My Humble Plea To Steemit's Megawhales
I saw this comment by @dantheman:
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 got me thinking. Like a lot of other people, I've been more than a little concerned with the direction things have been going lately... it was originally written as a comment to @dantheman, but it developed into something that was more appropriate as a post, and the message is something that I would like other whales to consider as well
I humbly ask that large stakeholders please consider the following...
Since Steem and Steem Dollars can only exist inside Steem accounts, it is a little ambiguous what you mean by "keeps value in the platform." I can only assume that it means the price of Steem would be driven down more rapidly if this Steem were to be dumped on an external exchange.... This begs the question whether even more value can be preserved by not dumping large amounts of Steem.
I'm not sure of the utility of "distributing Steem" when the price is declining as it has been. There would appear to be an abundance of Steem available for purchase at rates which would be very attractive if people had faith in the future of the platform.
I have seen it mentioned that you are planning on "redistributing" Steem across a larger spread of accounts by selling off large quantities of Steem from the largest accounts. On its face that seems like a reasonable goal, but I think it's probably not in the best interest of the platform or most users. The immediate effect is a sharp loss of value due to declining prices.
It has also been suggested that a lower price might entice new users and investors. I'd like to push back on that idea. Having some arbitrary number of tokens is less important to a prospective investor than the likelihood that they will retain or increase their value. While savvy investors and knowledgeable users will realize that the interest Steem earns is deflationary by nature, it is important to nurture an expectation that the overall value of accounts will be preserved... after all, in theory the price decline from dilution should be proportionate to the increase in the number of tokens. All else being equal, it shouldn't result in a loss of value.
Since it would only make sense to distribute it in order for it to be powered up and spread influence over a larger number of users, I think you have a much better option at your disposal... You can power down and hold liquid Steem, without driving the price down by dumping it on the market.
This would benefit a larger number of users, and strengthen the platform. It would prevent the loss of value that everybody is experiencing due to dwindling prices. It would also help normalize inflation, and result in slower dilution of SP balances. As we are above 95% vested, both SP and Steem balances are being diluted. Only the largest account holders have the ability to make the conscious decision to slow the debasement of the currency that we are experiencing from deflation alone.
While I don't want to deny you the right to "cash out," I think the financial interests of yourself and similarly situated account holders might be better served by holding liquid Steem and selling it more slowly. The loss of value through dilution would likely be far less significant than the loss of value from price declines, since it would only effect the liquid tokens... in fact, accounts across the platform would retain more of their value.
Powering down will result in a better distribution of influence, but selling the resulting Steem without an abundance of caution is a perilous game. Nobody wants to see the values of their accounts dwindle away to nothing. It is devastating for confidence in the platform and the currency. Existing users will be driven away and new users and investors will not want to join. I'd implore you and other high value accounts to take these things into consideration and limit the amount of Steem that you are dumping on the market.
You make some good points but I think true value will come from utility.
If Steemit continues to evolve in a way that makes people want to use it then it (and Steem/SP) will increase in value over time.
The past peaks in value were just the usual crypto shenanigans created by deliberate pumping, bandwagon jumpers and the ether meltdown.
They did not represent the true price of STEEM at all. It is not surprising that some people used them to sell out.
If Steemit does things right then concerns about people powering up, down, left or right will become insignificant.
If things go badly then another competitor will come along and replace it.
Trying to artificially engineer success by expecting large holders to act in the "best interests of the platform" has never worked for anything.
It will always fail because it is false value and particularly futile for a utility based cryptocurrency like Steem.
I don't think it's artificially engineering success to use the incentives built into the platform creatively and constructively.
You make waaay to much sense man!
I'm sorry. ;)
Haha! You do raise more good points than I addressed btw, since I didn't say so or really address them all above. Great work bacchist, thanks again for the inspiration on my upcoming article.
IMHO The best solution would be to decrease the reverse split to something like 3 months at 1/1.25 while also provinging liquid rewards of 25% instead of 50%. This would increase the coins supply by 25% in 3 months then reverse it back to the norm.
Example :
100mill total tokens
in 3 months total tokens would be ~25% more or 125 million
Reverse split of 1/1.25 occurs bringing it back down to 100mill and the cycle starts again.
This would incentivize smart traders (better volume) while also incentivizing long term holder (SP owners).
