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RE: Thought Experiment: What would be the effect of crazy-high SBD interest?

I haven't looked into it, but why wouldn't the proposal account also earn interest?

I'm not sure, but if I remember right, it only pays interest on SBDs in "Savings". I'm assuming that the SBDs in the SPS are not held in savings.

I think ludicrous interest rates would have a tendency to make the chain look bad to outsiders

Perhaps, but I'm not sure if it would look more sketchy than our Trending page already does. And it doesn't need to be permanent. The main ideas that I wanted to explore here were: (i) the possibility of using interest rates to peel apart the interests of delegation-bot clients from the interests of the delegation-bot operators; and (ii) that I think the interest rate doesn't apply to all SBDs, just to the ones that are held in savings (which could still be wrong). But yeah, there are risks and tradeoffs to be managed.

It's not at all clear to me that the bot businesses would flow their assets from SP to SBDs, why not just maneuver the price of Steem to guarantee SBD printing and use their SP to make sure they get a big chunk of the even-more-valuable-now SBD rewards?

If they did that, at least it would be good for the price of STEEM, even if the content quality stayed the same. In general, though, I suspect that most delegation-bot clients would prefer to have entirely passive rewards.

Also, the more valuable SBDs are the more tempting it could be for someone to raid the SPS funds, and if you're right about big holders powering down to get passive interest then more cheap liquid Steem would be floating around for someone to buy up to start controlling proposal (and witness) votes.

Those are both good points that I hadn't considered, although "cheap liquid Steem" here is not consistent with "why not just maneuver the price of Steem to guarantee SBD printing". The problem of "cheap liquid STEEM" could be managed, perhaps, by increasing the rate gradually in order to spread the powerdowns out over a longer period of time.

You may also want to think about any exchanges that list SBD, they're probably large SBD holders from the chain's perspective.

Also a good point that I hadn't considered. I'm sure you're right.

In the end, there's a big range between 0 and 100. I'd just like to see witnesses considering the full range of possibilities. Maybe I'm wrong, but it doesn't feel (to me) like anyone has seriously thought about this parameter in quite some time. We have a lot of experience to suggest that 0% doesn't do much to stimulate growth, but we don't know much about what happens at other values. Even the Hive example doesn't directly compare because they've changed many of their other rules, too.

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I'm not sure, but if I remember right, it only pays interest on SBDs in "Savings"

I believe one of the Hive hardforks made it so only "savings" HBDs would earn interest, so presumably the behavior before that was that interest would apply to both savings and liquid HBDs, so I assume that's how Steem worked and still works.

Perhaps, but I'm not sure if it would look more sketchy than our Trending page already does.

I think things which are more clearly "finance related" are more likely to be considered newsworthy by the greater cryptosphere. People might not spontaneously investigate what the Trending page looks like, but information about changes in financial policy could be the stuff of news or rumors.

although "cheap liquid Steem" here is not consistent with "why not just maneuver the price of Steem to guarantee SBD printing".

Right, for this point I was assuming for the sake of argument that your hypothetical was correct (which would imply that my hypothetical from the previous point was wrong).

I believe one of the Hive hardforks made it so only "savings" HBDs would earn interest, so presumably the behavior before that was that interest would apply to both savings and liquid HBDs, so I assume that's how Steem worked and still works.

Ah, I guess you're right. I thought I remembered seeing in Steemit's wallet that interest was paid on SBDs in savings, but not on the first SBD line, but I don't see that now, so could be wrong. It looks like they've removed all references to SBD interest now.

I do see it like that in upvu's wallet:

but that could be because they cloned the code from ecency, which had migrated to Hive.

So yeah, all bets are off... Thank you for catching that. I'll have to rethink things with that change in mind.