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RE: This Might Be Obvious To Some, But It Wasn't To Me - How Powering Down Can Actually Increase Your STEEM Power Over Time
some questions:
You powered down now you have steem, you buy SMD on the internal market and you convert to steem again using the built in feature. meaning that within a week you will receive steem. and you said that you will get more steem than powered down. Are you working under the assumption that the steem price will decline every week - over time ? if so once a price pump happend you lose steem.
also don't you think that the week you lose to wait for SMD to convert to steem you could have earned the interest on SP instead? seems like the safe method.
It's very important that you buy it at a discount. In other words, the price of STEEM on the open market has to be a fair bit lower than the price that STEEM is being sold for on the internal market to SBD.
No, this is not working on the assumption that STEEM will decline every week over time. It is assuming that you are purchasing SMD on the internal market at a discounted rate to the open market price every time. This trade may not be profitable every single week, but for as long as you can continue to purchase SMD on the internal market at a discount, it is more likely to be profitable than not over time.
The amount of SP you would earn over the week is likely lower than the lump sum increase you can gain by taking advantage of the spread. Obviously, again, this opportunity only lasts for as long as there is a discount on SMD.
Yes, plowing it all into SP is absolutely the safest method to increase your balance. I wasn't disputing that. But to me, powering down to get the weekly payout of liquidity to take advantage of market distortions like this is a no-brainer. (I'm not taking out everything - just allocating that weekly payment however I see fit.)
let's say you powered down and you go to the market and the there are no discounted SMD on the markets. than you power back up instantly ?
You got it. From my understanding, there is little to no penalty for doing so.
Also keep in mind the discount has to be enough to be worth it. Personally, it was an almost 10% discount for me when I purchased SBD, and I've seen it as high as at least 15% since then. That means the median price would have to be at least -10%-15% over the next 7 days for you to lose on the trade.
If the discount was only 1-2% it wouldn't be worth using the conversion feature. I might just hold SBD in that case, or plow my earnings back into SP.