Why Did STEEM Crash? Why is STEEM One of the Worst Performing Altcoins? Your Theory
I just want your theory on why STEEM has crashed so hard. The altcoin market as a whole has crashed, yes, but STEEM's underperformance is way more severe than that of other top altcoins. So there is clearly something wrong with STEEM itself, regardless of how the entire altcoin market is doing, having lost some 98% of its all time high.
What do you think happened?
Probably because of the broken economy that ran rampant: abuse was easy and couldn't be controlled. Delegating to bid bots was more profitable than manual curation. It is a bit of a woo-woo explanation perhaps, but if Steem is easy to get by broken means, why should it hold any value? We were devaluing our currency, because we wanted to maximize Steem units drained from the reward pool without providing any value.
Things are changing though, and stake is starting to flow to quality content in an increasing manner, because now we have the tools to counter circle and self-jerking. Go look haejin for example. With the threat of (free) downvotes, curation has become a more profitable means to an end to effectively use one's stake. And that stake is more often going to quality content, because shit content is more likely to receive downvotes. Proof-of-brain is starting to be functional again, which I think is essential for Steem to have value. It might not be perfect yet, but I think we are on a much better path now than pre-HF21.
With these changes, and 50/50 rewards, holding Steem Power has become a very attractive option. Data shows that between 30.8. and 16.9., staked Steem has increased by almost 2 million. With more and more Steem getting staked, it reduces liquid Steem on the market, which means scarcity, which furthermore will also reflect on the price.
Why don't they just set the rewards default to 100% steem power?
The main reason is the not decentralized distribution of stake at Steem. Some whales are continously draining Steem for income (plus Steem Inc. itself of course) while not enough momentum in terms of user growth is built to compensate this. New users are put off by the ridiculously low rewards you have as a newbie (let alone the complexity Steem, SP, SBD, 4 pairs of keys,...). Just a few nerds are here and keep creating content, mostly because they are addicted to the platform :) But not enough to ever get a critical mass.
The 8% or so inflation adds to that but can´t explain an 98% off from peak.
If newbies make great content, they have a good chance to be noticed now that there's a lot of stake looking for quality content due to the threat of downvotes (2.5 daily free ones per user) on bad content. Just being a user doesn't entitle for rewards.
On the complicated nature of keys: In the the next Hard Fork (aka. software update) Smart Media Tokens are planned to come with lite accounts. What that means is that onboarding becomes seamless through already existing internet communities that have adopted a custom token that can easily be created on the Steem blockchain. The new users need not to right away start dealing with keys, because dapps/communities will create wallet addresses tied to their social media account, but they can claim their full ownership of their Steem account when they have enough Steem. This eases the learning curve, and gives a lower threshold to be part of the Steem ecosystem. User can decide whether they want full ownership which comes with added responsibility, or rather ease of use, but without full control over their account.
Check #creativecoin, I'm not sure what's your take on "nerd", but you can find a lot of solid content creators there.
Thanks for you reply. In fact I was exaggerating a bit and was hoping somebody would object.
But I don´t see that new users, even with good content, get any reasonable rewards apart from their introductory posts. Most rewards still go to the circlejerk networks. Just being a user doesn't entitle for rewards, agreed, but what are you expecting from a blogging platform?
Lite accounts are so far only a big promise like the SMTs which are announced since years. If those lite accounts take the same amount of time like the SMTs they will come way to late.
Check out @cg-author. Not every quality post will be picked up, however, those who are consistently doing quality now, have way higher of a chance to be discovered and rewarded. It might not be perfect yet, but pre-HF21 was borderline hopeless.
They are now working for SMTs for real and Steemit is regularly posting updates on their progress on it: https://steempeak.com/smt/@steemitblog/smt-burnup-voting-and-delegation
Here is my theory. Link below, thanks!
https://steempeak.com/@culgin/what-caused-steem-to-get-dumped-why-i-think-the-worst-might-be-over
Steem crashed so hard because there is more cash bleeding out than in. Simple. The books dont balance.
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That doesn't answer the question, it just describes it.
It's not that Steem crashed. It was overpriced by a lot.
Considering a combination of features, it is unrealistic to STEEM be valued over 10USD.
Inflation, alt coins crazyness, haejin pumps, easily "farmable", all this and more contributed to an unrealistic price.
Honestly, i think long term, the price of STEEM will most of the time hang below 1 USD.
Go look @haejin's pending payouts around 5-7 days, he's cashing out barely cents now and wasting his potential to big curation profits by trying to self-vote himself. Free downvotes are changing the game.
Too late too late.
Mostly because STEEM is an inflationary currency.
Since there is a proportion who will always sell their new STEEM, then price is equivalent to the that proportion divided by the incoming money.
Or, there is a US$ reward pool that actually gets drained each month.
Most of the alt-coins being compared to have an equal income as outgo.
Also the only compelling reason to hold on to old STEEM is to influence the output of new STEEM. There isn't a compelling reason to hold versus sell your gains. Most people will tend secure the profit. They aren't selling their Steem Power, but they are selling the inflation which consistently places downward pressure on the token.
coz its the best coin... not :D
FUD happened.. then a rough hardfork.. then STINC laying off 70%..
Things were already dire when the layoff happened, though. At least this is what I seem to remember.
Good question. I have a couple of hypotheses. I think I will write a full article and post it here :)
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