Why Payments In SBD Stopped

3년 전

The economics of the STEEM blockchain are quite complex. The fact that there are two currencies on it (well, one is just a smart contract, if you want, and I'm talking about SBD) doesn't make things easier, on the contrary.

As you probably saw already, payments in SBD declined in the last few weeks, and now they stopped entirely. Rewards are paid exclusively in STEEM / Steem Power.

But why is that?

Well, it's all written in the code, my friend.

Let me try to explain this thing.

The Magic Concept Is "Debt To Ownership Ratio"

As you know, the STEEM blockchain produces STEEM tokens, the basic currency of the ecosystem. But it also "prints" SBD, which are tokens intended to be pegged to $1. They are pegged to "$1 worth of STEEM", though, not directly to USD (meaning there is no cold storage of USD backing this supply).

Because of this, SBD is basically a debt instrument.

So, the ratio between the circulating SBD and the circulating STEEM is called "debt to ownership ratio".

This is may be also written as: SBD amount / STEEM market cap.

And there are some constraints to it in the code.

It goes like this:

  • if the debt is under 2%, printing rate is 100% SBD
  • if the debt is over 5%, printing rate is 0% SBD
  • if it's between 2% and 5%, the printing rate is: 100% * ( 5 - debt)/3

So if the debt to ownership ratio is over 5%, the blockchain stops printing SBD entirely. This is the case now.

If the debt to ownership ratio is under 2%, printing rate is 100% - that was happening when rewards were paid entirely in SBD / Steem Power.

For the last weeks the debt to ownership ratio has been increasing (hence the printing rate has been constantly decreasing, getting to a halt). This constant increase was a means to control the SBD price: by increasing the supply, the price naturally went down. If you wonder, this increase is controlled by witnesses, via their price feed biases.

As the STEEM supply increases, the debt to ownership will go down, hence we will see SBD printed again, at some point.

Hope this make things clearer.

Steem on!

I'm a serial entrepreneur, blogger and ultrarunner. You can find me mainly on my blog at Dragos Roua where I write about productivity, business, relationships and running. Here on Steemit you may stay updated by following me @dragosroua.

Dragos Roua

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will this effect the price of steem in anyway

Great job explaining it in such a simple way.

Thank you and take care @dragosroua !

I just read this post at four days old. I have been trying to figure out why SBD stopped, and this cleared up the mystery.....
Thank You!

Hope this make things clearer.

Oh, I so wish it did..

I love what you write really.
Steemit without you is as student without teacher.
Thank you

Hey, @dragosroua.

Thank you for taking the time to explain the complex in a more simpler way.

Now, with one of the changes coming now in HF 20 being a raising of that 5% ratio to 9%, the printing of SBD will basically print until it reaches 10%, where it currently cannot pass, right?

In your opinion, how much of a chance is there that the 10% debt to ownership ratio will continue to stand? I'm understanding these changes are coming about because of market forces, along with a discovery that the way the code is currently written, if the debt ratio falls between 5-10%, SBD does nothing. It's neither created or destroyed.

This is good. Helps a lot. HF20 includes some changes to that though, right?
Are we getting some sort of protection against a mooning SBD?

Under the new rules, SBD tokens will continue to be printed unless/until the debt ratio reaches 9% of the STEEM market cap. Between 9% and 10%, liquid payouts will shift linearly from paying 100% SBD and 0% STEEM at 9%, to paying 0% SBD and 100% STEEM at 10%. This works the same as the shift that occurs today between 2% and 5%.


You are mistaken, SBD stability is much more precious to the ecosystem than a mooning SBD

THANKS @dragosroua resteemed hopefully others will share also


You're welcome.

thanks for the update, is the same amount of rewards always produced whether in SBD or STEEM?

well quite complicated thing to understand but works well in these conditions for the platform

Thanks for the explaination. So is this actually a good thing for the price of Steem or not? Especially I'm asking if this does affect the profit when using bidbots. Thanks.

Posted using Partiko Android

Let me see if I get this straight.

Upvotes generate "claims" against the reward pool.

What's in the reward pool (and will thus be transferred to the upvoted posts and comments) is a mix of steem and SBD.

How is the composition of this mix calculated ?

I imagine the "smart contract" you mention looks first at the price feeds provided by the witnesses and averages them (all the active witnesses ? simple average of the ~140 price feeds of active witnesses ? or weighted average ?)

Now imagine the average price feed is 0.94 SBD to 1 STEEM

The total supply of SBD is 15 685 205. Circulating supply of STEEM is 274 725 189 and total supply is 291 699 283 (according to CoinmarketCap).

The smart contract calculates (15685205 * 0.94) / the supply of steem. If it uses "circulating supply", the ratio is 5.3%. If it uses total supply, the ratio is 5.05% (both cases it's above 5%, but which one is used?)

