Why STEEM lags in bear market compared to other top cryptocurrency and what could be the solution.
In his recent blog "Steem is priced roughly $100 million less than Bitshares, does that make sense?" by @jrcornel, he wonder why STEEM lags BTS for $100M marketcap. One of the reason is that STEEM lacks positive sentiments due to in-fighting about reward-pool in Steemit. Another thing is that STEEM lacks serious marketing campaign compared to top crypotcurrencies.
Though I totally agree that sentiment determine the price. However, STEEM has higher inflation to sustain a rewardpool. Therefore, more percentage of STEEM are produced daily compared to other top PoW coins or ICOs (which has a fixed supply). Therefore, STEEM needs the growth of investors, who need to consume these extra supply which is not happening in this bear market and luck of positive sentiment.
While BTS has zero (I am not sure, but it looks like) inflation. Therefore, there is no pressure to consume new supply. Though BTS is down in the bear market, the sell pressure for it is lower. Moreover, BTS has less developments than STEEM, but BTS holders are not selling heavily in this low market price. On the other hand, any content creators or stake holders can sell their newly earned STEEM from blogging or bidbot profit without selling their initial capital (i.e SP holding).
One of the radical solutions could be to reduce the STEEM's current inflation drastically to 2% from current 8.7% by eliminating rewardpool using STEEM.
Assuming that STEEM distribution has completed reasonably (better than ICOs such as EOS). New STEEM production will only be used for interest on staking (i.e. PoS mining) and witness compensation.
Demand for STEEM will come from bandwidth purchases from the companies behind the SMTs, scarcity and speculation.
STINC, as a owner of Steemit will lunch their own SMT. Perhaps they can airdrop their SMTs on SP holders.
All the experimentation about rewardpool distribution on Steemit and other DApps will bottled out. The controversies around #rewardpoolrape will affect STEEM a little, since SMTs rewards will be the problem of the DApp owner and communities. STEEM will not be involved in conspiracy scheme to abuse the reward pool which is the main negative sentiment about STEEM.
The very DApp developers and community will decide on their own reward pool distribution for their SMT.
STEEM inflation will reduced severely, which will create scarcity, therefore, STEEM's demand will rise. Moreover, STEEM's valuation will also depend of DApps/SMT's success and DApp/SMT's bandwidth requirements.
Disclaimer: This opinion is not a financial advice, it my personal perspective and opinion. Please seek professionals for financial decisions.
Image sources: Most images are open sourced (e.g. Pixabay, Wikimedia etc.) with Creative common license. Some images are used with due courtesy to respected owners.
Thanks for reading.
@riseofth
Cryptominer since 2013, occasional trader and tech blogger
These are all very valid points, but it does not really explain the lag in my view, because to counter the inflation through the reward pool, there is a 13-week power down time, that makes it really hard for investors to sell Steem, once it's powered up.
Through this, there is only very few liquid Steem on the markets and it therefore will always move lagged to other coins, that can be bought and sold easily.
Yes, but some investors who bought it low (say, below one USD) and they can through blogging and delegation, can sell liquid STEEM (SBD->STEEM) at the market whatever the market price at right now. They don't need to touch the initial capital. We need strong speculation for holding extra earning providing that motivation can get down due to FUD in bear market
I agree with you that Steem has a marketing problem that needs to be adressed. As long as the organic growth can continue, the demand will increase. The platform will not be positively impacted by a few whales having all the coins and dolphins driving the demand for Steem for eg. We need new users to drive demand as well
There is also upcoming competition from SM Dapp based on EOS. Marketing is essential to stay on top.
The way I look at this is that we are in a marathon and not a race as many say. Steemit continues to be in beta as per the title logo and that seems very intentional as development on the blockchain and platforms continue in order to develop adjustments for improvements. Rome wasn’t built in a day either but if you notice, the developers have been pushing notes on updates quicker these days and that is encouraging. The price is still tied to whatever Bitcoin is doing so we cannot really control that and with more supply of coins than demand, it could be expected for some time. However, it should be seen as an opportunity as demand will ultimately come back and supply will be redistributed which can lead to higher prices.
That is true, we need more time. However, competition is fierce and blockchain moves at light speed. Therefore, smart and fast moves are sometimes necessary since they are lots of new players in the market.
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