RE: WITNESS ANNOUNCEMENT - New Witness on the block - Partnering with @davemccoy

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RE: WITNESS ANNOUNCEMENT - New Witness on the block - Partnering with @davemccoy

danielsaori in #witness-category • 7 years ago

Thanks, WizarDave!

The price feed is needed for the "peg" of SBD to $1USD. 1 SBD is by design meant to be worth $1 USD, this is how it is treated internally, so the task for witnesses is to fetch the STEEM market price to maintain this system peg.

In real life, SBD is not pegged to USD, but currently worth more than $2. This is why some of the calculations are a bit weird, like the big loss in overall return if you go for 100% powerup compared to 50/50 payout.

Please let me know if you have some more questions or if the explanation was not clear. :)

7 years ago in #witness-category by danielsaori

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wizardave 7 years ago

Aha. Thank you for that explanation @danielsaori. It's starting to make a bit more sense now.

So, is this strictly an internal peg? Steemit takes an average of all witness price feeds and works out the calculations from there? Is this weighted so the top tier witnesses feed carries more weight?
- Thanks for explaining. I'm a nuts and bolts kinda guy and have never run across anything telling how this works...

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danielsaori 7 years ago

Yes, it is only an internal peg. The system believes SBD is always worth 1USD, so currently, you would need 2.8 SBD to buy 1 STEEM. But in the open market, both STEEM and SBD are now worth roughly $2.8 USD. :)

The price data for each processed block carries the same weight, but as the Top20 witnesses produce a block roughly every minute, their feeds are more important, so overall it carries a bigger weight.

I don't know the exact inner-workings of the calculations, but it is an average over the last 3 days.

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davemccoy 7 years ago

Can you explain this part more?

so the task for witnesses is to fetch the STEEM market price to maintain this system peg.

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danielsaori 7 years ago

Did my second reply to wizardave make it more clear?

The blockchain is not aware of market prices, so it is the role of witnesses to fetch this data and feed it into the system. And this is used to make SBD worth $1 USD. (which in real life is not true as SBD is currently worth $2.8 USD ;) )

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