To Power Up or not to Power Up, that is the questionsteemCreated with Sketch.

in steem •  last year 

Hi Everyone,

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In June 2017, I came to Steem(it) as a content creator. I initially shared my YouTube videos plus a little more information about the video in the Steemit post. After a couple of months, Steemit became my number one platform to post content. I wrote long posts as well as shared videos. Not long after that DTube launched, I started posting videos directly to DTube. Most posts earned hardly anything but occasionally I hit the jackpot with a whale vote. After 6 months on Steem, I invested. I bought about 15,000 Steem at around $0.90 to $1.00. A year later, I bought around another 60,000 Steem. This time I paid about $0.30. The price might have been lower but the opportunities were greater.

I believe Steem is a great investment even though the price has fallen significantly from when I first arrived in June 2017. Powering up provides great opportunities to earn more Steem. Interest on Steem Power is above 2%. If you actively curate content, you could be earning another 15%+ per year. Even if we look at that in real returns (market cap held constant), that is about 7.8% ((1+returns)/(1+Inflation)-1 or 1.17/1.085-1). Considering the extent of development on Steem, the market cap should be rising.

So what’s the problem?

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I have discussed the Steem ecosystem in detail in my series, ‘Is the Steem ecosystem in disequilibrium?’. See the links below.

Is the Steem ecosystem in disequilibrium? (Part 1 – Witnesses)

Is the Steem ecosystem in disequilibrium? (Part 2 – Content Creators and Curators)

Is the Steem ecosystem in disequilibrium? (Part 3 – Applications and Services)

Is the Steem ecosystem in disequilibrium? (Part 4 – Passive Income)

Is the Steem ecosystem in disequilibrium? (Part 5 – Combination of solutions)

These posts focused on the internal workings of Steem and several of the problems I believed to be holding it back. Hardfork 21/22 is contributing greatly to mitigating several of the problems that I highlighted. I will provide a more detail analysis of the effectiveness of Hardfork 21/22 in a few months. This will give the Steem ecosystem some time to adjust to the many changes that came with that hardfork.

In this post, I want to discuss problems external to the Steem ecosystem, which greatly affect the the price and market cap of Steem.

The bear is only part of the problem

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When we think of problems external to Steem, it is easy to blame the cryptocurrency Bear Market (Altcoin in particular). However, Steem has been hit particularly hard. When I joined Steem in 2017, it was in the top 20 in regards to market cap. Steem is currently struggling to remain in the top 80.

So why is Steem being hit so hard?


The answer could lie in the current nature of cryptocurrency markets. I’ll use Bitcoin as an example.

Figure 1: Bitcoin prices USD 1 July to 1 October 2019

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Source: Adapted from CoinMarketCap, accessed 02/10/2019

Bitcoin could be considered one of the less volatile cryptocurrencies as it has a larger market cap. However, the price of Bitcoin can rise and fall very quickly. As you can see from the graphs, over the past three months Bitcoin has had short periods (couple of days to a week) where the price has moved substantially (10% to 30%). Every price move is an opportunity to profit from short-run speculation. Many cryptocurrency enthusiast are reasonably good at predicting price movements. I would expect several cryptocurrency enthusiasts would have made a profit from trading Bitcoin even though the price is considerably lower than 3 months ago.

How does this affect Steem?

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Traders profit from Bitcoin and most other cryptocurrencies because these currencies are liquid. If their timing is good, they can buy the lows and sell the highs. Traders can also profit by holding liquid Steem using the same methods as with any other cryptocurrency. However, liquid Steem has a disadvantage over many other cryptocurrencies. That disadvantage is a higher inflation rate (higher percentage increase in supply of Steem). The higher inflation favours holders of Steem Power, they receive interest and curation rewards. However, Steem Power is not liquid. It takes about 3 months to fully Power Down. The potential rewards of holding Steem Power exist to encourage more people to hold it. However, are these rewards greater than being able to trade liquid Steem or any other cryptocurrency for that matter? Figure 2 contains the price of Steem over the previous 3 months.

Figure 2: Steem prices USD 1 July to 1 October 2019

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Source: CoinMarketCap, accessed 02/10/2019

Over the previous few months, there has been little opportunity for holders of liquid Steem to gain from speculation. However, there are normally opportunities. See Figure 3 below for Steem prices for 2019.

