try fix it in the meantime. Also stablecoins have been a strong narrative in the 2019 crypto space with the advent of DeFi, multicollateral DAI etc and would be a great complement to an SMT token economy so it is worth fixing and eventually get a smartcontract managing SBD and other steem backed stablecoins at blockchain level.

Also stablecoins have been a strong narrative in the 2019 crypto space

true, but SBD never was and never will be a stablecoin

How do you know what it ever will be? There is no way to say what changes might be made in the future.

Come on man... Here is my proposal for you:

Get the witness together, convince them to donate 65k steem total from all of them (and maybe other whales too), trade it for btc, buy the sbd ask book on Bittrex.

There. You have sbd price at 1 USD.

Then do whatever with the collected and (burn, donate, I don't care)

Isn't this way easier than pledging for funds that could go to another more attractive project?

Also, it would stop the potatoe nonsense on the trending ( also a front page for steemit)

A little bit difficult to get everyone to part with their funds especially in this down economy, getting SPS funding to buy up SBD and keep converting and buying is the best solution, and keeps the posts off trending. The funds will be returned to the SPS when the peg is fixed so other projects wont lose out. Atm the fund has 200K sbd and growing and not many projects have enough votes to get funded so funds sitting there

Atm the fund has 200K sbd and growing and not many projects have enough votes to get funded so funds sitting there

That's the problem with individuals/proxies who decided to squat on the return proposal or trying to flex some muscles about their childish and ignorant views.

They think they are making a statement, but the only thing they are doing is causing those who are interested to build and vest their time to become disinterested.

If stakeholders feel things like a public node are not worth funding, then they deserve a failed ecosystem. But hey, not like some of them with millions of SP actually know what the hell they are anyways.

Some of them still think they are invested in Steemit after 3+ years.

Yip the return proposal has too much support, I agree with you there. People being penny wise and pound foolish. Ridiculous how @anyx can't even get his $15 per day proposal funded for key infra that most apps actually use. When the anyx node is down half of Steem is down.

Don't worry when I get the sbdpotato project stabilised and at a point where it needs to be, I will go on a crusade against that return proposal. One thing at a time, I don't have the personal bandwidth for everything.

Then I guess they aren't as worried with the Steem economic health as they claim to be?

Steem/SBD ratio is working as intended, and the whole problem with this potato initiative is that it doesn't have any real effect.

Here is a scenario for you:

Let's suppose you get the funds to buy the sbd form the market, and the price goes up to 1 USD.

Now sbd start to be printed again, and supply increase. A few months later, sbd price start to go down again because there is no demand for it, because no one have an actual use for it.

Then what? Ask for more funds to manipulate the market again, and again and again?

The result of this way of action is that sbd will always be a shitty coin that everybody will now know that prices are being periodically manipulated.

It doesnt work, and worst of all, don't increase the value of the ecosystem.

There is only one solution for this "problem": increase demand in a real and meaningful way.

Instead of looking for Band-Aids, those involved on the development of the blockchain and its tokens should look to improve it in a way that attracts more people to it.

I have been using steem for a long time now, and it is sad to see a platform with so much potential go down the drain because of petty disputes over rewards value.

Guess what? If no one cares about steem, its value will be zero...

I had only skimmed on this one, wasn't going to support it as i think it might not work, but since you mentioned a refund policy and the numbers are large enough to at least try (and you mentioned splitting in pieces to decentralize), in the near future the strength would be to keep it down, i doubt that you can but it might work, or else only a change in the code / inflation probably.
Speaking without much technical or economical knowledge.

if you look at the latest post https://steemit.com/sbdpotato/@sbdpotato/sbd-potato-2020-01-21-11579645250790 we have already converted 20K SBD and this figure grows exponentially every day.

That is great news to sbd potato. Thanks for this updates

Thanks for your support!

Potato? Even the name itself is a joke.


Posted via Steemleo | A Decentralized Community for Investors

The names Google and Yahoo are a joke as well, that’s the point it is supposed to be memorable.

