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RE: Thoughts on a Proposal to Buy and Burn STEEM using the DAO
Just a though i had .
An alternative to using SBDs to buy and burn STEEM is for Witnesses to signal a higher STEEM price than the current market value. This approach would strategically adjust the debt ratio, prompting the printing of SBD to authors. Given that SBD is supported by few exchanges, this method minimizes the need for trust in any centralized entity. By leveraging the Witnesses' ability to influence STEEM's perceived value, we can effectively manage the SBD supply, maintain its peg, and enhance STEEM's market position without the complexities and risks associated with manual or automated burning processes.
I would advise against this. There are reasons why the blockchain demands a market price from the witnesses. For example, even if the haircut rule applies. Some blockchain mechanisms are based on this.
It would also be less transparent than selling and burning.
That method would be way easier to realize, of course, but it could be treated as market manipulation. Doing it with a DAO proposal gives investors a chance to support or stop supporting the operation at any time.
Just another thought
Signaling a higher STEEM price within our Steem blockchain's internal market by witnesses is a strategic mechanism we use to manage the debt ratio and stabilize the SBD supply. This process allows us, as authors, to get rewarded in SBD, which we often use to buy STEEM in the internal market before moving to external exchanges. By doing so, we limit the supply of STEEM until the debt ratio adjustments occur. In this scenario, witnesses can revert to the original price from exchanges and repeat the process. We don't see this as price manipulation, but rather as a way to optimize our internal market dynamics, fostering stability and resilience without directly affecting external market prices. This method ultimately benefits our entire Steem community by maintaining a sustainable model.
Yes I mentioned this as well as an idea in the past, but I think this option has many more risks in terms sentiment and trust lost in the market place. I understand that it would be done for very specific steemit circumstances but I know many will view this as disingenuous and those concerned will say what is to stop them from signaling the price at $100 (or any massively high number) to enrich themselves(authors) with SBDs?!
Right. That's a good argument. We would decide for ourselves what price we are satisfied with.
We witnesses would not only lose the trust of the market, but also that of our voters.