Figure 3: Steem prices for 2019

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Source: CoinMarketCap, accessed 02/10/2019

So which is more profitable, holding liquid Steem, holding Steem Power, or holding another cryptocurrency? That is not a straightforward answer but in a volatile market, higher liquidity provides more opportunity. It seems that there more investors that are more concerned with short-run speculative gains than long-run returns. Hence, liquidity is preferred. If cryptocurrency markets become more stable, holding Steem Power will most likely be more advantageous than holding liquid Steem. However, cryptocurrency markets may not become stable for a very long time.

Steem needs to be competitive during this volatile period. There are a few possible ways this can be achieved.

An option for a shorter Power Down period

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A few people have suggested that users should be allowed to Power Down in a much shorter time (e.g. one week) if they burn a small percentage of their Steem (e.g. 5%). This would give the user more liquidity to profit when the price spikes as well as being able to enjoy returns from holding Steem Power. The small percentage of their Steem burnt would also be good for reducing inflation.

So what’s the downside? Earning Steem requires effort. Curating content takes time and requires involvement in the community. Probably something a speculator wouldn’t do. Following a curation trail is considerably less effort and the most likely choice for someone who is more inclined to speculate than curate content. A burn requirement would still require a user to hold onto Steem Power for a little while to recover the Steem burned during a quick Power Down. I am guessing 6 months. Would a speculator be willing to do that when there is no cost to sell Steem if it was kept liquid? A one week Power Down period is a long time to hold a coin when prices can jump by more than 30% in a week.

The reduced Power Down period suggestion would be more appealing for investors who have some commitment to Steem. For the benefit to these investors, the option is definitely worth considering. However, this may make very little difference to the price of Steem.

Targeting investors outside the cryptocurrency world

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Many of the largest stakeholders of Steem have focused on attracting cryptocurrency enthusiasts to invest and post on Steem. As described above, many cryptocurrency investors are focusing on short-run gains and not long-run investments. Maybe the focus should be on people outside of cryptocurrency. Maybe the focus should be on people that are willing to make long-run investments and grow a brand. When I bought Steem, I considered Steem as a long-run investment and I was not looking for a quick gain. If I kept my Steem liquid and sold in January 2018, I could have made $100,000. That sounds like a missed opportunity but I didn’t know the price would jump by so much in such a short time. If I had powered down immediately, I could have made $50,000; the price didn’t stay that high for very long, which is quite typical of cryptocurrency prices.

If we focus on investors that are interested in the long-run growth of Steem. Steem will become less susceptible to the short-run price fluctuations of the cryptocurrency world. Steem will be able to climb in market cap rankings regardless of whether cryptocurrency is in a bear or bull market. Cryptocurrency investors will see Steem as a stable coin during downturns and buy instead of sell.

What next?

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The world needs to know about Steem. The world needs to know about all the aspects of Steem and all the types of users Steem can attract. There are many ways to promote Steem. Marketing is very important. I am not a marketing expect but there are plenty of people in the Steem ecosystem that possess knowledge of marketing. Steem has a proposal system that can be used to fund a marketing campaign. I am very willing to support such a campaign. I believe many others are willing to do so too. What might be even more important than paid marketing is simply spreading the word yourself. Tell your family and friends about Steem. Share your posts and content on your other social media. Start your own Facebook Steem page or group.

Ironically, the biggest break Steem might get could be from Facebook and Libra. Facebook will bring cryptocurrency and social media together. Steem will be able to show the world how much better it can amalgamate the two than Facebook.

Whale Tank (Just for Fun)

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More posts

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If you want to read any of my other posts, you can click on the links below. These links will lead you to posts containing my collection of works. These posts will be updated frequently.

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New Economics Udemy Course

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I have launched my first Udemy course ‘Economics is for Everyone’. The course focuses on how economics affects everyday people, the decisions they make and how they interact with the world around them. The course contains 24 video lectures (about 4 hours of viewing), 64 multiple-choice questions (3 at the end of most lectures), 32 downloadable resources (presentation slides, additional notes and links to relevant Steem posts), and 2 scenario questions. The course is currently free-of-charge. Click the link above to access the course.


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Great post, as always.

Id want to add one more thing we should try pushing more.
Not look at steem simply from the viewpoint of the reward pool which in itself is huge deal... The ROI easily exceeding 15%+2%...
If you curate and are good at it you can get up to almost 30%. Seen it happen.
Actually im trailing a guy that gets 100% efficiency on votes and right now after 3 days of trailing on all the posts he votes i get on average 70% efficiency which is a significant jump for me.

The other side of the coin, and what im refering to is taking into account dapps like steem monsters that could further up your ROI to around 50%.

