Perspectives in Looking at My #STEEM Stake

There is no hiding that it has been a horrible year for those who bought and held #STEEM when it reached its high early this year. With prices being down approximately 90% from high to low, you can say that it could be easily categorized as a bad investment from that standpoint. However, I have looked at this from a different angle and have also implemented a strategy that has softened the impact from a financial aspect. More importantly, I never intended nor did I ever invest more than I was willing to lose. Blockchain technology and cryptocurrencies continue to be an asset class that is not only still immature but continue to be highly speculative given the factors in which the underlying assets depend on to create long term value.

Only looking at the price move is not the best way to evaluate progress on the ecosystem nor in your stake. For example, after during a preliminary analysis of my earnings for the year, I have that rewards have been approximately $1,100 USD. This represents over 10% of the amount invested into #STEEM. While this also represents an example of my engagement and effort during the same time period, I also have seen a clear correlation between my earnings and my stake over the period of time I have evaluated. When I compare this to other cryptocurrencies I have invested in during the same time period, none have provided this type of return. Again, not that I spent any time on those protocols but the fact is that those investments did not have even the opportunity to earn for my stakes. The exception is NEO that provides periodic GAS distributions but those returns have been less than 1% thus far as well. The fact that we are able to earn for engagement is certainly not only a hedge for our investment but also an attractive proposition for those considering being part of the ecosystem.

My main strategy for accumulating my stake in #STEEM has also helped me have a better view of my investment here. Instead of putting my available investment all into #STEEM when I started, I deployed a Dollar Cost Average strategy which has allowed me to bring down my average cost over time. I recently got to the incredible average cost of below $1 per #STEEM given the recent declines. It has also allowed me to accumulate much more stake than I would have by buying it all at once. For example, if I would have put the total amount invested in #STEEM this year in February 2018, I would have only been able to accumulate approximately 2,500 Steem Power without considering earnings. That means I would have not even been able to get to Dolphin status at that point in time! I would have also had a more ugly loss at this point considering the actual price.

With this latest update in average cost, I now need the price of #STEEM to grow by 400% to breakeven for my purchases. When including my earned stake, that figure goes down to about 300%. Overall, not too exciting considering that there are not many assets that can really give those returns. However, considering the earnings power generated by the increased stake, it makes the effort and investment more viable over a long term. Given the Dollar Cost Average strategy, it has reduced this amount significantly as not doing so would have required a more than 10x increase to breakeven! This clearly demonstrates how scaling into position helps hedge the fact that it is nearly impossible to catch a bottom in price in almost any asset sold on an exchange. It has also helped accelerate the stake I have been able to grow over time.

The increase in stake has helped grow Steem Power organically as well as the inflation of the protocol also compounds over time. Currently around 9%, the growth of Steem Power will help offset the losses over time. In addition, the increased stake has also led to improved curation efforts as it influences the weight of the distribution as well. Although I cannot give any figures yet, I can clearly see a correlation between stake and curation rewards as my stake has increased. That is despite me not seeking optimization strategies with curation as I continue to mostly manually curate content I enjoy without paying attention to when I vote. I have recently found a consistent stream of good authors that I have started to provide auto-votes but I still mostly manually curate.

However, the huge caveat on all of this is that the investment will remain viable as long as pricing stabilizes. Dollar Cost Averaging is a horrible idea, like any investment, if the price goes to zero. Many would call it “trying to catch a falling knife,” but I believe in some of the fundamentals behind both the blockchain technology and social aspect of #STEEM and the value being created. As we have seen much more lately, the value of the community supporting development and decentralization is enabling an ecosystem on which plenty can be built on. These are not conceptual project either as many are currently being actively used by the community as see by the latest State of the Dapps update. In my opinion, these projects will start to demonstrate the capabilities and benefits of developing on #STEEM versus other protocols. As the development of protocols begins to consolidate given the drawdowns in prices, my opinion is that #STEEM will grow to be a competitive alternative for many more projects. Therefore, I remain committed to fostering positive engagement in the ecosystem supported by continued investment of time and capital as the value continues to be attractive for me.

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