Attention SBD Converters: Please Read - Important Information about SBD -> STEEM Conversions
Users are advised to NOT convert SBD to STEEM at this time
Users should not convert convert SBD to STEEM using the 3.5 day conversion unless they have reviewed the market conditions carefully, and know what they are doing.
SBD is currently trading for more than $1 USD worth of Bitcoin / STEEM.
What that means is that you are better off using the internal Currency Market to trade your SBD for STEEM. You will get more STEEM per SBD this way, since SBD is trading for more than a dollar.
An alternate option (if you know what you are doing) is to use an exchange like BlockTrades, Poloniex, or Bittrex to trade the SBD for BTC.
Many witnesses are starting to adjust their price feeds to inflate the price of STEEM.
The intention of this is to temporally increase payouts / SBD generation, since they are currently artificially low due to the rewards pool changes in HF 18.
As more witnesses adopt a premium, the amount of STEEM that SBD conversions produce will decrease. It is possible/likely that under these conditions, SBD conversions will pay out less than $1 USD worth of STEEM.
Payout is declined on this post. Please resteem for visibility.
Why are witnesses setting the price? It's supposed to be dictated by the free market, otherwise we are not better than the fed...
'In effect, feed producers are entrusted with the responsibility of setting monetary policy for the purpose of maintaining a stable peg to the USD' (Steem White Paper, p.14). SBD is not supposed to be priced by the free market. The purpose of the token is to have its price manipulated by both the autonomous mechanisms of the blockchain and witness inputs so as to maintain a stable value relationship with (the also manipulated) USD. That offers more utility to users who live in a fiat-dominated world. If and when such a world ceases to exist, then such manipulation will have no value, but for now it has great value. @timcliff's point about there being no value in treating arbitrary and aburpt supply changes due to obscure blockchain factors such as the change to a 30-day reward pool as being meaningful to 'free market' pricing is also a good one. Our job is to support the utility of SBD by maintaining the 1-1 peg (within reason). It is not to abandon the peg and defer to free market pricing.
But it is.
@timcliff 's last response
So the purpose of the price feed is to produce more or less SBD in order to lower/increase SBD price if too high/low. Witnesses can influence the price but ultimately the free market decides what the price is.
Good questions / answers. Upvoted with @adm for visibility.
The purpose of SBD is to be a pegged asset. The free market should dictate the price of STEEM.
SBD is also dictated by the free market.Did witnesses chose to pump SBD recently? Nope, it's the free market that did it.I don't see the point of the price feed
The HF 18 conditions of reduced rewards are not a natural market condition.
What do you mean?
Because of HF 18, the payouts are all artificially low right now because the 30 day rewards pool is being 'filled'.
I don't see how this is relevant to witnesses setting price feed...
When witnesses artificially inflate the price of STEEM via their price feed, it causes the amount of SBD rewards that are available for post rewards to go up.
Do you mean that the price of steem on the internal market is based on witnesses price feed? If yes, then the price of STEEM is not dictated by the free market.
No, the price on the internal market is based on whatever market participants are willing to buy/sell at.
The blockchain has it's own internal price, which is different than the internal market price. The blockchain price is used to determine the amount of STEEM that SBD conversions produce, as well as how much SBD to pay out for author rewards. This price is set by the witness price feeds.
The conversions between STEEM and SBD happen on the internal market and are based on the price of STEEM which would mean that the price of STEEM on internal market is set by witnesses. Are there other internal conversions that I'm not aware of?
I think you are confused. There are two completely separate prices:
Price 1: The internal market price, set by the buying and selling of STEEM/SBD.
Price 2: The internal blockchain price, set by the witnesses price feeds.
There is also a difference between "converting" SBD to STEEM (done through the wallet, and takes 3.5 days), and "trading/exchanging" SBD for STEEM (done through the internal market, or through an external exchange).
Thanks for clearing this up for me. Just to make sure I understood properly, the STEEM price set by witnesses has no influence on STEEM market price, it is just an internal price to do conversions correct?
Yes, that is correct.
there was time when SBD was trading on 1,7 USD few days ago, now its not that far from usual 1 USD +/- 10%.
sure feeds need updating but there was better times to sell SBD for crazy profits ;)
Indeed. Holding and hoping for another spike might not be a horrible idea either :) The main thing though is converting to STEEM via the wallet conversion is not a good idea at this time, because it will give you less than you would get from trading.
Oh nooo! I wish I had read this in time, I'm going to lose an arm on this conversion now:
:P
Also you shouldn't convert when the coinmarketcap price of SBD is over $1. That's a good time to sell instead.
SBD a few days ago it wasn't 1,7 USD, it was almost 7 USD! I'm not going to lie, but I sold 50 SBD for 250 USD! 5 times more!
Thanks for posting this, I think it is very useful ... success always for @timcliff....
Thanks for the heads up. You always have very useful and valuable information. You got my witness vote.
Thanks @jrcornel :)
Thanks for the information Tim! Also, would you happen to know when the steemit announcement is going to be made?
Welcome. Do you mean this one?
https://steemit.com/marketing/@steemitblog/marketing-w-mitchell-a-steem-ecosystem
I think it was already made. Try the tag #steemitblog
I clicked on that, and the only thing there was from 29 days ago, lol
If you're referring to this: https://steemit.com/steem/@steemitblog/important-notification
I've already seen it. I was told they were putting out a more in depth announcement today.
https://steemit.com/marketing/@steemitblog/marketing-w-mitchell-a-steem-ecosystem
not sure why it didn't show up on the tag. :)
Resteemed!
Many thanks sir @timcliff for the valuable information, always accurate and accurate, I appreciate what you do for the platform and the community.
Thanks @jlufer :)
Thumbs up and thank you for the explanation!
Thanks, resteemed.
Thank you Tim! You're aces.
:D