All the stake and none of the gains

I read a comment yesterday or the day before (I have lost track of time it seems) that talked about the amount of liquid Steem (about 126 million with about 100 on exchanges) and, just imagine what it could do to support applications if staked. Well...

That isn't quite how it works - at least not in the way that it was portrayed.

This is a dPOS blockchain and that Proof of Stake component means that people have draw on a pool of resources relative to the amount of stake they hold. It is the same factor for everyone, whether you have 100 Steem or 1,000,000. Part of the reason that those who are active now are going to earn more than those who are not, is not just because of lack of competition on content creation or, lack of competition on the attention of the voting public; it is also the lack of competition on the pool.

For example, if the pool was 1000 tokens a day and there were only two distributors who could distribute it all with say, 100 staked tokens each, they could split it 500 tokens each as they both have the same stake. However, if a third distributor staked 100 tokens, the split would now be ~333 tokens each.

For the distribution of the pool, there is enough STEEM staked and active to distribute it all without anymore getting staked and, a lot of the staked STEEM isn't active, namely Steemit Inc's 2/3 and Steem's largest accounts of @Steemit, @Steem and @misterdelegation's 60 million combined Steem. The last (@misterdelegation) does have about half its stake active supporting applications, and the rest inactive or supporting in the negative through @Spaminator, @steemcleaners and @mack-bot. So, let's say that about 50 million of their stake is inactive, which means at least around 24% of all staked Steem is inactive and doesn't draw (interest yes) from the pool.

If Steemit Inc started activating that dormant stake, it would effectively make the draw on all other voters 25% less powerful. I don't think they are going to do this - yet. There is plenty more dormant Steem Power out there too. This means that if that 126 million Steem was staked and became active, it wouldn't make other voters ~1/3 less powerful on the draw (336 million in the supply), it would be dramatically more.

• Currently, there is 210 million staked with 50 million inactive so, 160 million drawing on the pool.

• With the 126 there would be 160 +126 for a total of 186, meaning that the 126 would have 44% of all active voting power.

More powered up Steem doesn't mean more gets distributed from the pool as the inflation pool doesn't change size based on the amount of stake, it is a set size with a set inflation rate that will in two or so years see the amount in the pool lessen until about 2035 where the rate will be 0.95% for the rest of time. At that point, rather than the 26 million Steem in the pool this year, there will be around 6 million a year and around 650 million total supply. Yes, from here until 2035 the Steem supply will only double from where it is today.

• So, as the pool doesn't change in size, having more voting stake doesn't mean suddenly there is more Steem to distribute to content.

And more importantly than how much is staked is, who controls that stake.

We can imagine that much of the 100 million Steem sitting on exchanges isn't sitting there waiting for the best time to power up and support content creators, it is looking to sell. If it was to come back to Steem and become active, what kind of voting behavior do you think it is going to have? We already see that for many people believe that Steem owes them and they use their vote to draw from the pool on themselves as much as possible.

I assume that much of that STEEM on the exchanges is Trader tokens, meaning maximizers of tokens and value of bags. I would predict that if on Steem, most of that 44% of the pool would go towards self-voting and circles in order to cost average their holdings by drawing from the pool. With that much stake doing that, it would be very hard to change their minds as there is no one who can face up to them. This behavior wouldn't be good for Steem, it would be much like Steem in 2016, the negative effects of which we are still dealing with.

However...

While the pool size is the same and the stake isn't going to distribute more - what would likely see a massive change if most of that STEEM got staked is - Price.

Imagine if there was only 20% of that Steem on the exchanges and the rest was staked, would there be demand? Probably, and that say 20 million would be very, very tradeable and would be easy to drive the value of Steem upward with minimal effort. As price climbs, so does vote value in SBD (it would start printing again if price was higher) and there could be an enormous amount of interest driven Steem's way as content creators would be earning very well, even if the Steem they were getting from the pool was the same or much less than today.

What would you rather, 10 Steem from a post being worth 100 dollars, or 20 Steem on a post being worth $2.60, as it is today?

Personally for me, I would like most of that Steem to come off the exchanges so that what is getting traded there is of a much higher value than currently. Right now a 1000 Steem trade is worth 130 dollars to the volume, but at the All Time High, the same was worth 8300 dollars. That means that smaller amounts can be traded and still satisfy the volume needs of exchanges, something that low value coins can struggle with. A bull market changes all of that.

But also personally for me, I see that there is a future for high value Steem that is valuable to both trade on an exchangeand keep staked to earn on content support through curation or creation. This is why not having as many people here now, not having as many active curators and , not having that liquid STEEM staked and voting is better for those who want to be actively earning STEEM. Perhaps one day you will remember these days as the best you ever had it - as small percentages of what you have earned now can be sold to deliver a vastly different set of life capabilities - and large percentages of it can be used to support all kinds of people and initiatives at a global level.

Yes, price is very important for Steem, but that is not really the main focus of the STEEM token in the future as what is really going to drive the value of the blockchain is having that secure, scalable and free transaction ecosystem that houses the thousands of SMTs to come. I think at that point, Steem on exchanges will be much scarcer than many imagine as there will be more value in holding for dividend, than selling for cash.

This is just my perspective on it - you do as you do.

Taraz
[ a Steem original ]