Symbiont{s} | ECOBURN | SBD Price Regulation Experiment
Thriving Through a Symbiotic Equilibrium
SBD Price Regulation Experiment
Greetings,
In recent months, Steem witnesses have been actively engaged in developing strategies to stabilize the price of SBD at its intended peg of 1 USD. A secure multi-signature mechanism was proposed and implemented, designed to apply downward pressure on the price of SBD in an effort to maintain stability by using funds from the DAO treasury. However, these efforts were significantly impacted when UPBIT (a prominent Korean cryptocurrency exchange) issued an Investment Warning for SBD on 2024.12.30, citing several concerns. Following the conclusion of their review period, the exchange proceeded with the Termination of Market Support for SBD on 2025.01.13.
Although various speculations emerged regarding the true motivation behind the delisting, the most immediate consequence was a dramatic drop in the price of SBD from over 5 USD to approximately 0.75 USD. This sharp decline triggered a significant increase in SBD-to-STEEM conversion requests on the Steem blockchain. As a result, many users came to realize they were receiving fewer STEEM tokens than expected, primarily due to the effects of token dilution and reward depreciation.
In response, we have introduced @ecoburn, a small-scale experimental initiative aimed at positively influencing the price of SBD by creating consistent buy pressure to move it closer to its intended peg and doing some price correction in the internal market. The objective of this experiment is straightforward:
- Generate daily posts and comments that community members can support through voting.
- Use all curation and author rewards to purchase SBD on the internal market at a defined price.
- Convert the acquired SBD into STEEM using the blockchain’s native conversion mechanism.
- Repeat the cycle.
Community Involvement
Community members, especially large stakeholders, are encouraged to participate by voting on the daily posts published by @ecoburn. There is no inherent risk, as voters will still receive their curation rewards as usual, and all assets will eventually be burned.
Strategic Considerations
This initiative represents only one aspect of a broader approach. Successfully maintaining the SBD peg will require complementary mechanisms to address scenarios where the price is either above or below the 1 USD target. Our hope is that this experiment will contribute meaningfully to the long-term development of such solutions, ideally supported, secured, and maintained by committed Steem witnesses.
Projected Impact
Even under optimistic theoretical projections, the amount generated from author rewards alone is unlikely to make a significant impact on the market unless substantial rewards are consistently generated. Nonetheless, it serves as a valuable testbed for exploring technical mechanisms for SBD stabilization.
Asset Handling Policy
In the event that the experiment is discontinued for any reason, all remaining assets held by @ecoburn will be permanently destroyed by transferring them to @null or donated to @steem.dao.
Operational Rules
To ensure transparency and integrity, the following rules have been established:
Thank you,
The Symbionts Team,
I think you're looking at this the wrong way and/or trying to solve the wrong problem. The chain already has a mechanism for "fixing" the "the SBD price is too low" problem, it's the conversion mechanism. People can buy SBDs to convert them, this naturally causes the price to increase through the magic of distributed profit-seeking, there's no centralized mechanism required. This works fine as long as the price of SBDs doesn't get stuck above the haircut price. What the economy needs is not more people trying to drive up the price of SBDs, it's for SBDs to flow enough for the actual mechanisms to operate.
What you are proposing is technically correct.
The truth is that since March 24, 2016, the SBD peg has never been consistently maintained, despite numerous experimental initiatives aimed at stabilizing its value from going up and down, as the conversion features alone proved to insufficient due to several factors. We also agree on the necessity of moving away from centralized solutions. There have been clever suggestions involving the DAO, such as using multiple proposals labeled as "X" and "Y," which would trigger a "Z" actions once a certain return threshold is reached to regulate the price of SBD. This approach represents a more decentralized and autonomous system. Other solutions have been suggested as well, but they all ultimately point toward the need for changes to the blockchain itself. Implementing such changes would require forks.
Clearly, there are inherent flaws that have prevented SBD from fulfilling its intended role. A broader reason for this failure is that its development has been largely neglected in favor of more pressing priorities in the past. However, if the goal is to achieve an autonomous and self-sustaining process, meaningful work will eventually need to be done at the blockchain level. Aside from that, the only alternative that could have a tangible impact is to artificially influence the price to maintain a possible peg (and securing the process with multi sig) and actually have a median price that makes sense.
Thank you for passing by and sharing your thoughts, @danmaruschak.
