Three Reasons Why We Should Not Support Feed Premium by clayop

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· @clayop ·
$240.51
Three Reasons Why We Should Not Support Feed Premium
There are many proposal about SBD pegging and some witnesses are supporting high feed premium to pull down SBD price toward $1. Here, I would like to provide three short reasons why we should not support high feed premium for printing lots of SBD.

* High feed premium harms converters
With 100% premium, converters will lose 50% of SBD value. One would say "They must not convert!", but there are still many conversions. IMO, feed premium proponents inform as many users as possible, and prepare a compensation plan for converters. If not, just publishing premium feed is irresponsible.

* Printing lots of SBD can be toxic when market is bearish
Printing SBD is actually printing STEEM. If we printed 20000 SBD yesrterday, it can be said that we printed $20,000 equivalent STEEM, which is about 20,000 STEEM at the current price. The thing is when STEEM price decreases 50%, 20,000 SBD will equal to 40,000 STEEM. Winter is coming (as said always), and we should keep this fact in mind.
About 6 months ago, there are many posts strongly arguing for high feed discount to convert(burn) more SBD. SBD was about 2 million but we burnt about a half of them while adding selling pressures on STEEM (Be noticed that when SBD converted to STEEM). It is easy to say print more SBD in this bullish market. But the fruit would be bitter in bearish market.

* There is no real harms with high SBD price
With high SBD price, authors must be happy because their rewards are overvalued.
The thing is about merchants. Some say broken peg prevents people to use SBD, or high SBD price gives them volatility risks. However, the answer can be simple. 1) Regard 1 SBD as $1. and 2) accept other payments too, which is very common in merchants (i.e. cash only shops are rare, visa-only shops are somewhat rare too). If merchants accept SBD as $1.5, they will add some demands for SBD towards $1.5 and it will exacerbate the peg.
High SBD price is bad only for those who buy SBD at above $1. I think they deserve it because the community's promise is 1 SBD = $1. They broke the promise due to speculative purposes and all the risks are theirs.

Thanks for reading and any comments are welcome.
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vote details (194)
@spikykevin ·
yeah it should just stay as it is , stick to the original steemit! =D
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@barvon ·
Good job @clayop
I like it ^_^
Perfect posts!!!
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@macka137 ·
It should simply stay as it is. There is little to no point in changing it. If it's not broken, don't fix it.
👍  , ,
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vote details (3)
@nicnas ·
Good way to look at it. Trying to force the link to $1 could be more harmful than beneficial. Usually when something is tethered to a currency it moves exactly equivalent to that said currency no?  So the only way to get this to happen would be the exchanged would have to be on board. I may be way wrong but just my two cents anyways.
👍  
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vote details (1)
@decentralizd ·
$0.24
Well said, I agree with your logic on the subject, while its annoying to see this happening all the time, does it really hurt anyone? Just us Zappl investors! ;] LOL JKJK
👍  
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@phrase ·
Imo Steemit is evolving everyday; if SBD is affected by Feed Premium, let's just hope we benefit enough in the Bull Market.
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@teukumukhlis ·
I believe. Always support your team.
👍  
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vote details (1)
@brakan ·
If u trust in the technology the home team will win:)
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@teukumukhlis ·
What can we do about it?
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@akiyoshi ·
I agree with you .. do not lower the price of SBD to $ 1, it just makes the market worse.
 Very good information. thanks for sharing..
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@dimarss ·
Good post @clayop! I found it interesting for myself. Follow you
👍  
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vote details (1)
@eirik ·
I agree. 

Monetary policies are solving problems only in the short-term.
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@lukestokes ·
$2.21
I agree, adjusting things in one direction is not the same thing as adjusting them in the other direction due to the systemic risk one can introduce in a bear market. We need to think longer term.

That said, I do like exploring ideas (such as reverse conversions) to put pressure on speculators not to speculate on a pegged asset. I've been running an ecommerce platform for 10 years and trying to get merchants to enable BitPay or Coinbase since 2013. They are scared of fluctuating currencies or anything new they don't understand or can't rely on. If we could offer them 1 SBD = 1 USD, they might go a very long way toward global cryptocurrency adoption. That's a really cool thing. I'd like to see a solution to enable the peg without introducing systemic risk. bitUSD is doing well, so we know it can be done.

I just posted my witness post (@lukestokes.mhth) last night, so I'm getting much more interested in these discussions. My witness is currently not adjusting the feed price.
👍  ,
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vote details (2)
@bacchist ·
$2.07
I disagree with this, however I do think that it's consistent with your general opposition to discounts.

