Steem Powerdown needs to take 1 week // Creating a major sink for STEEM tokens

in proposal •  5 years ago  (edited)

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For a while now i have been looking at STEEM, trying to be objective about its strengths and failures.
Outside a few other currencies i own im invested in STEEM close to 80% of my portfolio. Im, you can say all in with STEEM for better or for worse.
Still, i am aware of a massive issue STEEM currently faces. One of the biggest ones being....

INFLATION.

The idea Steem creators had was simple:

If the inflation is kept at a reasonable level and the platform grows, increases in value, grows users and use cases, the inflation wont be a problem due to demand.

But what happens when the demand is low and youre in a bear market?
Well then those that might want out cant leave right away because their SP is locked for 3 months.
"Got eeem!"

Thats a very defeatist way of thinking.

What those with this line of thinking tend to forget is the other side of the coin... What if this is one of the things keeping investors away from STEEM.
And i know for a fact that it is.
Not being able to access your funds in a extremely volatile market like this means that investors will be reluctant to power up.

"Oh but LB powering up is required if you want to make that Sweet curation returns!"

Im fully aware of that and i agree but there is an option to consider that will allow for all of that but help with the inflation problem and help with increasing demand..

CREATING A POWERDOWN COST.

Ive talked to Andy in the Steem telegram the other day and he seems to claim that holding STEEM as "cash" i.e. not powering up is a good choice because STEEM is "good money".
That is completely false.
Not powering up your STEEM means that with the 8% inflation right now + the loss of potential profit from not powering up means that holding STEEM as a means of payment, not powered up is a really bad idea.

"Oh by LB then they will power up their STEEM if its a bad idea!" That is awesome!"

NO.
They just wont buy it.

If lets say someone opens a business here, who is it they want to sell their products and services to? Is it Steem speculators that have no connection to the community that buy and sell on the market or is it invested Steemians that are here for the long run.
I think the right answer is Steemians.
If you are a Steemian and are here for the long run, like me, most of us will be inclined to power up, increase our influence on the platform and protect our investment by powering up.
Is it easy for us to access funds to make the purchase of products and services then?
NO.

We want to accumulate and even if a opportunity presents itself accessing liquidity isnt easy. It takes a lot of time.
Sure, you could claim that this could encourage people to buy into with more fiat but i find that not to be the case most of the time. I want to purchase Steemmonster cards and i dont have any Steem?... Ill just use my Visa instead of buying STEEM, paying fees, and having to take additional steps.
I bought as much crypto as im comfortable with but with the crypto i have im willing to do something with it.

What about investors?

Would they not be more inclined to power up if they know they could make their funds liquid much faster then 3 months?
Would this not offer a huge advantage to STEEM as a token?

I can powerup and earn 15%-20% APR but my investment is protected if the market enters times of high volatility because i can powerdown fast.

I think it would.

What is the benefit to the STEEM ecosystem then if this is allowed?

Well its simple. YOU ADD A POWERDOWN COST. Adding a powerdown cost that would send to @null 10%-15% (or whatever % would be found best) of the powered down stake.
The powerdown cost instead of it being a fixed % could also be calculated from the average over time powerdown figures. Increased powerdown percentages, increasing the powerdown cost.

Steem with its high inflation, right now has an extremely poor sink, or none to speak of.
Adding cost to shortened powerdown times creates a very significant sink that would tackle inflation and not only help protect the investment of those that want to powerdown and sell but would also help reduce inflation for those here for a long run.

Thinking that everyone would sell during a bear market is a very defeatist way of thinking and a wrong one. Many, if not most altcoins that arent inflationary in nature that require no powerdown have held their marketcap positions much better. You can sell those tokens freely can you not? If powering down is such great protection from a selloff then why do other altcoins that have no staking/or shorter powerdown times preserve value so much better then Steem?

STEEM has plummeted down to 80 in MC, slowly but surely, inflation being one of the main reasons in my opinion.
The fear of investors that comes from it all.... that if they buy Steem, holding it liquid they lose $ due to inflation and if they power up to offset the loss, they lose control over their investment.

Hmm, i think staying away for me is the smarter option. This is too risky.

This change is a must in my opinion because the supply of Steem is steadily increasing and the only way for it ever to increase in price is if the demand can deal with the high inflation and that is a "big if".

This change would attract investors and it would help reduce the inflation significantly.

Let me know what you think.

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SP should be similar to holding fiat in a long term bond, There is interest if you keep it there and a penalty to pay for instant access but there should be a choice.

Being able to instantly access your funds means you can use it for practical purpose and that encourages business to create practical purpose for you to spend it on. As the flow of Steem and it's practical use cases increase, both users and investors will increase . This inherent fear of letting people 'cash out' is a nonsense. They have earned the reward and it should be their choice what to do with it . Give them stuff to buy or spend it on directly and it stays in the Steem economy.

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Well said. Up top you go. 😉

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I like the idea of a 15% + fee to Power Down faster, or to have it based on Power Down statistics..

BUT.. I want to choose when I power up if I want to make it possible to use that option in the future.

The reason being that I like having my Steem locked in Steem Power for 13 weeks since it gives me the option of being able to recover my Steem account if I notice any strange activity without having to worry about my account being cleaned out completely if I take a week or two off from Steem.

That's actually one of the reasons why I chose to invest in Steem instead of Bitcoin - Bitcoin wallets can be clean out completely within minutes if someone gains access to it.