I project my returns being between 30%-40% in total based on my total investment in the steem ecosystem.

If i took last year into account id have to say that i started with 3500 Steem and now i hold around 14000 Steem in various assets.
The market went down which is a problem but from the accumulation point of view i almost quadrupled my initial steem.

The opportunity exists on steem like nowhere else.

Thats i think something we should be sharing with the world as well.

I think we should be looking at far more than just the rewards pool. The rewards pool is just a mechanism for distributing inflation. We need to bring in money from outside the ecosystem. I wrote about profit sharing of revenue brought in by DApps in my post, Ideas for profit sharing with Steem DApps. This would involve rewarding delegation beyond just what can be obtained from the rewards pool.

Curation rewards can vary significantly depending what you upvote and when you upvote. Curation rewards also varies greatly depending on how much SP you have. The more SP a user has the more difficult it becomes to get a very high return. Someone with a few hundred SP may only need to vote 10 times a day and could earn as much as self voting. If someone has a few hundred thousand Steem, 10 votes a day will return at best roughly slightly higher than the 50% curation rewards, I would guess lower as people would frontrun them. Below is from steemdb.com.

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The percentage of the rewards pool allocated to curation is only slightly higher than twice that of interest.

Another point to consider. If your current curation strategy is very effective, others will copy thus reducing the percentage reward.

All the points you mention are still great and good reasons to invest in Steem and Power Up.

I will not pretend to have the curation figured out, which is why i trail someone else for a part of my VP but i would assume that someone with 100k+ SP would have to distribute his votes at lower percentages to a larger number of people to get higher gains.
The second most effective curator on the list i posted in my post has around 50k SP and is slightly less effective then the person im trailing.

If your current curation strategy is very effective, others will copy thus reducing the percentage reward.

That is true which is why adjustment is necessary. I probably shouldnt have shared my trail but the point is that indeed, the returns can be much higher.
I do not know of any blockchain that offers so much opportunity for a investors as well as a creator, developer, gamer... etc.
And all that being placed at 80 in MC. Do a comparative analysis of all similar cryptocurrencies and you come to a conclusion that STEEM is extremely undervalued.
Others rely on "halving" or on "hype" but i always ask myself:

Which token out there can offer you so much for so little?

Oldsteem and was pointing out bs happening on the chain in a cynical way.
I still do that.

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Eeerrrmm...Who are you trailing so we can do it together? I'm barely making 20 steem a week from curating lol

Haha. Well, you have to read more of my posts Elsie. :P

I'm slacking last 2 weeks, working on other thins but I will certainly be by your page this Weekend :))

  ·  last year (edited)

I would be very happy for 20 Steem a week from curating.
I would be happy even for less than the half of it.
Actually nowadays I earn less than 2 Steem a week from curating.
I earned 1.693 Steem Power from curation in the last 7 days.
Nowadays I do not even earn 20 Steem a week from author rewards.
I earned 5.113 Steem Power and 2.135 Steem from author rewards in the last 7 days.

You are most likely using the wrong Dapps! Look for communities that reward their creators fairly, like DTube, Steemhunt, 3speak, Steempress, Earthtribe etc... It's really easy to grow now more than ever. So much support.

El, your content will always make 100x more. Same for me. We win in the long run 😂

A girls wants 1000x more & fucking retire 😂😂

Lets assume that your math is right (and im sure you calculated it so you could share how you came up with that number), but the fact that you can earn that % is exactly why steem isnt worth much. The easier it is to earn something, the less overall value it has in comparison. If you could earn 50% USD with your existing stack of USD, theres something seriously wrong and everyone feels serious pain.

It was pretty easy, wasnt it... It only took a few thousand hours and some smart investments.
Actually, its not easy at all. Lol.
Far from it.

The fact that i managed to do it should showcase the opportunity that exists here for everyone.

You could earn 15% from curation or you might earn 25%.
You could earn 10% returns from SM cards or you could earn 50%.
You could earn 0.50$ per post or you can earn 20$.

The opportunity exists and it all depends on how good you are in whatever you decide to do.

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A refreshing and calm perspective, for the change :)

I assume very strongly that everyone who invests money here has this money left to lose. In such a highly speculative environment, anything else would be stupid or desperate. Depending on where the money that flows into this crypto form comes from, you can consider it angry or happily earned. Unfortunately, people have a rather unhappy and tense relationship to money.

