Some Thoughts On Tokens, Burns and SMTs
With the proliferation of tokens on steem-engine and SMTs to look forward to, i'd like to throw out some ideas about how it could affect the Steem price. And the concept that's guiding my thoughts is that of 'equilibrium'.
A hypothetical example
Let's say you post a picture of your cat on Steemit everyday. You have a few hardcore followers but not much outside attention so your daily rewards are pretty stable at $1.
Now, there's a new "Cat Community" token that's created to reward posts about everything to do with cats and naturally, your posts are rewarded. So now you get that $1 in Steem and X Cat tokens. How much are these Cat tokens worth?
Equilibrium
At the start, the value of Cat tokens should be however much Steem was burned to create the tokens. If 100 Cat tokens are created by burning 100 Steem tokens, then each Cat token would be worth 1 Steem.
Further on out, we have to think about the supply and demand of the coin. This is more straightforward and we can leave it to the market to do its job. Similarly with inflation. The market will take care of the new coins being created and adjust its value accordingly.
Overvalued coins
If you can create a coin without burning / trading another asset, then something will have to give down the road. In the absence of outside money either the price of Steem has to fall or the value of Cat Coins have to fall. Otherwise, the system is in disequilibrium.
Expected future earnings can give tokens a higher value as demand pushes prices up. I may love cat posts, and be prepared to pay 1.50 STEEM for your Cat token as I anticipate big curation returns. I convert 1.5 STEEM into Steemp, and buy your CAT. That STEEM is locked unless you withdraw it.
I think both STEEM and tokens can go up. It all depends on whether people keep the steemp on steem engine, or withdraw and sell. Over 1 million STEEM is locked up as steemp at the moment, that's 1million (potentially) not being sold on exchanges pushing prices down.
Lots of other factors at play here beyond just how much STEEM gets burnt to create a new token.
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Definitely agree that both steem and token prices can rise at the same time.
Indeed, keeping the steem peg on the exchange is important for the price of steem.
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