Are your payouts still being distributed as 100% Steem power?
If so you're throwing away free money.
It isn't much at the moment, but SBD is currently trading at $1.05. This means that if your payouts are all Steempower you are throwing away that free 5%. (2.5% because only half the payout is in SBD)
The Steem network assumes that SBD is valued at one dollar. Therefore, when it is valued higher than $1 content creators are generating more value than is listed on the official payout.
Why is SBD being printed again?
The market cap of SBD is not allowed to be higher than 10% of Steem's total market cap. Because the market cap of SBD is currently 7 million and Steem's is 80 million+ we're allowed to start printing again.
When SBD's market cap is higher than 10% we have to stop printing and haircut the value of trade ins. For example, if SBD's market cap was 20% of Steem's market cap we'd have to haircut SBD to the 50 cent level... we got surprisingly close to that just recently.
The dark days are over.
An interesting thing about HF21 is that the payout structures were changed. This means that less SBD is being generated. It used to be that 75% of funds used to go to content creators and 25% went to curators. Curation rewards do not spawn SBD.
Therefore, when the ratio was changed to 50/50, far less SBD is being printed. Before the change, 75%/2 (37.5%) was being printed in SBD. Now, that ratio has dipped to 25%. Will this reduced supply make it easier for SBD to break the peg and ascend to a higher valuation? It's something to think about.
While the price of SBD is greater than $1, no one will trade SBD for $1's worth of Steem. This means that a quarter of our inflation gets stuck in limbo for a bit and this takes sell liquidity off the market, potentially spiking the price of Steem coins.
On the flip side, when SBD is greatly overvalued, Steem inadvertently creates more inflation that it should. For example, if SBD was worth $2 a coin, Author rewards would be spiking at a 50% premium. Not only that, more SBD is being created because when SBD is greatly overvalued then Steem is also bubbled. Because SBD is printed based on the price feed provided by the witnesses, a flood of SBD will enter the market.
For example, say a particular post should generate $50 total payout. That leaves $25 for the author, 12.5 of which is SBD.
Now, if the price of Steem and SBD double, that post is now generating $100 and 25 SBD. Unfortunately, when the value of Steem and SBD deflates again this 25 SBD will be redeemed for $25 worth of Steem, and it only should have been half that. As the price of Steem and SBD begins to deflate, no SBD is being traded for Steem because it is valued higher than the $1 peg. All the extra SBD that got printed stays in the system while Steem crashes.
This is a huge problem when say the value of SBD is $10 a coin like what we saw during 2017. Essentially we were printing 10 times more SBD than we should have been at the time.
How to stay ahead of the curve?
Well, if SBD is spiking, consider taking gains; the market is bubbled.
Simple as that.
Conclusion
If SBD spikes to $10 again even my posts will be generating like $1000 per. (This assumes a Steem price of $10 and an SBD price of $10.) We have to be aware of the bubble next time around and not get burned by it.
The value of SBD is currently a double-edged sword.
No sense in throwing away free money.
Posted via Steemleo
Return from Don't Forget to Switch Back to SBD Payouts. to edicted's Web3 Blog
