RE: The Reports from the Witnesses 2018-03-18 by doodlebear

Viewing a response to: @timcliff/re-doodlebear-re-timcliff-re-doodlebear-re-timcliff-the-reports-from-the-witnesses-2018-03-18-20180319t150900257z

witness-category · @doodlebear · Mar 19 '18

>  The supply of SBD is based on the marketcap of STEEM.

So, it is an automatic mechanism.

>  the blockchain always treats 1 SBD as $1 USD worth of debt.

That would make the dto ratio even smaller. Right now SBD trades at about 2 US-$ from which the 22 million US-$ market cap comes, but if the system assumes a 1 US-$ price per SBD, its total market cap would be at 11 Million US-$. This results in a dto ratio of 2%. No supply increase of SBD necessary. Why then is it there - or is it not there?

👎 abusereports, ozchartart, themarkymark

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@timcliff · Mar 19 '18

SBD supply continues to increase based on the blockchain’s inflation rules. Every day (unless we are >= 5% debt level) new SBD is printed to pay for the liquid portion of author rewards.

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@doodlebear · Mar 19 '18

> SBD supply continues to increase based on the blockchain’s inflation rules.

According to the rules I found, the current situation is defined as there is no need for inflation. There should be no SBD printing. Or is there yet another place with more rules on that - or have I misunderstood the whitepaper?

>  (unless we are >= 5% debt level) 

I thought it was 10%, or are those two different figures?

What I also still don't know is what the base for the dto ratio numbers is: Is it only internal numbers that count or is it the entire external market? I imagine, there is a huge difference between the two...

👎 abusereports, ozchartart, themarkymark

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@timcliff · Mar 19 '18

No need for inflation?? That doesn’t make sense. Every thing the blockchain pays for is done through inflation.

At 2% debt level (based on the STEEM marketcap, and the supply of SBD) the blockchain will start issuing some STEEM in place of SBD for a portion of author rewards.

At 5%, the blockchain will be issuing STEEM in place of SBD for all author rewards. The transition from 0% STEEM, 100% SBD at 2% debt to 100% STEEM, 0% SBD at 5% debt is a linear transition.

At 10% debt, the blockchain starts reducing the amount of STEEM that is issued from SBD->STEEM conversions in order to preserve a maximum of 10% debt. For example if there was a 20% debt level, SBD-> STEEM conversions would only give 50 cents worth of STEEM instead of $1.

The price of STEEM is used in the calculations to determine the marketcap. The price of SBD is not used in any calculations.

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