RE: How does Steem's virtual supply behave when STEEM is priced above the haircut threshold?
Thanks for the new input on Steemonomics. I've now had time to look at it in more detail.
I would confirm your observations.
I also found it astonishing why the virtual supply decreases by a maximum of 10%. However, if you consider the term 1 / x with x = steem_price, the limit for x → ∞ is equal to 0 (it's a pity we can't use LaTeX). This leads to your observation that in this case only the first summand of equation 1 has an influence on the virtual supply.
I assume that the maximum reduction of 10% results from the haircut rule, which defines that the debt ratio may not exceed 10%. If the debt ratio were to be increased with a hard fork, a larger reduction would be possible. But what would happen to the haircut threshold then?
The first reduces the
virtual_supplyand the second increases it. I would have presumed those changes would offset each other.
At first, I thought that we had already clarified the effects. But when I looked for your post on this topic, I noticed that we had only dealt with this below the haircut threshold.
However, a sample calculation showed that even here, with the price unchanged (above the haircut threshold), the virtual_supply does not change. This is also immediately apparent, as the changes to the STEEM supply and the SBD supply each depend on the current (unchanged) price.
However, this actually reduces the haircut threshold. In this respect, I think your assumptions are correct and behave in the same way as below the haircut threshold.
I just thought of an example of your second case (lower SBD supply):
If we did a hard fork to take the SBD in the DAO out of the debt calculation, it would have the same effect you showed.
I agree. The haircut rule creates a 10% buffer above the
current_supplythat can be filled with SBD debt, and that's the only space wherevirtual_supplyis eligible for reduction.I guess the behavior after such a hardfork would also depend on other parameters, too. If it were just linear scaling like we have now, then I guess it would be more or less the same, just with the new cap. I haven't kept up with Hive, but I have the impression that they made some additional changes besides just increasing the max debt ratio. If we were to implement more complicated changes like that, I think it would probably need a whole new/different analysis.
True. I agree. It lowers the haircut price, but if the actual price is unchanged, then the lower haircut price doesn't matter for calculating the
virtual_supply. By lowering the 80% threshold, it would move the reduction percentage to the right on the curve, which just means that thevirtual_supplywould be less sensitive to future price changes.Yeah, that's a far more realistic example than the one I used. It might actually be useful to think about implementing that. I guess it would knock the haircut price down by more than 50%, and it's probably justifiable, since those SBDs are all locked up, indefinitely.
0.00 SBD,
4.44 STEEM,
4.44 SP
Yes, they have definitely made changes. I have seen that the start and stop thresholds are now 20% there. So there is no longer an intermediate range. However, I do not know whether there are any further changes in relation to economic aspects.
Ah, yes, I see.
I think too. That's something I would shortlist for a hardfork.
0.00 SBD,
0.21 STEEM,
0.21 SP