The optimal ratio: is no ratio.
The haircut is a last ditch attempt at preventing a death-spiral and should be implemented manually by witnesses in real time, if at all, just like price feeds and HBD APR. Probably not even then because the haircut itself massively incentivizes holders to dump it and make the problem worse. The haircut was an abysmal failure that didn't help us at all.
Show me the math on how much inflation we prevented by allowing the peg to drop to 60 cents for months at a time. Now factor in all the people that dumped just because the peg was broken: making it a completely worthless asset. We likely printed more inflation BECAUSE of the haircut, not the other way around. Allowing the peg to break to the downside did the network zero favors.
You have to admit that your statement is not backed up by any data (I am not saying that it is untrue, just that it's an assumption). It sounds to me that your premise is that when the debt ratio reaches or gets close to 10% it triggers HBD conversions. I only have data after the split from steem so here it goes.
Here you have the deviations from the expected production of new hive per day. Most of the positive deviations were caused by HBD conversions. The negative ones are either burns or the result of the hbd stabilizer.
And here you have the evolution of the debt ratio. Only between 4/8/20 and 4/24/20 (17 days) was the haircut rule in place, yet we had conversions year round. Something else is at play here. My conjecture is that conversions are mostly triggered by market fluctuations below the peg unrelated to the haircut.
Just to complement the data here is the historical HBD supply.
You can even see a massive reduction in the HBD supply at the end of May accompanied by a surge in the extra hive created when the debt ratiio was no where near the haircut.
Wow... nice analysis.
Good shit.
I am impressed.
This is a hard topic to navigate because we are in the Wild-West phase and one false move could send us hurling off a cliff.
Oh yeah also I was totally bullshitting you because Tether market cap has a history of rising and falling with the bull/bear markets. You'd think demand for Tether would increase during a bear market... but it does not. Seems like the liquidity tidal waves of these mega-bull runs wash away any kind of rational theorycrafting.
Actually your kind of right about that. Think about it, what happens during a bear market? People trade their crypto for fiat and/or stablecoins. So in other words, compared to regular crypto there was more demand for Tether. The supply for it remained relatively flat during the last bear market while the marketcap for the whole cryptoverse went down. It even had a brief moment when it traded around 1.20 (according to Coingecko).
So the demand for stability does increase in relative terms during those periods. Check the logarithmic chart for its marketcap.