I would push back on a couple points, though. For one, users who are converting are already losing money through the conversion process. And as I pointed out in one of my recent posts, the high price of SBD negatively impacts users who select to power up 100% of their rewards.

So it seems to me that the best way to reduce this harm is to get the SBD price down so that users don't have to have knowledge of the market prices of both tokens in order to avoid costing themselves money.

And as long as SBD is extremely high, it's essentially unusable. Merchants accepting SBD won't exist. Stability is the selling point of the currency, and if you can't buy some without the expectation of losing a third of your value, you wouldn't buy it for its utility. It would remain a speculative tool and not accomplish the goals it seeks.
👍  
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vote details (1)
@clayop ·
> For one, users who are converting are already losing money through the conversion process.

It's not losing promised money if they get around $1 value STEEM per unit 1 SBD conversion. In fact, they will get more money when they sell SBD.

>  the high price of SBD negatively impacts users who select to power up 100% of their rewards

Same perspective. Authors choosing 50/50 option get **more** while 100% power up will get as promised (1 SBD = $1)

> Merchants accepting SBD won't exist.

Here, I want to bring some questions. How many merchants exist dealing with SBD, and how much have they negatively impacted by high SBD price? Is there serious sales or profit decrease?
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@bacchist ·
I disagree on the first two points, because I am looking at it from another angle. I think it's an almost semantic argument.

But I'm not aware of many merchants dealing with SBD exclusively, primarily, or without regard for its market price. I think that it is an obstacle for adoption to have an unstable currency. This is why most people who take crypto payments convert prices according to fiat prices at the point of sale. A high SBD price brings in to question what the utility of SBD is in the first place.
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@atomrigs ·
$2.64
What is the point to have SBD in the first place? If you want to live only within the  Steem ecosystem without using any other cryptocurrencies, then it is worth to keep SBD. However, you guys already have bitshares and bitUSD. Why not exchange steem with bitUSD or something stable tokens when needing a payment method to any merchants. I could not understand why you guys reinvented the wheel while you don't give up the old wheel. Steem is a blogging system, then just focus on that goal, and make it simpler for wider user bases. Don't make it complicated with steem, steem power, steem dollar and all weird calculations. I strongly suggest just giving up SBD entirely.
👍  ,
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vote details (2)
@clayop ·
I agree and my similar idea was presented in [my previous post](https://steemit.com/steem/@clayop/toward-mass-adoption-of-steem-dollar-is-pegging-really-important)
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@businesswri ·
Wasn't the whole purpose of SBD is for advertisers to come in and rely on a stable SBD? Since it's not as volatile as Steem? or am I missing something
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@atomrigs ·
SBD seems to have a bigger ambition that that. According to the whitepaper, 
> Because stability is an important feature of successful economies, Steem Dollars were designed as an attempt to bring stability to the world of cryptocurrency and to the individuals who use the Steem network.

EOS will have another new version of dollar pegged token? I think Dan just wants to experiment a different mechanism of dollar token whenever he starts a new project. :)
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@heymattsokol ·
Steem is a lot more than a blogging system... I think it's a mistake to try and oversimplify it.
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@atomrigs ·
$0.03
Then what is it?
👍  
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vote details (1)
@bullionstackers ·
$0.21
I love my SBD.
I keep or exchange them. 
Mainly stack them up
👍  , , ,
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vote details (4)
@justtryme90 ·
>High SBD price is bad only for those who buy SBD at above $1. I think they deserve it because the community's promise is 1 SBD = $1. They broke the promise due to speculative purposes and all the risks are theirs.

Its hard to argue with this.
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@themanualbot ·
Help me verify whether a witness is a pro-feedpremium or not.
I am recasting my votes to the witnesses.
https://steemit.com/sbd/@themanualbot/i-am-not-a-witness-but-i-am-concerned-about-pulling-down-sbd-price-toward-1usd-i-will-be-removing-my-votes-to-witnesses-that
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@heymattsokol ·
It seems like in the long-term, getting SBD to peg more accurately to $1 (within accuracy of, say, 10 cents) is pretty important to facilitate certain kinds of transactions.

In the short term, if it's too destructive, it is not worth it. Your point #2, about the bear market, definitely has me worried.
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@lautenglye ·
nice...you deserve upvote and resteem...
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@muammar ·
Good job @clayob
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