This article is going to be discussing what I believe to be the best strategy for Steem Dollar payouts on the 4th of July. First of all, I found this video interview with Ned Scott very useful, Skip to around 39mins in.. This explains the whole concept around Steemit and a brief outline of how the payouts work.
This is also a follow on to another post of mine a few days ago
On the 4th of July, 10% of Steem's market cap will be paid out to Curators and Creators of content on the Steemit platform. As far as I understand, this will be paid out in Steem Dollars which are pegged in value against the US dollar, which can be then converted to Steem for user to do as they will with.
I have read elsewhere that, of the 10% payout, 75% is paid out in Steem Power, and 25% is paid out in Steem Dollars. Can someone clarify?
It's going to be interesting to watch the Market Cap of Steem over the following few days. Trading volumes are very low (<$10,000) considering it's $16m market cap. Where it get interesting for me, is considering what to do with Steem Dollars and when to do it...
Please do correct me if I am wrong, but there is a lot of execution risk if you try to cash in Steem Dollars on the 4th of July, I personally think the best thing to do is wait (whatever your motives are). The execution risk comes in between converting $Steem to Steem and then selling them for bitcoin (if there are no buyers, you won't be able to sell at the market price). Bear in mind that, $1.6m (or $400,000 if my earlier query is correct) Steem Dollars are going to be paid out, which if all are converted, and then attempted to be sold for Bitcoin, would put 160x (or 40x...) more volume through the market, all of which will be on the sell side. There will be a lot of seller chasing the market down, and the likelihood is that the price of Steem will take a hit. That's great for Steem Dollar holders, because their value is pegged against the $, so the lower the price of Steem, the more Steem you will get for your Steem Dollars.
I'm in the camp of viewing Steem as having an integral value (as I have spoke about in my previous post). So I want to make sure I maximise the amount of Steem I receive from my Steem Dollars, which I am then intending on Powering up. So that is why I am going to wait for the market to sell down before converting my Steam Dollars for Steem.
The more the network grows, the smaller these payouts will become (as long as you assume that user growth will outstrip market cap growth). For that reason (high market cap, relatively low user base), Steem is currently in abundance, but that won't last forever. I view this, and the next few months as a one off opportunity to gain a strong shareholding in a revolutionary social media platform that is growing quickly. Steem's relative scarcity will only increase with the increasing user base, this will in turn stabilise the market and allow opportunities to cash out in the future.