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Maybe I'm missing something, but by converting the SBD to STEEM aren't you just inflating the STEEM supply which should (in theory) decrease the price to counteract the decrease in SBD supply?

Wouldn't it be better to burn the SBD instead?

Burning SBD is too slow at the available funding rates, even if this proposal was fully funded, only 25K SBD would be burned which won’t make a dent.

By cycling the funds through conversion and market buy action, the same funds can used to reduce SBD through conversion every 3.5 days and have a proper impact on SBD supply reduction.

Remember the STEEM marcap is roughly 7 times larger than the SBD marcap so the impact on Steem should theoretically be 7 times less.

This is all done incrementally so the Steem market should be able to absorb it and it can be throttled/stopped at any time should it affect the Steem price too much.

  ·  5 months ago (edited)

"Too slow" is a bit subjective but it is certainly the case that paying out SBD from the DAO and then burning them can't possibly do anything to reduce the supply of SBD that is already in circulation, since it uses newly-created SBD from the DAO. All this does, in effect, is reduce the inflation allocated to the DAO.

  ·  5 months ago (edited)

The inflation comes from the processes that create the SBD in the first place, which is either funding the DAO or paying post rewards (when the ratio is low enough). Converting SBD to STEEM doesn't create inflation, it just changes it from one form (claim on STEEM) to another (actual STEEM). The inflation is already there, inherent in the very concept of funding things out of thin air.

If you don't like inflation then get rid of the latter (although it probably can't be completely eliminated since some witness pay probably has to come out of thin air, but it could be a lot smaller).

(FWIW I know you are in favor of this to a certain extent. I'm just commenting on the mechanisms. As long as SBD is created, via inflation in this case, it also has to be destroyed unless the STEEM value grows even faster, which arguably may happen long term–that is the premise behind inflationary rewards allegedly being a good idea–but certainly does not and happen and has not happened consistently.)

I think Matt may have mean’t increasing the supply of Steem on the market and placing selling pressure on the STEEM price as a result. I fully agree with you that the STEEM inflation was already there, however it was locked up in SBD and not in circulation.

Long-term we may have to consider whether current inflation sources are warranted, but imo we still some ways away from being at that stage.

Yes I understand the point. But my point is that even SBD that is removed from supply is also reducing an overhang to the STEEM market, so there is a clear offsetting benefit. For every 1 STEEM added to circulating supply, there is 1 STEEM removed from the potential supply of SBD that could be converted. SBD isn't really "locked" (except the small portion within the DAO), it is available to be converted at any time.

The 'debt' analogy isn't perfect but it works to some extent. When you pay off debt, your financial situation improves because you have less debt, even if you have to use up some of your cash/assets to do it. Unless you started out insolvent, the more debt you pay off the lower your debt ratio becomes. It is the literal inverse of taking out more debt to buy assets.

Fully agree that reducing debt is a financially healthy concept. We are on the same page.

I understand how the inflation works, I just mean that converting the SBD to STEEM adds more liquid STEEM to the system which may be sold and reduce the market price of STEEM thereby nullifying any increase in the SBD market price from the reduced supply.

So I don't really think this whole conversion scheme really works and the only way to really make an impact would be to burn the SBD.

  ·  5 months ago (edited)

Mathematically what you wrote in the first paragraph simply doesn't work out. An informal proof: The supply of SBD has to decrease faster than the market price of STEEM, in part because if the price of STEEM did decline, the conversion rate would also decline (you get less value in STEEM for each unit of SBD; the haircut rule). Eventually, if SBD keeps getting converted, this has to result in reaching a state where all of the SBD is used up, and there is no SBD in circulation. (Of course sbdpotato would likely stop first, because SBD reaches $1, but that's okay, it means the amount of liquid STEEM added to circulation is less than it would be in the limit.)

In reality I'm pretty sure that there are multiple factors influencing the STEEM price and it isn't guaranteed to decline just because SBD is converted, as loosely assumed in the above example. It is absolutely possible for the price of STEEM to go up even as SBD is being converted, which would make the conversions even more effective. But even in the worst case, it does have to work.

