How Have PAL and LEO Reacted to the STEEM Price?

Days of woe are here again; just look at the STEEM price tumble!

Just 2 weeks ago, STEEM was trading at a recent high of about 44 cents; now, as I look at market prices, it is down to 28 cents - a drop of some 36%. Ouch!

But this is the STEEM price relative to the US Dollar. So can we blame a Dollar rally for this? Well, the Dollar Index has risen about 1.5% during the same period, so perhaps there is some cause-and-effect here. Look beyond the cryptocurrency markets and you see a return to lax monetary policy being discussed, with the predictable boost to share prices. Is the big money leaving the crypto-game and going back to the grown-up markets? For now, possibly.

This very brief glimpse outside of the cryptocurrencies is just to illustrate how prices are always relative to each other; there is no universal yardstick, merely exchanges. So with this perspective, how has the nascent token economy on Steem fared compared to its underlying currency, STEEM? I just wish to look at PAL and LEO, for no better reason than that I hold some, and hence have been watching prices.

PAL is currently trading at a whisker under 0.46 STEEM, while LEO is at quite a wide spread with an average of 0.17 STEEM. LEO is the much newer token and has just recently started distributing rewards. One may have expected a certain amount of selling pressure due to this, but instead we are seeing its price rising slightly. Similarly, the price of PAL has also risen slightly in the last few days.

The absolutely obvious thing to note is that neither token has seen its STEEM price tank!

And the obvious reason is that these tokens are priced in STEEM. Indeed, their slight rise may show that many users are staking these tokens so that they can match, or even exceed, their stake in Steem Power.

The really big signal here is that there is more confidence in the economy than in the underlying currency.

This may be a bad day to be optimistic, but this is a positive signal and, just like any national economy, economic activity will eventually be reflected in the value of the currency in the external markets.

I have written on this subject before, about how the STEEM economy is relatively stable in terms of earnings and how such earnings are affected more by internal measures, such as activity, than the external market price.

Note that both Palnet and Steemleo show their rewards in their local currency, PAL and LEO respectively; they are not shown in STEEM and certainly not in Dollars. These tokens are two steps away from a fiat gateway and yet people are happy to discuss these tokens within the context of their ecosystems. This is a lesson that STEEM itself should emulate.

However, Steem blockchain front-ends such as Steemit, as well as Steem Engine in places, continue to show prices in Dollars within the STEEM economy. Most of the users will continue to live on a roller-coaster ride of emotions as they see their rewards being moved around by forces beyond their control.

The basic unit of activity is the upvote and the value of such an upvote, per staked SP, is very stable due to the design of Steem's macroeconomic system. This is the one part of the design that actually works well!

The Dollar value of STEEM is only important when one wishes to out-exchange the coin. Just like the exchange rates of your national currency are only of direct importance when you need to buy another currency when going abroad on holiday or business; very few people fret about their national exchange rates on a daily basis. What people do notice is when local prices change because of the strength or weakness of their currency - even if that currency is a token.

So, although in danger of repeating myself, the answer to the title of this article is that both PAL and LEO have remained relatively stable compared to STEEM. Indeed, the slight rise in both their STEEM prices shows a certain confidence by people in the ecosystems they are building.

There are other such communities that I have not mentioned; there are also more just starting and in development. It is an interesting evolution, and one that I wrote about over six months ago, that STEEM no longer powers just one social ecosystem but many. STEEM remains, however, the (de)centralised bank that now empowers a host of enterprises.

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Your thoughts and comments are most welcomed.
Have you noticed how token prices have been fairly stable in recent days compared to STEEM?
Has that influenced your perception of such tokens?
Has that also led to any changes in behaviour, such as staking more tokens?
Let me know below in a comment.

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Coda

I originally wrote this as a quick detour within the main text, but then upon re-reading it seemed to ruin the flow, hence is added here as a coda. I would like to ask the Steem Engine devs as to why tokens are shown priced in Dollars when actual trades are done in STEEM? It is annoying having to double-check the actual token market page rather than just scanning our token list. This sudden lurch in the STEEM price and the relative stability within the token economy should be the signal to stop showing tokens in Dollars.

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_{images: pixabay (edited), logos my design.}

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