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RE: Witness clayop Interest Rate Update
Good summary of the rules. Thanks for posting.
I would also add
Changes to the interest rate policy and/or any premiums/discounts on the STEEM/SMD conversion rate should be a slow and measured response to long-term average deviations rather than attempting to respond to short-term market conditions.
Possibly this is important to the "no interest" portion of rule 1 (I guess interest shouldn't be completely stopped just for brief rises above $1).
I don't really agree with charging a premium unless the situation is extraordinary. I think this might be failing to honor the contract to pay 1 USD worth of STEEM.
Thanks for highlighting the rule of thumb.
IMO, "extraordinary situation" means ambiguous since there is no ordinary situation in the market. Instead, as the white paper says, long-term conditions are more objective (still "long" is debatable). And my argument is also based on long-run conditions of the market.
We cannot hastily conclude that the market is strongly rising, but at least, I think we can conclude that the market conditions are not in strong downtrends. Therefore, my opinion is that we don't need the same level of discount in the previous market conditions.
True, that was purely my view, based on such a premium failing to honor the promise to convert into "1 USD worth of STEEM". It would systematically convert into less. The white paper does not give any situation where a premium would be charged, although the word premium does appear, suggesting it is possible.
This is an entirely different question from whether less discount is needed. As you know I have agreed with reducing discount.
As an aside, I don't think we can rely on @abit's conversion to measure a rate or trend. It is an outlier.
True. If we remove abit's from the calculation, the number is 12% (close to 3% per week)
3% per week is, in general, a dangerously low rate at this point. It means we can not tolerate more than one or two 50% price drops in the next 15 weeks (for perspective, we just had five) without reaching peg failure at 10%. Maybe we will get a little lucky and that won't happen, but going forward we will need a better plan (could include more aggressive action at lower debt ratios, where it is less painful, assuming we do get lucky and climb out of the current hole).
Sorry I cannot understand why "we can not tolerate more than one or two 50% price drops in the next 15 weeks" If STEEM price becomes 1/4 while SBD amount is the same, is the debt ratio around 18%? That is dangerously high number but will it trigger the black swan event?