How to buy a Steem Dollar for less than a Dollar
If you want to convert your Steem Dollars into Steem NOW and then sell them on an external exchange then you'll have to pay a steep premium.
However, if you're of the belief like I am that Steem Dollars will be relatively safe for a while you can pick up that premium for yourself, and simultaneously be supporting Steem.
here's how..
We have the internal market which is trading higher for steam and the external market which is trading lower.
The strategy would be to buy Steem on the external market with BTC, transfer it over and then sell the Steem on the internal market for Steem Dollars.
The internal market STEEM/SBD
The external market - STEEM/BTC
Please take note the the price in the internal market is in Dollars, not Bitcoin. We are looking at a price on the bids of $0.387 in the internal market to $0.2389 in the external.
Buy a Steem Dollar for less than a Dollar?
Lets say you have $100 of bitcoin, you go into the external market and buy Steem, you would get 100/0.2389= 418.5 Steem.
You would then transfer over that Steem to your wallet on Steemit to sell into Steem Dollars - looking at the best bid above that would net you 418.5*0.387= $161.9 worth of steem dollars.
Why is this, whats going on?
Some people just can't wait to cash out, they want to get out as soon as possible so are willing to pay a higher price - currently the internal market is the only way to do this. The people who are willing to buy it off of them are providing them with that liquidity as a service and being paid for it. However with this being the first payout, the opportunities are huge.
Give it a go if you have some spare crypto lying around. Free cash anyone?
EDIT:
I gave it a go, transferring over 0.05 BTC to bittrex
I managed to buy 141 Steem on bittrex for around 0.000352BTC
I then sold on the internal market, netting myself $50 steam dollars from bitcoin worth $33.7
It took around 6-7 minutes.
Remember there is no "guarantee" that 1 SD will ever be worth 1 USD! It is supposed to and it probably will, but that is the bet you are placing if you make this trade (or at least that it will get closer).
It seems the gap is tightening, looking at 0.2296 vs 0.314 or a 36% arb. Rather than 61%.
How is it looking today?
There's a huge disparity at the moment, my initial thoughts were that the price of steem would go down. Now instead I'm left with the option of purchasing the Steem Dollar at a huge discount, waiting for it to correct back up to a dollar and then either buy Steem Power if the price of Steem has dropped or convert to BTC if it's risen - with a nice 60% bonus as a reward. Sounds like a plan!
Very kind of you to point this out, wingz!
Now, if the people cashing out SD dump their STEEM on the external market, that price will go even lower than 0.00035294 BTC, no? That would amplify your construction, if the internal market stays the same... (people will keep cashing out SD the coming days, so that is a reasonable assumption imho)
In other words: wouldn't waiting a little bit longer be more profitable?
I look forward to your view on this!
You're correct, if the internal market stays the same then you can ge in at a better price. It's gone down more than bittrex though. It went from 0.38 ish to 0.31 ish while bittrex only dropped from 0.000352 to 0.000340s in BTC.
I have a market neutral stance, I don't care what happens to the price of steem (in this trade), only that the difference in the internal and external markets tightens. The premium drops. It really should because when I first looked 60% is just ridiculous.
Now stands at 29%.
I didn't want to wait any longer, so I executed my order :)
Thanks again for sharing this!
Haha, good stuff, glad I could offer some value. Now... fingers crossed, the market adjusts over the next couple of weeks.
Looking behind, it would have been even more profitable to convert to STEEM and hold. Look at its price now: 0.0026 BTC
Not what I expected to happen xD
But your trade will still earn a nice return ;-)
Yeah, all in hindsight though :) I ended up converting everything to Steem after the price rose 150% and bought some more. The markets still have some inefficiencies and there are lots of opportunities on the external markets, so I'm slowly building up my stake there. Completely crazy last few days.
Is there any way to change to settings in the internal exchange so that I see the prices in relation to Bitcoin not usd?
Managed to get on 0.000341s in bitcoin. which is around 0.23 cents and I bought Steem for around 0.313 for 1000 Steem which is at a 36% premium. Looking at the internal market it looks like there are just liquidity bots all the way down to 0.3s with 50 steem purchases.
@anonimau5
The disparity may get wider ( in which case I'll just keep buying Steem Dollars), but it just dropped from 60% to 36% in a couple of hours, most of the bids in the internal market look like a liquidity bot in 50 steem chunks. I have confidence that the overall market cap of steem can absorb the 300-400k payout and the steem dollar will reach a value of $1. Plus I view today as a special case where people don't really care what price they're getting, they're just 'testing' to see if it works. I'll happily take the other side of the trade in that case :).
@will-zewe
Not that I'm aware of, it's all pretty basic. Even going to market needs some work right now, if there's a bid of 0.312 that I want to sell then I have to sell for 0.311 or else my order just shows up as an offer of 0.312.
FYI: https://steemit.com/steem/@steemitblog/introduction-to-steem-liquidity-rewards
Now it is the other way round.
Any ideas on how to take advantage of that?
Looks that way. I'm seeing external $4.27 and internal $3.06 if I'm looking at the correct numbers.
Is this still working
I am confused how steem works, I just joined today. So does one accrue steem dollars through upvotes? Or can you just outright buy them using USD or bitcoins?
This is beautiful.
Haha, not quite relevant now. We're looking at steem dollars above $2 at times - oh how times have changed :P
Haha I was just thinking about this, googled this idea, and out came this post.