Why powering down could end up in shutting down,
The original idea of buying vests (ie. powering up) was to have a longer term share into Steemit and I thought that idea was great. In order to power down it would take 2 years (1% per week) to get the full amount you wanted to power down.
It gave me reasonable comfort as new investor.
However even with 1% per week I was a little worried that whales powering down could still flood the system with steem.
Right now the system is unbalanced in terms of very few steemers holding the majority of steem power and basically even with 1% per week there could be a massive flood of steem coming in.
Surprise!!
I found out (I am relatively new to Steemit) that the powerdown is not 2 years but only 13 weeks.
where lies the problem?
I am not sure why they went for 13 weeks but it seems very odd to just change it, I haven't read a valid reason as of yet and I am on the case with this one.
I read one comment about the witnesses requiring to pay out in time as they get paid in steem power, but I can't believe that was the only reason for shortening the payout.
It "feels" very much like (not saying this is the reason they did it) those who are involved were not comfortable with having 2 years in place. Which shows a lack of trust from my point of view.
what are the implications of this?
There is no control apart from the 13 weeks over the people powering down. Whales and dolphins have no direct way of knowing whether their combined power down will flood the market.
If there is no limit in terms of how many whales can power down during those 13 weeks we are just hoping this will never happen.
when will the market crash by whales/ dolphins/ steemers powering down
Well this is probably a tough question to answer with many variables involved. But in the end it doesn't make for a healthy system if in periods where less investments comes in, there could still be an unlimited amount of people powering down albeit in 13 weeks.
Right now it should be possible to see how much steem is being bought and how much steem is powered up and down.
We can see that the price is reasonably stable.
However if in the near future (by coincedence) couple of whales and dolphins power down a lot more then usual, for whatever reason, at a time where investments are low and hardly any power ups have happened for a few weeks... things can go south very quickly.
It isn't unreasonable to think a worst case scenario will happen in the future and those 13 weeks will be an absolute nightmare for everyone.
solutions
Make the 13 weeks variable based on how the economy goes. In a healthy economy, 13 weeks would be fine. However if we are near the max amount of steem power that can reasonably be powered down before the economy get's flooded. We should increase the 13 weeks to alleviate the system rather then collapsing Steem.
Steemit I feel will fail once the system collapses on itself through power downs, it will lose investor confidence and the curation reward system be non- existant.
I just don't see any benefits for having the 13 weeks. Unless we get rid of the entire power up system.
Please put my mind to ease by telling me I got it all wrong! As that happens all the time 😄
Well that is true in many ways, but I don't think it is that unreasonable to assume that when people don't have a clue what max power down the system can take (in those 13 weeks) we will be very likely to test those waters.
Dare I say it in time we will test those waters and it seems to me this is unnecesary evil, when they can implement better logic to it.
A car might fall apart when you drive it, but it generally doesn't because it is build to perfection.
2 years or 13 weeks is very wishy washy and pulled out of the air.
As I see it the flip side of block chain post permanence is that things change, but posts cant be edited after 7 days. I'd been looking a long time to see if there was still interest to be given for SBD held, and I was also of the opinion that power down took 2 years, until very recently. That is a big change, as you say, and with no explanation . Unfortunately old posts can misinform, and there is no way of knowing - and no reason for newbies to imagine - that the information they have found is no longer correct. I also found it frustrating that when I searched a topic I had to open each post to discover when it was written. That I found frustrating when I was looking for time-sensitive information.
Of course one way we can all help maintain stability is to check out the witnesses and make sure we vote for the ones that look as if they have steemit's long term interests at heart. There;s a good post by Luke Stone, https://steemit.com/witness-category/@lukestokes/how-many-steemians-are-not-voting-for-a-witness-i-found-the-answer that shows how few steemians actually vote for witnesses. That has to be something we change...
the only thing for certain is that it is all uncertain, just like life
It's been 13 weeks for a long while now with no ill effects. Besides, if the market "crashes," it just means Steem is on sale for the rest of us! Is there real value in the network or not? That is the real question. Prices are always temporary.
Hi Jacob, I agree with that.
That could be because right now most steemers that powered up still think Steemit grows bigger and has a long term future. There is still a lot of faith.
From a post 11 months ago:
Users Powering Down or Converting Steem Dollars over the past 3 weeks have caused Liquid Steem, as a % of all Steem in Circulation increase from 2.84% to 3.96%. This doesn’t sound like much, however this actually represents a 61% increase in liquid Steem over the past 3 weeks. This is significant because, it is only this Steem which is tradable, and thus it is this which sets the price of Steem.
The thing that applies here is: if it can happen it probably will.
There will be longer periods where the market will flood with steem in times of investment hits a low.
Prices indeed wil crash for possible months to go, no curation rewards etc. Yes we can buy cheap if that happens and more steem get's distributed so slowly it will become a more balanced system. These are few of the upsides.
Downside:
This market is different then a normal market. Within 13 weeks the liquid available steem could tripple tot quadrupple or even more and there is no control over it.
Why would we want to expose ourselves to these risks?
Yes over time people might buy up steem again, but in the mean time there might not be a curation system that works. In effect this type of crash shows investors the power down system has to big an influence on the working of the curation system,
So what are the benefits of having 13 weeks?
And how can they possibly outweigh the possible collapse of the system? I struggle to find them.
The whales are happy with it as they now have a quick way out.
What is in it for us?
I think the problem will not exist when we have a real infrastructure where we can use Steem to purchase items.
Powering down will only re-introduce the steem from the whales in the system, increasing payouts for all. This in return will generate new whales, but probably more smaller whales.
Which is only good, the current situation with the huge whales does not feel right to me.
yes the balancing is good, but to what cost? If too many whales sell it all it will take months for steemit to gain momentum again. We simply don't have enough buying power to deal with short term influx of massive amounts of steem.
We can only hope the whales realize that they would only hurt themselves by selling off large volumes of steem at this point.
Maybe we need some sort of temporary "solution" to avoid multiple whales selling at the same time, or even just one like @ned or @dan, would be hazardous.
It hasn't happened yet, but if someone decides he no longer supports steem that could be very painful.
However, unless you're planning on selling yourself, I wouldn't be too worried. I'm sure steem will bounce back, even if it takes months.
thx for your reply, I am not powering down holding for the long run. But I am trying to find out Why they went for 13 weeks.
Why did they first go for 2 years?
Right now the only thing that makes sense is that people at the higher levels can reap rewards now whenever they feel like it.
They went for a full risk option from 2 years to 13 weeks.
There must be a bigger incentive here and we don't know it, that worries me 🤔
I agree with you.
Found this; the original mention of reducing to 13 weeks: https://steemit.com/steem/@steemitblog/proposed-changes-to-steem-economy
And another interesting post: https://steemit.com/steem/@beanz/powering-down-going-from-104-weeks-down-to-13-options-to-power-down-slow-and-other-ideas
I'm not sure yet if it is the best solution, but for now I'm afraid we're stuck with it.
Although in a later post Steem Inc said they would involve the user more in all the decision making, who knows.
thx blevley I had read those as well :). But the proposal has very little info about why they changed it. If they want to attract short term investors we have steem for that.
I will try and find out where we csn give our feedback, maybe try my luck with the witnesses.
Thanks for information!
i feel better by all your comments on this am just new here thanks