Therefore, it creates no SBD and only STEEM goes into the reward pool.

Is that correct ?

I'm not sure how the "bias" is used - given the fact that most witnesses have no "bias" set and those that have a bias set range from -0.2% for @pharesim to +0.81% for @raggaemuffin (I ignored @chainsquad and the dead witnesses), I guess my witness, @lux-witness, is not the only one to be unsure about how the "bias" is used in the code ... could you maybe offer a hint ?


1 - The SBD printing rate algorithm:

we need for that:

  • Steem Market Cap (virtual_supply), mutliplied by feed_price (so the final value of this market cap is in USD)
  • current_sbd_supply, in SBD, will call it 'SBD Amount'

The debt to ownership ratio in the Steem ecosystem: [SBD Amount] / [Steem Market Cap]

And this is how it's coded:

  • if the debt-to-ownership ratio is under 2%, printing rate is 100% SBD
  • if the debt-to-ownership ratio is over 5%, printing rate is 0% SBD
  • if it's between 2 and 5, the printing rate is: 100% * ( 5 - debt)/3

we can consider 2% being 100% SBD and 5% being 0% SBD, and everything in between a ratio, e.g. 3.5% debt means 50% SBD / 50% STEEM

Right now, the result of this operation is provided as a blockchain property, so you just get it with a single RPC call.

Also worth noting, this will change in HF 20, so the sliding from 100% printing to 0% printing will occur between 9% and 10% debt-to-ownership ratio (which means there will be a higher debt-to-ownership ratio across the STEEM ecosystem and the printing rate will decrease much faster, almost like a "kill switch").

2 - The price feed bias is a weighted average, so the fist 21 witnesses count more than the rest. You can still make use of this as a public signal, I did this a lot although I'm not even in the first 50.


None of the first 21 have set a "Bias (%)". The first ones are @pharesim (28), @raggaemuffin (32) and @abit (34)


if it's not set it is implied to be zero.

Later edit: this is how it's looking on steemd.com:

Screen Shot 2018-08-18 at 3.32.08 PM.png

really deep calculation i dont understand anything lol :D

THANK YOU FOR THE INFORMATION ... Ms clear impossible, you clarified the doubt!

@dragosroua we love you

Thanks for this explanation, now i have womething to show my friends, we've been arguing all day on this thing, some think its because steemit now has many competitors, the like of scorum, whaleshares, dreamreal and many more.
They'll get to read this.

Thank you for this information

I also noticed it today, But i didn't know the reason, but now i know it and Understand it well. Thanks for clarification.

Very Complex, but understandable.

  ·  3년 전

Isn't it beautiful...how the economic ecosystem system works...

Well so long as am earning steem I really don't mind. All the same, thanks for clearing that up

complex details but you made it easy with your detailed ellaboration @dragosroua

Thanks man! That was neat and concise. I had general idea about it after reading about it since yesterday but I am glad that you shared the formula for ratio being 2-5 percent.

I had no idea about this. Good to know.

Thanks for the explanation. But one thing, why steem ahs gone so much down. I remember when last time BTC hit below 6000, steem price was fairly above 1. but this time I'm unable to understand the reason?

Whales take SBD to fully own their assets ???

And you, probably, own shares? But friends should be kept?

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Thanks for this great information dear...

So , should I convert all SBD to steem dollar .

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You have recieved a free upvote from minnowpond, Send 0.1 -> 10 SBD with your post url as the memo to recieve an upvote from up to 100 accounts!

You always share awesome information.

Do you think we should worry about this debt? They say that this happened in the past, but being new I worry that steemit be beta, it will be the end?

Make a another post to easy understand for the newcomers.


Make a another
Post to easy understand
For the newcomers.

                 - kunani

I'm a bot. I detect haiku.

thanks for give us this latest news

This information is very good, in fact I did not know why the SBD had stopped, thank you for your pleasant publication, it deserves to be shared.

Thank you for this

Thanks for the simple to understand explanation. Got a better handle on it now.

ohh so that is the reason thanks dragosroua for great explanation 😍

Whenever SBD hits $1 mark, such info starts circulating. This time, it's bit different because Steemit management has stopped paying in SBD...means they really want to keep it to $1. Will SBD be competing USDT (Tether)?


There's no link whatsoever between SBD being at $1 and "Steemit management stopping to pay in SBD".

First of all, it's not Steemit management which is paying, it's the blockchain.

Second, there's no more SBD printed, that's why there's no payment made in it.

And third, SBD stopped printing because of the reasons described in the article.

You got a 12.05% upvote from @postpromoter courtesy of @dragosroua!

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I was wonderning why I didn't get SBDs from my posts, until I saw this post and I read it and now I understand why. So thank you @dragosroua for you explaination