This post is a call for new thinking and change of perspective on the way we view Steem Back Dollars (SBD). After Ned announcement of 70% layoff I went to bed very concerned. By nature I am an optimistic, I believe in life its important to cut corners to survive. While the decision may hurt development but its necessary if any recovery is in sight for Steem. Over the last couple weeks I have been rallying support on various telegram and discord trading group to trade Steem more. One of the challenges with convincing traders to consider Steem is the chart isn't attractive, its trend is a slow downward sloping curve. The sellers are always around the corner and the buyers are difficult to find, in fact, if you look at the data from https://coinmarketbook.cc/details/steem, Steem has one of the weakest 'Buy support' in the TOP60 coins, ranking #54. The trend is worrying because it slip from #21 all to way down the #54 at the time of writing. There is more trouble in the Steem camp as its fallen significantly in CoinMarketCap ranking, now battling to hold unto TOP50 ranking currently holding #47 at the time of writing. One can easily extrapolate from the data coming from CoinMarketCap and CoinMarketBook that breaking the Steem support only takes USD 193,673.00 worth of Steem. Given these development I am therefore proposing a new way new thinking and a change of perspective on Steem Back Dollars (SBD).
Photo Credits: lykencrypto
I start my discussion on where I stand with regard to the Steem tokens. Steem remains the most vital token within the Steem blockchain, however, its demand remains weak. One of the realities Steemian must wake up to is the model for the Steem token isn't the best, it is a model with an ever increasing supply and very little demand. Even with the best market condition the Steem token would maintain a high price for two weeks before the bears take it apart, again look at the chart. We must be honest about the situation, there isn't much real world business happening incorporating the Steem token and the infrastructure, from exchanges to merchant aren't taking bets to sustain the price. Again, let me give credit to the Steem Monsters team for their initiatives, probably its a closest model of possible avenues but it needs to translate into players going on exchanges buying Steem and getting their packs and not necessarily using their earn Steem from rewards, preferably we like situation of the first and not the latter.
My pitch for Steem Back Dollars (SBD) is the way I view it, as a "debt-instrument". I am still of the view that the 10% increase in the debt ratio wasn't the most prudent of decisions. It should be adjustment tool based on a quarterly Steem price with a Bitcoin price acting as a gauge with ratio ranging from a minimum of 3% to 7%. What you are trying to create is a liquid trade-able asset that helps anchor the Steem buy support. Essentially, you are saying, the floor for SBD is 1USD worth of Steem with potential for upside. Now you may be asking how does this help Steem, isn't more of a liability? The reality this is far from the case, debt instrument is nothing new, I like to take a page from the US monetary system, and the way US Treasury bills and notes work. One of the many things people don't realize is the 21 trillion USD debt isn't entirely a death sentence. Apart from the 1.6 trillion obligation it has for China and another 1 trillion to other sovereign governments, the greater 14 trillion in debt is held by American companies from Pension funds, mutual funds, banks, etc. They have effectively created one of the most liquid and trade-able asset with triple AAA rating. Americans are the largest beneficiaries of their own debt. I bet you did not know that, and as an added bonus, its currency is the World Reserve and Federal Reserve can print as much as it wants. The way this works for the American monetary system is to ensure that their Gross Domestic Product (GDP) or in other words the businesses (productive) of the country can sustain that given debt by government collecting the taxes from these activities.
I hope the above description helps paint the picture in your head that you now understand my trend of thought. What you want to do essentially is entice traders to take bets on SBD but with the guarantee that there is a flow of 1 USD worth of Steem. The upside, meaning above 1 USD is then used to soak up the excess Steem on the exchanges by utilizing the Steem/SBD pair on the internal exchange. While you may be raising eyebrows, this has happen in the past, again look at the charts and compare. From the Steem side of these trades, it gives those working with this system is flexibility as more and more traders take bets. This should also help soak some of the SBD and Steem from the exchanges and unto the Steem platform and Steem can better afford to sell off some of its stake at a more favorable price to take care of its financial obligation. The reason why i am fixated at keeping debt ratio at 3% to 7% is to curb the supply of both Steem and SBD, in the case of prolong market downturn trader's converting 1 USD worth of Steem does not add to excess Steem in circulation as the method above should lift Steem prices resulting in less Steem being created. What we are trying to bring is liquidity and more trade-able value into the ecosystem.
Moreover, what Steem needs now is real world business application that translate into people going on exchanges buying Steem and using it in those application. I hope Steemian understand my proposal above and as usual you can always leave a comment. Until next time Steem on