Interesting idea... a bit extreme, tbough
While I'm definitely not an economist or investment advisor (I'm a full time waiter) I don't quite worry too much about dilution of the Steem market at this early point in the platform/currency, and I say that as someone who is buying now, albeit in meager amount ($25 added to my coinbase two days ago, and will make my Steem purchase when that transaction clears in a few days).
I’m pretty convinced that this platform will explode to millions of users within a couple of years, and that that is where the “demand” side will kick into overdrive, almost regardless of how carelessly or recklessly (in many ppl’s opinions, that is, not mine) value is “dumped” during this Beta period.
More in a sec
I won’t however argue or agree with the idea that “a lower price might interest new users and investors” (as you point out and more or less rebut already), because I think many (millions of?) new users will continue to come simply for the free blog that is ad-free - (my early thoughts on that here https://steemit.com/steemit/@ibringawareness/would-you-be-on-steemit-without-the-financial-incentive-for-the-record ) as it’s a cheap (free now) webhosting solution in many ways - one of the primary reasons I am here in fact - and thus "the demand" will potentially always be there.
What I don’t think people are putting into this equation yet however, is how the Steem reward for sign ups keeps dropping ($3 now, but $5 when I signed up only ten days ago). My point is that eventually it may “only” be free to sign up once everybody’s heard about it, and then possibly even charging (gasp!) for certain functionality, like hosting images, hosting audio for independent podcasters (like me). Imagine if they let the “value” of Steem drop to almost nothing, but at some planned point decided to charge only $1 for a membership (“to avoid abuse” / “prove you’re not a fake account”), then just give you the equivalent in Steem (or $1 monthly. Or $12 annually… or $99 annually if you’re a business owner who wants a second account just for your business or organization once this takes off in the real world) …..
My point is, there are so many ways that they can eventually start making money, effectively ensuring that the value of Steem has no possibility of crashing to $0, because it will always be pegged to a low, equivalent at minimum to the “price” joining, of such a quality platform, that also charges for more premium service. That ongoing and all but "guaranteed" revenue stream will also always be of interest to potential investors.
Okay I'm done, thanks!
I've had thoughts similar to a few of the things you mentioned, but I don't have quite such a rosy outlook at this point. I want to believe, though!
Thank you, and especially thank you for the upvotes. Based partly on not being "flamed" or quickly proven wrong in my unexpert opinion expressed, I am now typing my comments up as an article, combining them with another comment I've made elsewhere. If it does crazy well, I will probably owe you a percentage for getting me the path, haha.
No need. Glad the gesture was appreciated.
And ummm, do you realize you just said "I want to believe" to someone who lives in Roswell New Mexico? And I alluded to my podcast above - since I don't think it would be spam at this point in the conversation, check out http://www.Area51.fm - two weeks ago my guest (former Pentagon / Dod cyber security expert) came on to talk about the Blockchain and Steemit, and I haven't stopped Steeming since).
Weird!
Okay it is done, and I linked to your article (this page) as well of course from inside the text. And I apreciate being called "rosy" - I used that! Thanks again , Guy https://steemit.com/money/@ibringawareness/steem-price-plunging-and-why-i-m-happy-about-it-because-of-steemit-s-secret-future-business-model-you-we-don-t-see-or-know-about
1 SBD = 0.88 USD right now. The peg has slipped quite a bit. http://steemprices.com/
I know there was a spike, but accounts have lost about 20% of their value in the past week. Tough break. But, of course, that happens. If you have SP, you're not in it for the week anyway.
Not offering solutions. I really don't know what's best and most equitable. And each user should be able to make their own decisions. I'm just observing and pondering...
My horror at realizing I said deflationery when I meant inflationary, but it was past the first payout and I couldn't fix it.
Replying despite downvotes.
Problem is that this only works from a whale viewpoint if every whale does this. If there's one whale selling, the "good ones" are losing money. And who trusts everyone else? Exactly, nobody.
A valid concern, for sure... I think some of that could go on and it would still wind up making them money, though. The upside is incredible when you think about it.
Isn't that called prisoner's dillemma? Or am I not thinking clearly.
It's a lot like that, yeah.
I would say it's a little different because in this case it's plausible that no individual could do better by not colluding with the others.