What's up with STEEM price?
Altcoin prices are overwhelmingly driven by market conditions. It's well known we are in a bearish period for altcoins. Don't blame Steem entirely.
That said, Steem has performed worse than most prominent altcoins, which is evident from checking out CMC. Top 10 (2016), Top 30 (2017), Top 50 (2018). Currently, it's at #81. Furthermore, successful projects like EOS, BNB, BAT, MKR were all around Steem at some point, all of which are an order of magnitude or more ahead of it now. Don't blame Steem's failures on the altcoin market.
The price has minimal reflection on HF21's performance. There's always initial excitement surrounding major hardforks, but it'll take approximately 3 months for things to settle down. Moreover, the inflation rate remains unchanged. Don't blame HF21 for STEEM continuing to drop.
Speaking of, the only way to increase price ceteris paribus is by decreasing supply or inflation. There's significant correlation between altcoins that have thrived in the bear market with those featuring low or <0 inflation. Don't expect any sustained improvements in price relative to the altcoin market till inflation is under 2%. (Nominally, 8.3% is way too high, made even worse by the SBD conversions.)
Lastly, and most importantly, the price will go up when the crypto whales feel like manipulating the altcoin market and "dumb money" enters. Remember to sell your favourite altcoin when that happens. If you have an irrational obsession about Steem, you can always buy back when the inevitable bear market hits. This is the only way to become a whale.
In short, it's mostly the altcoin market, but also Steem can do some things to bolster the price within that context. The chief economic tools available are:
a) Reducing inflation.
b) Canceling SBD.
c) Reducing investor friction; e.g. reducing lock-in period.
d) Reducing supply, e.g. burning Steemit Inc's oversized stake.
What about the biggest factor of all, which dwarfs all the factors you mentioned, which is the insiders dumping millions of STEEM into the market at whatever price they can get for them, month after month after month? Are the EOS or Litecoin insiders doing that to their currency?
Also, I notice that you said not to blame the altcoin market, but later on you mostly blamed the altcoin market.
I'm sure EOS and Litecoin insiders are dumping too. Wasn't the founder of Litecoin accused dumping? No idea if there's any truth to that. The difference is those tokens have orders of magnitude more buyers so even if they crash, they retain more of their value.
If you read the post again, you'll see what I meant. I said "Don't blame the altcoin market for Steem's failures".
a) The altcoin market has crashed in general, and taken Steem down with it.
b) But Steem has done much worse than other altcoins, so it has fallen farther.
Today, Steem has lost over 98% of its ATH value. Let's say, you can account for (just example figures) 70% due to altcoin market crashing, and 28% due to Steem's failures.
Excellent sum up, inflation of Steem is way too high, actually in the range of 20% pa in a bear market considering SBD conversion to Steem, which is not good, because SBD adds little to no value to Steem in my opinion but only adds complexity and inflation.
Yes, it only seems to be there to devalue STEEM. Even after devaluing STEEM, it's still pretty terrible at its intended purpose, i.e. stablecoin. Not to mention, there are many successful stablecoins now, backed by both fiat (IUSDC) and crypto (DAI). SBD has failed, it must be scrapped. If a stablecoin is needed, one of the actually stable ones can be integrated instead.
a,b,c, and d will not happen.
I expect the price to go further down.
I'm not so pessimistic. Sure, if they happen it'll take a very, very long time, but I do expect there will eventually be some improvements.
Agree. And then will be a good opportunity to power-up:)
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You demonstrate yet again remarkable grasp of factors affecting Steem, clearly far advanced beyond my own. I predicted several events that have not occurred as a result of HF21, and, while I am happy to be proved wrong in those particulars, note that your discussion here far better correlates to actual metrics.
However, while you reveal that capital gains remain the basis for ROI in your discussion of fluctuating market prices, you do not comment regarding how extracting rewards via financial manipulation facilitated by stake weighting impacts the community, which I find well explains the relative market performance of Steem, if unexpectedly less catastrophic subsequent to HF21 than I predicted.