Ok that makes sense...I didn't really think about it too deeply. I like the SBD potato idea, but I don't like taking funds from the Steem DAO to do it since I think there's a better chance of getting SBD to $1 by using those funds to help build good projects that encourage people to buy/hold STEEM.

In any event, I have another idea to help get the price of SBD up that I think might make more of an impact.

  ·  5 months ago (edited)

Definitely room for different ideas and approaches, and nothing wrong with disagreeing on a particular usage of DAO funds, that's sort of the whole idea of the DAO. I'm not personally sure it is the best possible use for DAO funds, but currently a lot of DAO funds are unused, the idea here is for a good portion of the funds to eventually be returned, and increasing the value of SBD actually increases the market value of the DAO treasury (so more funds available to fund the sorts of good projects you describe). So I personally see it as a reasonable use at this time. If there were more immediate contention for DAO funding then I might feel differently.

So I support your disagreement, even if we disagree. ;)

The DAO funds are largely unused at the moment so I don’t think it is a bad use case for them especially since they will be sent back after. At anytime should the DAO start to look short on funds I would be happy to send it back sooner. Also remember Steemit promised to donate some funds to the dao which is yet to be done.

I think longterm it brings nothing, because the market doesnt see SBD at 1$ otherwise it would be 1$.

And what is if Steem Pumps to XX$, then we print a lot of SBD again.

So what is the benefit of it?

I think SBD cant be abuse save so it should fixed or removed.

I do agree that SBD needs to either be fixed or removed, leaving as is in a broken state is stupid. if steem prints alot of SBD then sbdpotato just needs to keep doing its thing converting the SBD and getting rid of it.

The market doesn't believe SBD is $1 because there is no monetary policy committee behind SBD trying to help peg that, there is no smart contract like the dai or any dollar backed bank account like Tether, SBD is largely just left and not managed in any way and we expect it to be pegged with no effort. sbdpotato aims to change this and bring about some human intervention and governance to fix the peg.

The market doesn't believe SBD is $1 because there is no monetary policy committee behind SBD trying to help peg that, there is no smart contract like the dai or any dollar backed bank account like Tether, SBD is largely just left and not managed in any way and we expect it to be pegged with no effort

smart contract i think is the right solution. If the Blockchain itself fix the Problem and exchange, that would be better.

Is it possible we replace SBD code with a dai copy for steem? because i think dai works way better.

That would be a great proposal i would support :)

I think that the intention of this initiative is commendable however it is a drop in an ocean and it will not even make a scratch. At the current prices we need to burn 2.5 million SBD so it would take this proposal 10 thousand days to achive it's goal...that is 27.4 years. Assuming we multiply this effort by 10 it would still take almost 3 years to do it.

With the current inflation rate the blockchain is producing about 30 million steem per year. That has a value of 3.9 million USD or 6 million SBD (at a price of 0.13 for steem and 0.65 for sbd). So burning 2.5 million SBD means that we would need to re-route 42% of the inflation to this. That equals to 100% of the author rewards for 1.2 years.

That is not even considering that with the last HF there is nothing stopping the printing of SBD. The whole SBD pegging mechanism is FUBAR.

The only realistic way that SBD will be worth ~1 USD is if Steem is at least 0.20 USD again. Doing conversions is not good because the market sees that the inflation rate skyrockets and the price will reflect that.

Going forward we need to make sure that the code does not issue SBD via author rewards since the SPS already takes up 10% of the inflation and that triggers the haircut rule faster than normal...In addition we should make sure that there is a mechanism in place that stops printing SBD via the SPS. Maybe have a hardcoded rule that buys SBD from the internal market instead of printing more SBD...or we just live with the fact that SBD will no longer be worth about 1 USD.

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  ·  5 months ago (edited)

@thecryptodrive i think you should make a proposal to rewrite code of SBD and make it like a copy of DAI.

Remove the SBD in payouts and add them as real 1$ value.

