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RE: Steem Price is being pushed down by 1 person! Speculation on why and where it may end up
All orders are placed at or above price on coin market cap. These orders are helping to maintain the steem dollar peg.
Proceeds of these sales are kept as steem dollars which keeps value in the platform while helping to distribute steem.
It looks pretty sketchy to have downvoted the top post and be the only one who does it. It gave you an opportunity to address everyone's concerns, not that you did a very good job.
The post that you downvoted for no reason that anyone can see besides sketchiness also made the observation that steemit is flooding the market with hundreds of thousands of steem, killing the steem price.
@delicious and the correct answer to that is to buy and hold SBD since that is the literal equivalent of opening a short position on steem. What @dantheman is doing is exactly the correct move, it makes it easier for others to acquire steem and gain a voice and influence while the platform is still nascent.
@dantheman is in the unfortunate position of damned if he does and damned if he doesn't. However the sooner this is over with, the sooner the healing can begin. It's catharsis.
BTW @dantheman I'm a bit pissed I converted $100 USD worth of SBD a week ago and got back about $60 USD worth of steem today. Point of SBD is I'm supposed to be able to get about $1.00 worth of steem and all I need to do is have patience and wait a week. $0.60 does not qualify as "about". I hold SBD so I'm not assuming bagholder risk on steem. Can you please look into fixing it so that we use the current market price or the 24hr avg price? Otherwise the only smart move is to hold something else while we wait out the inflation if there is any chance we will need our money within a few weeks.
@delicious isn't complaining about the fact @steemit is selling STEEM, but the fact @dantheman downvoted the post. He is right that this looks really bad. The guy just reported the selling without interpreting it! In one hand Dan explains that it's all good and there is nothing wrong, and on the other hand he downvotes the post to dig the matter under the rug and doesn't even explain his downvote. I had no intention to upvote that post, but given the deliberate attempt to downplay the matter, Streisand it is.
Thanks for the explanation. For a newbie who hasn't even read a white paper yet it is confusing. Shelled out some $ into steem, because I believe it is going to become a new stronger non hijacked reddit we need so much in order fight against corruption these days.
@williambanks. With conversion you get (about) $1 expected value of STEEM. You do not get literally $1 worth of STEEM, since volatility during the conversion period can work in your favor or against you (I've literally experienced both so I can assure you it works both ways). I think maybe that needs to be communicated better (though mostly my opinion is that the conversion option is unsuitable for most users and should be removed from prominent placement in the UI and left to experts).
I think the point is that if it's a 7-day moving average against STEEM like it is now it will be systemically undervalued due to built in STEEM inflation
@nikolai Yes but only by a few percent (will be more like 1% in the future). That can be accounted for by slightly adjusting the feed rate. I have already been aware of this and would be suggesting to witnesses to make that adjustment if I thought it were relevant. At the current time SBD has been -25% and +50% from par, so these small tracker errors aren't that important.
Hello Dan. I have a few questions. I am shocked that an account exist with 50% of the total steem supply. I always believed that the intention of steemit was to be decentralized. Could you help elaborate on these questions?
It is essentially the not-yet-distributed coins that are being sold (to raise development funds as well as distribution) as well as given away to new users (for user recruitment and distribution). Steemit will say that they got them from mining, which is technically accurate.
Hello Smooth. I really appreciate your response. So technically the owners of the steemit account are the miners? And the decision makers are Ned and Dan + a third person? Or is there no owner of the steemit account and Ned and Dan only uses the account as to serve the development and growth of the whole steemit platform and community?
Steemit Inc. is the business that developed the Steem code, launched the blockchain, and owns and operates the steemit.com web site. Steemit Inc. owns the 'steemit' account, which was created and filled by mining. Dan and Ned are the founders of Steemit Inc. and I don't believe anything else is publicly known about the ownership of Steemit Inc. other than that they had some private investment before the launch.
Hello smooth. I received several answers fro this question. But your information is by far the best reply. I think that this is important information. It changes the fundamentals for trading steem tokens. :)
Mayneed a hardfork to resolve this.
