What can the Steem Team learn from the Ethereum experience taking into account the potential of SMT and the token metrics involved

in steem •  2 months ago

This piece is highly speculative and straight to the point. I would try my best not to paint a narrative of fantasy but present the facts as I see it. Before we start the discussion I would like to present the Daily charts of Ethereum/Bitcoin and Ethereum/USD to give us some perspective for the discussion and the points I would like to present.


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The charts above covers Ethereum against firstly Bitcoin and then against USD during the same time period. For our discussion, I would use the USD pair to do our analysis as the Bitcoin pair can give a double edge analysis given its inherent volatility. Base on who you speak with, Ethereum is known as the "super computer", "smart contract platform", "internet 3.0", "currency", etc, you name it and the Ethereum enthusiast can back you up. Looking at the Ethereum/USD chart, one can clearly see the market kick off of April 2017 and the subsequent peak of January/ February 2018. Given the momentum and buzz around Ethereum at the time, the 'Ethereum enthusiast' were talking about the potential "flippennnnnning", as Bitcoin lack as they see it the tools to lead the market moving forward. The platform quickly became the place to raise million of dollars via Initial Coin Offering (ICO), to build decentralized applications that would later build their own protocol or build on top of the Ethereum protocol. Billions of dollars were raise and one can speculate that this was largely the reason behind the impressive ETHUSD chart starting from April of 2017 to February of 2018. The market subsequently went into a bear cycle and the setbacks of the Ethereum protocol that were "no no" talk back then became more vocal as we speak. Lets deal with these...

Ethereum protocol while being impressive still lacks the insight that make Bitcoin great, deflationary and often not highlighted enough capped at 21 million. Users of the Bitcoin protocol have a clear picture of the monetary policies with "halving effect" guiding market participants of the supply dynamics. In a world pregnant with risk and cycles (bear market we experiencing) currencies like these become an umbrella of shelter. Ethereum does not have those advantage compounded with the problem that the network often becomes congested during periods of increased demand with skyrocketing fees in the form of "Gas". Given these realities of a network expecting to host thousand of "dapps" facing those difficulties, the realities paint an ugly picture. Let's keep in mind, that the fees paid aren't "Ethereum", so the consumption effect of the network cannot compensate an ever increasing supply. The general theme of smart contract used to raise funds, none of which are lock up for use of the protocol but rather as an account that temporary holds "ETH" before it dump. This reality becomes clear during the bear cycle as everyone heads for the exit trying to retain value. What becomes apparent, you have a system that isn't efficient, isn't scalable and its monetary policies does not afford confidence through "HODLING" as the next guy tries to exit before the other.

Steem is expected to launch SMT in Q1 of 2019 and I believe there are lessons here that can be learnt from this Ethereum experience. One of the first lesson is careful monetary policies, users must have confidence that the token is the place to be irregardless of market cycle. Consumption of Steem through burning of the token or clear guided rules that ensure Steem itself becomes collateral that cannot be touch. This does not have to be rules, but there should be protocol rules that encourages healthy network effect or even HODLing. One such example of an excellent initiative already in effect on the Steem blockchain is the powerdown period, something similar could be look at, if Steem is lock via smart contract to power SMT. Lets jump back to Ethereum....

Its difficult to say Ethereum is dead at this point, a simple fix for these difficulties are 1) improving the scalability issues and 2) improving the monetary policies through network effect. One of the ways of solving the monetary policies would be a shift of consensus from collecting 'Gas' to collecting 'ETH'. This 'ETH' could then be sent to fix address where it is subsequently burned ensuring that the ever increasing supply is contained. This would give confidence during downtime as participants know the value of their coin isn't eaten away by an ever increasing supply. Coins can be burnt quarterly and the blockchain could account to itself to usage/supply formula. This is just a suggestion, it can even be applied to some aspects of the Steem blockchain. Lets conclude....

From my observation within this space, the market goes where there is confidence and "HODLing" makes a huge difference. Good token metrics with increasing network usage and awesome user experience helps with the on-boarding of the masses. The value of token is important in helping sentiment towards the project and even attracting users. The market loves coins with clearly defined supply or where supply is capped to a metric, speculators/traders readily trade these coins. Where scalability is concern, Steem is far ahead of Ethereum, but given the Ethereum community and the kind of investment they can attract its difficult for Steem to compete on that playing field. I believe there are lessons discuss that should be food for thought. I can't say Ethereum is dead but I can say Steem has a lot of untapped potential....

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Just try to peg SBD to $ 1 so that we can use it like Tether ... that is all we need.

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The Steem dollar and Tether scenario is a fantasy, Steem Dollar would need to have at least circulating supply of at least 100 million and Steem marketcap an insane value, the Steem Dollar is doing just fine, a floor of 1 USD with upside potential that's how I see it, Steem needs SBD to curb its supply, I more see it as a tool to support Steem... Pegged base currency are used by exchanges, there aren't much merchants accepting them, if you find any let me know...

As Steem blockchain matures, SBD would mature as well, let's keep our fingers cross for the merchants accepting Steem, that's more important and HODLing within Steem, that would help stabilize price, hodlers hodling SBD and speculators taking a go at it, takes rocket fuel but SBD as it stands now is doing quite well

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Incredibly graceful!!

These are fabulous and sleek, friend.

So fabulous and exquisite dude

Looks clean and exquisite dude

So classic and slick, friend.

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