Could you comment on the inhibition of capital gains such profiteering exerts on Steem, and in turn how that profiteering discourages the burning you recommend?
Thanks!
HF21 has very little effect. The profiteering is shifted slightly from bidbots and creators to whales, curators, and SPS, but the inflation is exactly the same. The only difference is in behaviour of these parties, i.e. perhaps you'd expect bidbots to dump differently than whales, but that's debatable.
In short, the only solution is to reduce inflation.
I guess I didn't understand you question.
Gah! I went to reread my question, and accidentally replied to me, instead of to you, with greater detail. Please consider that reply to myself as intended for you.
Substantial stake is able to be used to extract the vast majority of rewards, through various methods. Burning Steem reduces stake, and thus reduces the ability to manipulate the rewards mechanism. Rewards inuring to content creators that do not buy bidbot votes are very small, and the creators become aware that their content is not being rewarded because stake weighting is used to extract orders of magnitude more of the inflation than is paid to authors of content.
This discourages authors who come here for financial benefits and the retention rate of Steem users plummets, as we have seen. Concomitantly, their departure shrinks the market for Steem, as these authors sell off their pitiful holdings and never look back. Only a growing market pushes the price of Steem upwards, thereby creating capital gains.
These are the issues I would like to get your take on, and to which I referred in my question.
I don't expect anyone to actually burn their stake, so it's more of an academic possibility. In the past, founders of projects have burned, but it doesn't seem likely Steemit Inc. will do the same.
As for the rest, my only comment is that everything you have said is totally unsustainable. You can't give away free tokens without their being demand for the token. Apart from the brief bull markets, but as we have seen, those are anomalies and not long term sustainable solutions.
Funny how in crypto the ideas seem to be to reduce supply instead of create demand.
When Steem is interesting, being discussed, creating hype or even a scandal. People will want Steem.
No one outside of steem cares about these details. Create demand.
You have to do both.
Says who? :) Just said to challenge in a friendly way.
Is is too complicated for the masses. Steem, SP, SBD, 4 pairs of keys. Long wait for account,...
I am afraid with this setting it is doomed to stay within a small niche.
Plus the promise "your voice is worth something" is true, but this "something" is so low, that many people are not willing to take the efforts.
And this is the main reason that we see no momentum in user growth, inflation up or down.
What do you think of 'burnposts' and burning STEEM generally?
Is it worthwhile for individuals to burn a percentage of their post rewards?
Burning STEEM is basically part of reducing supply. Burnposts effectively also reduce inflation by burning right at source. So part of a) and d). However, it's probably insignificant if a small number of people burn. Lower inflation needs to be a platform protocol change.
Thanks for the reply on this.
I guess like most things, it is a case of every little helps / got to start somewhere...
High inflation is a double edged sword that will send the value of Steem soaring because people who stake their coins can generate so much of it. Steem has very volatile liquidity issues due to inflation and liquidity.
Reducing inflation doesn't increase the value of Steem, it just might make it less volatile.
I used to promote canceling SBD, but now realize that makes no sense. We could just as easily create a smart contract that allows users to lock Steem into a CDP to create SBD just like Maker uses Eth to create Dai.
The vast majority of wealth created by these networks is going to be just that: network effect (development and adoption). Tweaking the rules isn't going to do much. Diehard Steemians should want volatility to be high so they have the most opportunities to buy low and sell high.
It's clear to see that the value of Steem hasn't soared in the slightest, except for the brief macroeconomic bull run.
Yes, a Maker-type model would be a better approach, but Steem simply doesn't have the market value or liquidity to back a stablecoin. So, it's not really possible to recreate DAI on Steem. Still, it'd be better than the current situation.
@theycallmedan had a great idea of instant (or near-instant) power down with paying a 3-5% burn fee. Of course, this would need some security measures to prevent instant fund transfers in the case of malicious activities. Something like this would take care of c and d.
I agree, there is no need for SBDs anymore. Pegging to a dollar didn't work. Removing it would serve better for Steem.