I would only recommend people to invest in Steemit or to start here as bloggers if they have strong nerves, a smooth and quickly regenerating mind and a lot of humour. For everyone else, this platform is more like a psychological flytrap, a hornet's nest, where the fear of the pool being raped and the dream of great wealth being over goes around. The big ones infect the small accounts with this fear or FOMO. I include myself.

As a blogger I would like to have my peace from the noise before and after each hardfork and the space invaders who dominate the trends with economic and technical topics. If the goal is to have a trend world dominated by quantities, I can understand when artists, poets, fiction writers, philosophers, etc., seek the distance to avoid unintentionally serving the cool or hot player mentalities that promote and bet on "user behavior".

In the wiki explanation of game theory that I understand, Steemit is a non-cooperative environment:

If the players can conclude binding contracts, this is called cooperative game theory. If, on the other hand, all behaviours (including possible cooperation between players) are self-enforcing, i.e. they result from the self-interest of the players without binding contracts being concluded, this is referred to as non-cooperative game theory.

In this respect, I would say, it testifies to collective intelligence to say goodbye. My impression of Steemit is that content needs to be there only for content in order to offer a kind of carnal substance without which investment makes little sense.

Would you have invested if there wasn't a blogosphere that exists as an expression of something lively? What would you have invested in then? Would there even be a Steemit?

I am actually not interested in making money here as I do not depend on it. I'd say from the cool gamers perspective I'd be the best candidate in terms of a naive user who does not care for the cake. Over time I felt the burden to always use the upvote-button and would prefer to just talk to other people not thinking about rewarding them. So I just switched to giving always 100 percent, no matter what. From my logic, an article which I read from beginning to end deserves my full treat even though I highly disliked the content. I realized that I begin to detest that and that was the moment for me to reconsider, as I am not wanting to be a punisher for opinions or "bad quality".

Even worse, now this whole downvote issue came around the corner. So, after two years of experience I feel exhausted and am ready to retreat.

Thanks @erh.germany for your very well thought out response. I think there are several different perspectives in regards to rewards on Steem. Some may see it as a zero sum game, where we are all fighting over a finite rewards pool. For these people, it is more about competition and taking what you can. There could be some cooperation in vote trading but little beyond that.

There are another group that see the Steem rewards pool as a mechanism to grow the entire ecosystem. They believe the rewards should be distributed to the biggest contributors to this growth. The people with this mentality will be more focused on cooperation than competition.

Thanks for replying. My questions above ... I am indeed curious about your answer.

What do you mean by "entire ecosystem"? Do you talk about outside Steemit? If so, it's not only an eco-system it's many systems and sub-systems all related to each other. Which group or groups are you referring to? How do you define "biggest contributors", is it financially or otherwise?

Do we agree on the notion that "economic growth" actually needs to be reduced or transformed as well as slowed down? I see no other way if we humans want to stay healthy and mentally stable and cooperate on a global scale. I'd say there is so much money floating around already. This expands and accelerates developments and projects which actually need long term views and schedules as well. I may talk to the wrong person, I don't want to offend you. I hope you can follow my concerns.

I wonder what the big guys indeed do with financial powers. .... Would like to see local and international as global interdisciplinary projects without having to rush for results, keeping it sensitive and sensible.

During the altcoin depression Steem, while taking my effort has out performed any of my other Altcoins.

My EOS has lost almost as much value, but without any opportunity to earn or generate more.

I've even been considering moving some of my other holdings into Steem. I think doubling from this price will be pretty easy.

That would be great. Supporting your passion with coin is a logical move.

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WOW, this was a good read! But what is the clear answer to the question in the title?

Actually, I also wrote a post this week with almost similar title viz. To Power-up or to Power-down is the Question. Althogh I powered up a couple of days later, I'm still looking for a good reason to invest and power up at this stage. (I'm thinking to do a follow-up post to it).

There is no clear answer. It comes down to a few factors such as your degree of risk aversion, your need for liquidity, what objectives you have (i.e. short-run vs long-run), and how much confidence you have in Steem. I chose to Power Up because I believe Steem has a bright future and SP enables me to engage more with the ecosystem.

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This post has been included in the latest edition of The Steem News - a compilation of the key news stories on the Steem blockchain.

That's awesome, thanks.

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If somebody is running a witness, like myself with @contrabourdon (witness @untersatz), then powering up your rewards helps you advance faster on the witness list. Another reason to power up. By the way, thank you again for your witness vote!

Hey no problem. You are doing a good job supporting the community.

