Answering: Why Am I Getting Liquid STEEM from Author Rewards?

spiritualmax (64) in steemit • 7 years ago

Hello people.

So, I bet some of you may be asking "Why Am I getting Liquid STEEM from Post Rewards?"

Well, this happened in our community's discord when @sames came forward with the interesting fact that he got SBD, STEEM and STEEM POWER - not just SBD and SP as usual.

We were baffled... but then I called the guy who always knows about this stuff - the Imperial Tax Man @eonwarped.

Eon already knew what was up, he's a smart cookie, and he knew this was a possibility documented here.

That post can be seen here!

Now, why is this happening?

Now, let's take a look at some geeky stuff to answer that question.

Here's Some Geeky Stuff: Answering the Question.

I advise you to read the post I shared above as it goes over everything in great depth, but I'm going to share that this event is happening due to the debt ration.

SBD supply: 10794352.127 
Feed price: 1.974 
STEEM supply: 265609473.061

Current numbers are for a debt ration of 10794352.127 / (1.974 * 265609473.061) = 2.05%

This means what?

It means we are now on the point of liquid STEEM printing!

SBD isn't going to be printed if STEEM doesn't go back up, and for now SBD is getting slower printing rates.

Here's an excerpt from that post I mentioned:

The main takeaway?

If the SBD's portion of the virtual supply exceeds 2 percent, we start to throttle the SBD production, and at 5 percent, SBD stops being produced altogether. (We get paid in STEEM instead).

Something we should all consider is what impact this will have.

What Impact Does This Have?

Well, the are a couple of possibilities on the table.

First of all, if STEEM goes back up then this trend will be reversed.

However, if it doesn't, the trend will continue, which could affect the prices and have an impact that is still hard to predict.

As far as I know, there are two main variables to consider...

If SBD stops being printed and people start getting paid in STEEM instead, then thanks to the fact people will still use bots who get paid in SBD, the price of SBD may rise thanks to diminished supply and increased transactions on the buy side.

This will pump the SBD price up and so you can profit from holding.

On the other hand, this also makes the price easier to manipulate by whales who may be keen on getting the SBD pegged to the USD again and keep it there, so it may actually go down even more.

In Conclusion:

It's here and it's happening... the impact isn't going to be easy to predict right now.

Let's wait a bit and see the course this will take.

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7 years ago by spiritualmax (64)

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atmosblack (63) · 7 years ago

Interesting - I never heard about that one before... Thanks for bringing this up!

$0.61

2 votes

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spiritualmax (64) · 7 years ago

No problem Atmos... yeah this is a new one for us.

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shawnvanderveer (51) · 7 years ago

I just looked at my author rewards and indeed i got paid in steem instead of steempower. It was just 0.002 steem but still xD.
For now I'm just holding no matter what happens. And lets hope for the SBD pump to come to get more steempower :D

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12 votes

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spiritualmax (64) · 7 years ago

I dont know, price is rising again...

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theuxyeti (64) · 7 years ago

same

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fitzgibbon (61) · 7 years ago

Holy crap! Thank you for that post. It showed me the way to @eonwarped, who I'm following now, because I finally understand this:

If the SBD's portion of the virtual supply exceeds 2 percent, we start to throttle the SBD production, and at 5 percent, SBD stops being produced altogether. (We get paid in STEEM instead).

I've been thinking for months now why people would buy SBD on the market at these ridiculous prices. I've seen buy orders on Bittrex for 13 USD per 1 SBD. Until today, I have concluded these buyers did simply not take the time to study or understand the way Steem works, or maybe were just blinded to the total supply at that time.

But now, I can see under what conditions SBD really becomes a limited (and thus valuable) asset.

The world makes sense again to me.

Thank you for that!

$0.37

3 votes

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eonwarped (68) · 7 years ago

Odd. I had the opposite reading of the market. I don't have much faith in their understanding of steem's internals :) . But you may know something I don't about the wisdom of the market.

Certainly around that time of 12$ SBD there was an air of "SBD to the mooooooon!" attitude. I attribute the spike to just general excitement.

One thing to keep in mind is that even if 5% of steem market cap is hit, it doesn't mean SBD will shut down forever. As the steem supply continues to grow and have value, the ratio will start to go down until it starts to produce again. In effect, the inflation rate of SBD will be rather pinned to STEEMs inflation in some way.

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fitzgibbon (61) · 7 years ago (edited)

No, but now I understand there is the possibility that the production of SBD's is capped, due to the supply exceeding a certain percentage of debt.

Capping supply while demand stays constant can lead to price jumps, so at least now, while very hypothethical and still very unlikely, I can see some sense to betting the market that way.

Previously I just thought these people were just burning away their money. Personally, I don't hold SBD's, I don't see those as an investment. And besides, SBD's don't contribute to voting power :)