Once SMTs and Communities arrive, maybe there will be no need for reward pool anymore. Without those, I don't see the reward pool going away and inflation going down.
No serious investor is going to invest in an asset that holds it hostage and asks for a ransom to get it back. Oh, or wait 3 months. Not sure which one is worse, but both are terrible. The easiest way I can remember is simply to have a fully liquid STEEM, that takes 7 days to "mature" in an account to get voting rights. Move it to a different account, and voting rights are revoked. These are simple solutions from 2016 that people have forgotten.
But every Venture Capital fund (aka professional investors, which we see mainly in all the other Cryptos, except Steem...) has a lock-in of up to 10 Years. And they dont need to hold the Token at all (expet for open community projects like Ethereum or Bitcoin), most of them don´t touch the Tokens but go for the for-profit dev-teams like block.one and hold stake in them.
One question to all of you Steem optimists (its not a provocation, I like Steem my self, but im way more critical before I put my money back in, but hey maybe this is a bad thing and Iam wrong and miss out)
have you ever wondered why there a no professional Investors invested in STEEM or Steemit.Inc? No Polychain, no Pantera, no BlockTower, no Galaxy Digital, you name them. They fought to death to get a position in projects like BAT or filecoin or polkadot and they dont mind the heavy volatility because they are locked in anyways. ... but why do you think they don't touch the steem ecosystem? They have researched all the top 200 Cryptos and they have the biggest talents and experts working for them, so it´s not because they don´t get it or because they don´t know about Steem and it's not because Steem is an inherently bad technology... I guess you know why cuz you have already written about it in older articles
Yes, there are funds with lock-in periods, but they are backed by a basket of assets, and managed accordingly. Completely different from one hyper volatile crypto asset.
The only rational conclusion is that it's because Steem is not good enough. The underlying technology is OK, the idea of putting social networking on a blockchain has some merit, but most of the systems and implementations have failed.
Steemit.Inc have halted their systemic sell off... which is positive.
But yeah, I feel like point D and the overall inflation issue are the main things. I sold no steem during the bull run and I feel like an idiot for letting the fomo take hold so bad. Ain't gonna let that happen again.
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The price stopped crashing while they paused their selling, but they've announced the selling is about to resume, and the price has now made a new lower low.
That reminds me. Can't really blame Steemit Inc either, as them not selling anything for 2 weeks hasn't resulted in any movement of price. At the same time, we have to wait and see if it has any effect if they don't sell for 3 months or so.
I hear you. I was all powered up in January 2018. I realized my mistake and powered down, but thought I was too late when it finished in mid-2018. Turns out it wasn't the worst time, lol.
Yeah, I've had a real problem with fomo in all my crypto dealings up until recently when I managed to get a handle on it. Starting to do better now, but the bull run was rough for me when it shouldn't have been if I could have sorted out my psychology. Where so many made massive gains, I've just about broken even over the whole time period (2017-19) It's a waiting game for me now. BTC is tradeable, but the alt bags I've just gotta sit on. Luckily I've got mainly decent ones in the top 20. Have got one or two stinking bags of shitcoins though which ain't ever going to be worth anything 😂
If I'd sold all my steem (I owned much less steem then) in winter 2017 I could have bought back in now and been in the an orca if I wanted.
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Yeah, FOMO is a common affliction. All I'll recommend is that if you see a bull market brewing, power down and be prepared for when it comes. That also ties into c). I am never going to power up again as long as there's a 3 month lock-in, and that's one of the reasons seasoned investors stay away from STEEM in general and specifically powering up. Reduce it to 7 days, sure, I can see powering up again.
😂 for me it's
D) once bitten, twice shy.
The temptation not to sell in incriminates as steem rises is going to be even greater in the next bull as I have much more stake. If/when it repeats the highs the chance at bigger rewards from posting becomes the ultimate fomo. At the ends of the day, that is one major thing steem had got right, its fomo model lol
I'm actually writing a post about a fomo inspired dream I had last night right now. It's going to be a gooden 😉
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Bad altcoin market :D
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