It's both really. Supporting SBD while also hurting the price of STEEM. It may be above the current price but a huge sell order slightly above market is still going to weigh on the price. I don't think that is really questionable.
That said, it is and always has been the advertised plan of 'steemit' to sell a large amount (approximately 25% of the total holdings of that account; approximately 20 million USD worth!) of STEEM, which indeed redistributes it to buyers, so no one should be surprised by any of this really. I might disagree about strategy as to how fast or when to sell, but that is not based on anything objective at all. Steemit's strategy here is certainly defensible.
The original post was mostly a reasonable analysis, pretty balanced in pointing out the redistribution effect, and original work on a topic of obvious interest that no one else has published afaik.
(I deleted my own comment)
The Secrets Steemit's Whales Don't Want You To Know!
was looking for a way to downvote this, unable to remove upvote after accidentally...
This is my biggest problem with the "whales powering down" theory of the price slide.
With so much money in SP, it would be absurdly self destructive of them to not put asks in above the market price.
That is to say, its not like theyre just dumping their steem on the exchanges priced to sell immediately, no matter how far into the order book they have to push.
I think its much more likely for medium and small powerdowns to be doing this. Especially if theyre coming from non-market-savvy traders.
Thanks for the explication, Dan
To everybody who's holding steem power and is worried;
The steem dollars the guys are selling, are used to invest in steemit; they need to hire more staff and those people need to be paid, they need more office space, more computers, ever bigger and faster servers and so on ...
So, (as long that's what they're actually doing with the money and not snoring cocaine of hookers asses') that's why YOUR steem power is an investment.
The prices going down is just a temporarily effect of this being the early stages . While all it takes is 1 steemit story that makes it into the mainstream news cycle and BOOM 1.000.000 new users overnight; at some point that will happen, but ... before that happens the site needs to get better, a lot better, so ... that's why they need money; to pay for the developers that will make all of our wishes come true :D
(in other words; power up as much as you can, before steemit goes mainstream)
https://steemit.com/ascensionteam/@l0k1/steem-is-not-a-blogging-platform-steem-is-an-ad-hoc-public-and-transparent-corporation-let-me-explain
From what I can gather, this giant whale is in fact a tool of the developers for helping moderate the SBD exchange rate. Naturally some of its funds have to be powered down, in order for it to fund the system, pay the website bills, pay for programmers and architects and whatnot.
It may not always be the biggest whale. In fact, this power down it is doing, will drop its' controlling share, and other big investors naturally will then have more say in how to do things. I think that this is working exactly how the mining rewards distribution in Dash works. The central business of Steem rightly should be Steem itself. @steemit is the account being used to this end.
Besides all this, by selling steem this way, and the price going down, I mean, it has to hit a bottom point at some level, and at that point, Steem becomes a more attractive investment for further injection of funds from big investors. And the strategies I outline in my article above also point towards exactly how one goes about doing this. I am quite sure that at least part of what I have said in the article will be borne out by how things progress from here on.
Steem is a corporation, public and transparent. Every holder of SP is a shareholder, and has by this the ability to have some influence in a small area of the activity of the whole Horde, and with the funds, both holding, vesting and selling, the backbone of smaller, subunits, that I am terming 'departments' various kinds of businesses, that will hold some, vest some, and sell some as they go about operations.
It's a whole new model for how to business, something a bit like an investors club or a startup club. I believe that eventually it will become a model for all businesses to run with. This is also why I think that once the powerdown is on the slow-down, a lot more money will come into the pool, and the structure of the forum system will enable marketing of the businesses run by the Departments.
It's also why I am developing what will eventually be a way to properly organise the membership of these departments, and indeed even the names will become tradeable items, if a nameholder decides they want to quit running it, they can negotiate a price to transfer it to another owner, who will then administer the group membership, and the activities that the groups do. This will function as a kind of personnel management system.
yep, you obviously did your homework :)
following
Let them have a couple hookers per programmer and some nose powder. The CEO gets only one hooker, and she has to be a midget. We all stand to benefit from increased team morale.
after they fixed this;
https://steemit.com/steemit/@luminousvisions/there-s-no-flow-in-steemit-you-cannot-jump-from-1-post-to-another
they can have a party, but not now ;-)
me first ME ME ME !!!