Powering down cost, and burning a small percentage when instantly powering down, is a cool idea.

Agreed :)

I agree with the idea that much faster powerdown should be an option and that it should come with a relatively small cost. Perhaps there should be a cost that comes with powering down each installment of your SP that depends (linearly) on the proportion of that installment of the SP in your account.

I wouldnt say "small cost" but rather "reasonable cost".
How it would be set up is something that has numerous options.

I think it is a good idea. You could keep the free 13 weeks and then have the option for people in a hurry. 10-15% is maybe a little steep, but I always thought burning here and burning there was a good idea. Burning for promotion for example.

I wouldnt say 10% is steep when the market can swing in either direction very fast.

Nah, maybe you are right and I am just thinking fiat-farts here. I sometimes have a hard time thinking like an investor.

I really like the idea of having 7 days withdrawal window. If it were 7 days to get SP back, I can powerup liquid steem, use it to vote, and then powerdown to pay server bills or buy steemmonsters cards.

I think if we had 7 days lockdown period, more people would be willing to power up and keep less liquid on exchanges.

How exactly it would work is not something im talking about here outside the 2 options since its hard to say at this point. There are a few things to consider when deciding how to balance this.

I think that less liquid would be kept on markets but you wouldnt really see that since Steem would have much more mobility. I assume the only thing that would show that is increased number of transactions...

I wish this was included in the HF. Thirteen weeks is ridiculous! I would love to see options- the shorter the power down, the higher the burn!

Personally I like the proof of stake concept. I think paying for powering down costs could make sense if it goes to burn the steem to fight inflation even more. But I don't think it's gonna attract investors on its own regardless.

That has to come from some prober marketing and reasons to invest. Regardless of the inflation.

But I like the idea you are having, I just don't think it is answering the question on how do we attract investors?

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I think paying for powering down costs could make sense if it goes to burn the steem to fight inflation even more.

Thats what this post is about.

Maybe I misunderstood a bit then. I read as main focus to attract investors. My apologies:)

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Well it is about that as well as preserving the value of the token by reducing inflation.☺

💯agree

Power down originally took 2 years! I think it has to take a while or some would just take out all their rewards. There are some schemes that will give you liquid Steem if you give them the post rewards, for a fee. We need people to power up to get a better reward distribution and they can earn from using it. They make more by voting since hf21. Steem is not really about the quick buck and playing the market. I like it that way.

Power down originally took 2 years!

That is true but that doesnt really mean much. Even if it took 5 years that doesnt really constitute an argument against what im saying here.

I think it has to take a while or some would just take out all their rewards.

I already tackled that argument in the post. Actually a large portion of the post explains why we shouldnt fear that happening at all.

Steem is not really about the quick buck and playing the market. I like it that way.

Im curious as to why you like that? How is the current system preferable to what im proposing?

If there is a cost to quick power down then I am not totally against it, but we should be encouraging people to power up where we can as it is good for the platform. A lot of people have bought a mass of SP, so they are in for a while. At the moment I can't see many selling anyway.

but we should be encouraging people to power up where we can as it is good for the platform.

This change would do exactly that. If you can powerdown in a short time then it would be much easier for you to make the choice to powerup.

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You can do that as an service and even profit from it instead of burning it. Or burn it. Or invest it in the platform..

The current system with the 13 weeks rule is making steem more volatile. I think steem is low now, but will also shoot waay up again in a real bear market..

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This is a great idea, I would at least charge 10% for "cash out within a week". Burning or returning into rewardpool if possible. But is it realistic to get it implemented anytime soon? Would require another HF I guess?

By the way, no way that 8% inflation is the main driver of the current underperformance of Steem. There is more than that.

I would prefer burning...

But is it realistic to get it implemented anytime soon?

Unfortunately not. Ive chated with @andrarchy the other day in Steem telegram and there is simply not enough big stake behind this idea or talking about it (there were a few mentions) to consider this will be implemented any time soon, if ever.

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By the way, no way that 8% inflation is the main driver of the current underperformance of Steem.

Inflation is probably far higher than 8% because of SBD conversions.

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Interesting idea! As I see in a comment, this probably won't be implemented by Steemit Inc any time soon. I wonder if it could be done as a service by someone outside of Steemit Inc as I saw @luegenbaron mention in a comment here. The problem is how to guarantee that the Steem given out immediately gets returned to that giver by the receiver as they power down to repay the instant Steem funds given. Maybe a multi-signature account setup could do it. Something to think about!

I think steem will make an ultra-volatile price swings if there will be no powerdown scheduling of painful thirteen weeks period.
That I think will be good for traders since steem has many users. It will then attract non-steem traders and it will affect the price positively in my opinion @lordbuterfly

I disagree on that because thanks to the long powerdown period supply will be scarce when demand is high leading to spikes. During a bear market demand is again the driver. That argument ignores dynamic effects.

Good idea on this.

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There is already a market solution.

  1. Create 2 accounts, one is your main with just enough SP for RC free happiness. The othere has all your SP for earning inflation.
  2. The inflation account delegates 100% to your main.
  3. You sell the inflation account to someome when you want to dump it by giving them owner keys.
  4. Next time you wanna power up, use a new account. You can also create multiple inflation accounts.

I understand a better solution can be created which allows more control and consistency, but that will require a hardfork.

There is also the issue of determining the price for dumping out. It shouldn't always be the same % it should change depending on how fast price is dropping or increasing, how much steem etc.