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Good read!
Marketing should be our priority!
But I don't think we should expose ourselves just yet. After HF23 takes place, under asuption that SMTs and communities are successfully implemented, we can start promoting ourselves. I believe we'll have more to offer in return.

I understand your point. However, Steem has so much offer right now even without SMTs. I think it is time to create more exposure. I actually think more marketing should have been done during the bull run in 2017.

You also need to remember we don't need to wait for Steemit Inc. We can fund marketing proposals using the SPS.

I don't believe we have enough funds to sustain proper marketing, not sure how much money it costs but i assume we're talking about big figures here.
But yea, more exposure would be nice, especially after HF22 where we actually started to behave as we should since the beginning.
Would like to see your thought on SBD and stable currency, if you'll manage to finds some time to write about it i would be glad. And if you do pls tag me so i could be sure not to miss it :D
Enjoy :D

Absolutely, new steem is like a new shiny thing that has a potential to turn things around again. In my more than 3 years of being here it happened twice with worse technology than today, we only had Bull market fuel behind us. Today with good marketing and SMT release we can gain a lot of new people using Steem. Next year will be fun.

With the right exposure, Steem should be able to break away from most of the cryto market volatility.

I think many investors not familiar with the crypto markets will be very nervous about investing in Steem considering the huge drop in price over the past 18 months.

Your posts take a certain point of view that's hardly rivalled on steem. You've definitely said it all marketing is key and we've got something revolutionary a Sophisticated model that wouldn't even be matched in ten years time anywhere and we've got a whole lot of people in that area really. I'm hoping we're doing a worthy job enough. Let's see how it pans out.

Thanks @josediccus. We have a lot of very talented people in the Steem community. I worry a little about Steem falling too far in market cap. If it falls out of the top 100, it could become overlooked by something far more inferior.

Nice just what I have been looking for the green light that says buy more steem

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I'm glad you found the post helpful.

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Interest on sp is more than two percent I believe, isnt it closer to 8% Thats last I checked, its total interest / (total SP/total steem)

Correct, the interest rate varies depending on how much Steem is powered up. Currently according to Steemit Wallet, the interest rate is 2.2%.

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You can calculate manually using the percentage of the rewards pool assigned to interest from steemdb.com.

I'm the founder of @dcooperation and I would like to count that. So, I look here : https://steemdb.com/@dcooperation/curation , how can I count that interest. Can you explain please in more details or in a post, how to do that ?

Well for interest it is the inflation multiplied by percentage of the rewards pool allocated to intetest multiplied by by total supply of Steem divided by total SP (assume 3/2 for this example). So approximately 8.5%×17%×3/2 = 2.15%. The interest rate varies depending on how much Steem is powered up. If the percentage increases, the interest falls. You will notice Steemit frequently updates the value.

Curation rewards are more difficult to calculate. They depend on the percentage of Steem powered up, the amount of SP actively involved in voting, the efficiency of other people's SP usage.

The highest percentage returns from curation is achieved by voting early on a post that eventually obtains a high payout. To improve that further, you should vote early on many posts that obtain high payouts but with a lower percentage. It's a lot to explain in a comment but that is gist of obtaining returns.

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.. thank you for this well written post..a few important points you mention..up.. follow you..resteemed..

Thank you for your support.

  ·  last year Reveal Comment

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Hi @spectrumecons!

Your post was upvoted by @steem-ua, new Steem dApp, using UserAuthority for algorithmic post curation!
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In our last Algorithmic Curation Round, consisting of 115 contributions, your post is ranked at #45.

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What a refreshing point of view!

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i am trying to collect some steem but not powering up at all

I understand if you want to make a quick move when price jumps.

yeah because in the end its just a token you have to move with the market demands and getting stuck here for three months is such a pain

Greetings dear friend @spectrumecons.

Traders profit from Bitcoin and most other cryptocurrencies because these currencies are liquid.

Every investor wants to feel that he has control over his capital. Being able to withdraw part of your assets in some strategic moment is vitally important when making new investments. In steem investors do not have this possibility since the most profitable option is to powerup, but this compromises the capital for 13 weeks. Investors are already aware of this and steem now does not look like an attractive place to place capital.

A few people have suggested that users should be allowed to Power Down in a much shorter time (e.g. one week) if they burn a small percentage of their Steem (e.g. 5%).

This looks like a great idea. I consider that aspects such as these should be included in the HF. Why do not they do it?
They should also reduce the waiting time for payout. The new tribes are adopting shorter periods which leads to greater acceptance by their users.

Your friend, Juan.