Shouldn't the peg be maintained by the mechanics listed in the white paper?
The conversion function is clearly inadequate, especially when there is heavy sell pressure and limited demand. If the price of STEEM is almost always going to decline, the conversion function is only going to become viable if SBD is heavily undervalued by the market... This is a condition that hasn't been met, since the price of STEEM is dropping at a rate which exceeds the market's discount on SBD.
The other mechanism is the interest rate. The interest rate has literally never changed. I understand that this is up to the witnesses, but they seem to have little interest in increasing the interest rate, despite market conditions demanding it according to the white paper.
"The peg" isn't an actual thing if it requires market transactions like this. Then it's just a target price enforced by the most wealthy and influential actors...
Actually the mechanism in the white paper relies almost entirely on market participants to engage in trading in order to maintain a peg. (Steemit counts as a market participant, in fact currently they are almost by definition the largest market participant.) There is nothing in the white paper or in the software that directly trades on exchanges at all, so the only way exchange prices end up being close to $1 is if market participants trade in a manner to make that so.
Well, yes... That is true. Ultimately market participants trading SBD at around $1 is how the peg manifests. However, the white paper lays out incentives that are designed to influence the decision making of market participants and encourage them to price SBD near the target.
The most well known of those is the conversion. That provides significant risk of exploitation to traders pricing SBD too low through arbitrage. It influences the supply side, as it should prevent traders from being willing to sell SBD at heavy discounts... Furthermore, if SBD holders are willing to sell well below $1, buyers can confidently purchase it knowing that within a reasonable time frame they can attain nearly a full $1 of value (or even in an unfavorable market, more value than the seller was willing to take). That works on the demand side, by enticing buyers.
The conversion also can function to bolster price by decreasing the supply... Literally by removing the quantity of SBD in existence... but the same effect would be achieved by simply taking them off the market and hoarding them, and that seems like a much better option given the other mechanism designed to persuade traders to price Steem Dollars near $1.
That is the interest rate, which defaults to 10%. That is a very healthy return by almost any standards, given that the risk is essentially limited to catastrophic failure of the economic system. And in that case all this is a moot point, anyway.
Unlike Steem and Steem Power interest, Steem Dollar interest is not intended to debase the currency. It is designed to entice people to hold SBD. If everything is working as planned, it is reasonable to assume that at some point in the future Steem Dollars will be close to par, even if they are not currently... So it becomes much more attractive to wait and collect the passive income than take the loss by selling.
The interest rate should be responsive to market conditions, and it should be raised if the price of SBD remains depressed. That will further encourage holding instead of discounted selling. I'm not sure whether the strategy of raising the interest rate has been consciously abandoned, but I've seen little indication that it will be implemented. I'm not sure whether a 10% discount warrants such action, anyway.
But those are mechanisms designed to influence the decision making of market participants. Those mechanisms are the peg. Directly placing market orders... now that is something entirely different. That's market manipulation, which I can't imagine would be necessary or desirable if the peg as described in the white paper was functioning.
I don't know if the white paper says so but it is clear to me and Dan has also said that interest rate changes are a long-term factor and don't really have much influence on short term supply and demand. Given that SBD has been between -25% and +50% of par in the relatively recent past I don't think much can said about what the interest rate should be. That's just, like, my opinion of course.
As I said steemit is a market participant. I don't see how that is questionable. If they were push the price away from par, you would have a point about it being "manipulation", but they are doing exactly what rational market participants would do if they find SBD selling at a discount and believe that the pegging mechanism works over time: They are buying it.
Thanks for the response Dan. Can you indicate if this is ongoing feature of the market, or is this for immediate funding needs (temporary)?
I am here for long term:
https://steemit.com/steemit/@steempowerwhale/who-is-powering-up-or-am-i-alone-the-steemit-power-up-club
But what usually happens with huge sell walls is everyone else tries to sell lower. When everyone is trying to race to sell lower the price crashes fast.