Because there's no intrinsic mechanism on the top side I think you need to talk about "above" and "below" differently (especially because some people have believed that a price above $1 is good, and some manipulations may have been pursued with that philosophy in mind). How much time has it been below the haircut price?
Don't try to force the price up, if you want to do anything try to get it under the haircut price so the "thermostat" mechanism of conversions can work.
IMO, the decisionmakers let the perfect be the enemy of the good by demanding bots and multi-sig when the "use DAO SBDs to buy-and-burn Steem" idea was on the table. In the fiat economy teenagers are routinely trusted to handle hundreds of dollars of cash in retail establishments, an individual account (or several) could have done manual buy-and-burns with DAO funding (at least as a stopgap) and been monitored and have their funding cut off if they weren't doing the job.
Yes, some additional features would be nice, and the difficulty of getting a hardfork to happen are a big barrier to that. But I think the larger issue is mostly economic: by design SBD is a "smaller" coin than Steem, so it's more vulnerable to manipulation. When a nontrivial segment of the crypto ecosystem believes that manipulations, pump-and-dumps, etc., are what crypto coins are for then it's going to be hard to insulate SBDs from that. The real solution to maintain SBDs at around 1 USD would be to have them be involved in a goods-and-services economy with prices that treat SBDs as equivalent to USDs. Easier said than done, of course.
In the past? It is hard to say, as there is currently no straightforward way to extract and analyze historical data. Maybe we should start tracking such data, as having the tools to analyze economic patterns is an underexplored area by developers.
There were discussions in the past regarding the implementation of bidirectional conversion, but it was never implemented.
Several witnesses and stakeholders have expressed opposition to the idea of a buy-and-burn approach using the DAO, and we can understand their concerns. If the goal is to reduce the debt ratio by removing SBD from circulation, the most transparent way to do so based on DAO usage is to send the SBD directly to @null, or to convert it to STEEM. Then send the resulting STEEM to @null. @null. Both of which achieve the same outcome.
Buying STEEM, on the other hand, could artificially raise its price without actual demand, which introduces ethical concerns and fairness issues, especially for external holders. A similar situation occurred when SBD traded above 5 USD, raising discussions on how to communicate risks and expectations to individuals who entered the market at those elevated prices and were likely to incur significant losses. Some even believe that this is what caused the SBD to be delisted from UPBIT considering that some witnesses were vocal about it. But in truth, we will never know for sure.
Another proposed complementary solution that was never implemented is to modify the code so that the treasury fund is excluded from the inflation calculation. Only SBD actively circulating in the market would be considered, which could offer a more accurate representation of the real debt burden on the system.
PS: Both of the mentioned solutions that we did no implement are already implemented on a competing chain and are playing a role in maintaining their peg. A case study to check.
Right now, with haircut pricing in effect, SBDs are pegged almost exactly where we'd expect them.
That's the value that the blockchain is paying for conversions: $0.79.
The external SBD price (reported by @coingecko) is $0.80.
Edited to add: I've been checking this, periodically, since the February delisting, and it has rarely drifted far from the expected value.
IMO, the only way to get the price back to $1 is to get the STEEM price over the haircut threshold. Otherwise, arbitragers will just keep pushing it down.
Also, not a slight against you, but I've seen too many initiatives over the years where someone says "vote for my posts so I can build a war chest to accomplish X", but then a couple of years down the road, the funds are used for some totally different purpose (see @sbdpotato or @crowdfundedwhale). If you want to do this, you should just set the beneficiary to 100% for null, so nobody has to trust you.
Currently, the SBD price is getting closer to the $1 peg; however, market depth remains very low, which makes it susceptible to significant fluctuations. Historical data indicate that market uncertainty within certain ranges invariably undermines arbitrage opportunities and discourages participation. This phenomenon helps explain why the SBD price has consistently remained within a narrowband around its peg regardless of the haircut value.
As the saying goes, code is law. We agree that all mechanisms should operate under a decentralized governance system. What happened with the accounts you mentioned clearly demonstrates that social or community-based agreements do not possess true immutability and can easily drift away from their original purpose. We actually had the opportunity and were able to nullify some negative effects after the Hive split, but it is clearly a path that we should never take again in the first place.
We are in a position where any misuse would result in a much larger loss than if we simply pocketed the fund. While we are not expecting significant support, our goal is to limit funding to a theoretical level calculated to absorb enough value to positively influence the price over a period of 3.5 days. Any excess funds would be burned.
Great idea! I will support this.