It is also way more scalable and it add more internal trading Volume to the market.

The point is if SBD comes only from Rewards, it cant scale. If you can look up Steem for real 1$SBD it is way better and stabilize the price too.

It also would be awesome to trade a real 1$ SBD with SMTs and Steem Engine Tokens.

If more 1$SBD needed there can be fast "prited" via look up.

So we should stop wasting Time and make SBD usefull.

Edit:

It is also more abuse save because if it use the same mechanic the inflation cant go higher and SBD has no impact on it.

approved, but this is a rather resource intensive way to do it... why not an exchange that exchanges 1:1 sbd with the stellar USD tether, and create and anchor for the steem as well... then people who do triangular trading would raise the value of sbd while making money of it... plus it would make the steem fiat conversion cheaper if a stellar steem link existed...

So what's the plan for this?

Funds Return Mandate: Once the funds are no longer required to stabilise the SBD peg to 1:1 to the USD, the funds will be returned in full to @steem.dao which makes it a "No-brainer" vote as it will, in the end, be like a return proposal.

Personally i don't see the benefit of SBD shooting way above $1 either and with such low supply SBD could be easily manipulated now perhaps?

In any case it's not like you have to return the funds right now but does the proposal need to still be voted in your opinion?

Hi @jarvie in the SBD channel in Slack we decided we would wait until end of Feb in case the market drops again. At which point I will return the funds if no longer needed. The proposal can still be voted to build up reserves until then incase the funds are needed, the more funds in place the quicker we can recover the peg.

I also don't want SBD to shoot too much over 1 USD; this proposal by @smooth would help peg on the upside https://steemit.com/steem/@smooth/steem-improvement-proposal-allow-steem-donations-to-the-dao

Please just build and required % burn into the rewards payout. So if someone chooses the 100% STEEMPOWER option the payout would actualy be 95% STEEMPOWER and 5% (if 5% is the decided amount) goes to Null. If someone chooses the 50/50 Option, then the payout would look like 45% SBD and 45% SP with 5% SBD going to SBD Potato or other SBD Entity and 5%SP to Null.

Yes, I know these can be set manually however this just needs to be built into the rewards pool directly as default and if someone wants to increase the amount they can.

As of right now the Mr. Potato Head posts do actually look like "no brainers", are recycled content with no Proof of Brain , set a very bad example for new and veteran users alike (especially with voting the "additional comments") and look terrible cluttering the trending page.

With a built in burn on all rewards, these types of posts would not be necessary and then the votes on these posts could go to minnows and actually keep some retention and will fix STEEM organically.

The problem is you can’t force people to burn, it is voluntary, and currently rewards are paid in Steem so will only be burning Steem, won’t address the issue of burning SBD. The think is the existing SBD supply is too high in relation to the Steem marcap so we need to get rid of some of the existing SBD excess, a burn tax on new emissions won’t solve that.

I understand at the moment burn is voluntary, but that's what hardforks are for.

Also, maybe I have a different version of STEEM but I see an option to take rewards as 100% Steempower or 50% SBD and 50% Steempower when I create a post. Am I wrong about this?

Why is it impossible to adjust the payout structure by adding @null as a non optional beneficiary on the next hardfork? In fact, there should also be the ability to increase the amount on top of the mandatory burn.

So Again, using 5% as a possible figure the rewards payout would be

95% to be split between author and curators and 5% to null upon post payout.

In regards to the SBD payout option , same thing as above but it will go to wherever it would need to go to get pegged (lol, this term makes me laugh).

An easier way would just be reduce the inflation by 5%, atm this next HF is full loaded with SMT changes and Steemit inc doesnt want to change too much else. Will have to wait for next next HF, the 50% sbd payout is not technically correct anymore, due to the oversupply of SBD, the blockchain is only printing Steem now, so effectively 50% liquid steem 50% SP

ok, I see. The inflation reduction also sounds like a very reasonable and easy fix. Lets hope it does get adjusted somehow in the next HF!
!