You are viewing a single comment's thread from:
RE: Summarized Explanation for the Falling Price of Steem
There's much more going on than just inflation. The market cap has fallen from 380 million to 42 million. Market cap = price * number_of_shares, so If inflation were the only thing driving the price down, the falling price would be balanced by the increasing number of shares and the market cap would not be changing.
The price is influenced mostly by speculation. Your equation should be:
Market cap = speculative_price (estimated value of Steemit ($100k? $1mln?), trust in Steemit's model, whether whales are powering up or down, price of BTC/Steem, etc.) * infinte_number_of_shares.
Following that equation, the Market cap should really by anywhere between 0 and infinity. I'm actually surprised that after the initial Steemit hype, the price didn't fall much faster, as traders usually are quick to react to any indicators of insecurity (e.g. the USD/RUB immediately jumped at the hint of Russia invading Ukraine).
Therefore, the falling market cap should indicate that the confidence in Steem and Steemit is dropping so fast, that the ever printed currency can't cope with it. But as long as Steem is printed in large volumes, confidence won't return.
The only way to increase the value is to stop printing and see offers from established competitors, willing to buy Steemit. In fact, someone recently published (an unverified, I believe) claim that Facebook contacted @ned to buy Steemit. So I'm not the only one thinking that throwing some financial information to the traders is important for Steem's successful rebound.
But without stopping or significantly reducing Steem printing, nothing will break the current trend. Btw, I see less and less payouts on people's posts - maybe there was a fork we didn't hear about and this is already in effect (or it's just whales thinking that Steem should not be distributed to minnows at this point).
the payout pool is in line with the market cap which as you've said currently decreasing. So basically as the price of steem goes down, so does the payout pool. It isn't that "whales" want to pay less, it's just built into the protocol.
Payouts are in SBD, which means the weaker Steem is, the more Steem and SP is paid per SBD.
But you are saying that the daily generated pool for post upvotes decreases with the price of Steem.
I'm obviously missing something between these two opposite mechanisms. Would you please elaborate in what currency and how is the daily pool generated (i.e. what factors determine its size). Thank you!
As I understand it, payouts are priced in STEEM. Half of the payout is distributed in SP, and the other half is distributed in a mix of STEEM and SBD at current conversion prices. (It used to be half SP and half SBD, but that changed a while back.) I'm not sure exactly how it determines how much SBD vs. how much STEEM. Something to do with liquidity levels, I think.
So in short (all else being equal), since the payouts are priced in steem: when steem's price is high, payouts' dollar values are high and vice versa.
No, no, I understand payouts. I don't understand how the daily reward pool is generated (its size and in what currency)?
Btw, the payouts are in SBD, which is then split as 50% SP/50 % (SBD and Steem). So the lower the price of Steem, the more Steem we get per SBD (since it's price is "fixed" to the dollar). Right now 1 SBD = 4.77 Steem. Play with the calculators on http://steemdollar.com/ to understand the relationship between SBD and Steem.
Nesting limit reached. Replying to:
Check your author rewards in the history section:
Author reward of 0.003 SD, 0.114 STEEM and 0.132 STEEM POWER for dek/no-more-steem-margin-trading-on-poloniex
You were paid in all 3 currencies. 50% STEEM Power (SP) and the other 50% was split between SBD and STEEM. The proportion of SBD and STEEM varies according to some formula that I don't know, but it always seems to be 50% SP.
The whitepaper is vague on that. As far as I can find, it only gives annual numbers. Basically, total numbers of STEEM are inflated at 100% per year, 90% of the new STEEM is distributed to existing SP holders. The remaining 10% "...is distributed to users submitting, voting on, and discussing content.... the actual distribution will depend upon the voting patterns of users..."
That annual reward distribution is described here: https://steem.io/SteemWhitePaper.pdf#page=35, but I don't know exactly how that maps back to the available pool for any particular post.
We are both saying the same thing - it's 50% in SP and 50% in Steem and SBD (the latter two's proportion keeps changing according to the economic logic of the developers - it's not just a formula, they change it by hand, from what I've seen).
The White Paper is written as vaguely as possible. This suggests to me and any investors, that the developers had no idea whether their project was economically sound or not, and they intentionally did not specify certain aspects clearly, which would allow them to tweak things as the system develops. This, however, makes the system rather vulnerable to market speculation - traders are not investing in the system itself, but are speculating on the economic knowledge and whim of the developers. Since modern day trading is all about analyzing widely available data and not the private thought process of a couple of people, this makes Steem rather unattractive (or rather - attractive for bearish trading).
That said, according to page 35 in the White Paper (which you've linked), it seems that the daily pool is generated in Steem. There's also a mechanism for reducing the incentive for mining Steem after a certain block number.
Think about this - either the developers had a perfect vision for the future of Steem and knew at which exact point in its development significant inflation (or oversupply of Steem) would kick in (it's now obvious they overestimated the popularity of their project and actually didn't have a good idea), or they have very bad ideas about programming (hard setting variables is a no no for most programmers) and economics (which no one on this planet fully comprehends; what they've did is put a flag in the middle of a river, over which they now have little control).
Anyway, it's a long topic and I'm grateful for your comment!
That was a joke/satire page. There's no evidence of any communication with/from Zuck
My point was there should be, as investors need something to convince them that Steem isn't (progressively) becoming worthless.