I've only been around these parts for just under a week or so now, so it's very possible I'm missing something here. As an experiment, I started powering down, fully expecting to stop earning "interest" on my SP. To my surprise, even after the power down began, my SP happily continued ticking upwards.
Isn't this a loophole?
If you continue gaining interest while you power down, why not always be powering down? At the end of your 7 days, you just take your payout and analyze your options.
Please excuse my MS Paint skills:
Option #1: Sell your STEEM if you need liquidity for whatever reason.
Option #2: If SMD/STEEM price is greater than Open Market price, buy SMD and convert it to STEEM.
I understand you need to wait another 7 days to get the open market price for STEEM - and that you're taking a "risk" that the open market price is higher than the internal price at the end of 7 days. But that doesn't seem like as much of a risk now with the elimination of market maker rewards. The price of SMD/STEEM seems to have been constantly at a discount to the open market price since then.
Option #3: If neither of those options sound good at the time, you can just return it back into STEEM Power.
Sure, you may have temporarily lost minuscule fractions of STEEM Power depending on the length of time that you hold the converted STEEM in your account, but in my mind, this is more than made up for with the availability of the other 2 options above, which grant you either a.) liquid cash or b.) opportunities to profit from the disparities between the blockchain market and open market.
I'm probably missing something here. I haven't actually finished my first week of powering down, but found this aspect interesting and would welcome any insights.
Thank you!
In the period between receiving your liquid steem payout and choosing to power up again, there will be new blocks and new steem allocated to the vesting pie. Thus when you choose to buy back in it will be slightly more expensive, you are paying an opportunity cost by always powering down, but you are paying another opportunity cost by not doing so.
This generally isn't likely to be a significant amount, but if everyone was doing your strategy, the few people who decided not to power down, would receive a significant share of the newly created Steem in the Vesting pie at those times.
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It's only more expensive to buy back in if the price perfectly follows the predicted track (where supply up = price down) but there's always inefficiency.
The people who were powering down would continue to receive Vesting shares during that time, from my understanding.
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The price of vesting shares in terms of Steem follows an exact formula. Any Steem* created in that interim goes exclusively to those still holding Vesting shares.
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You're not gaining an interest, you hold the same number of Vests. It's just that the value of each Vest is increasing, hence your SP appears increases.
As to why you should not Power Down - you'll lose your Vests which went out that week, which could be much more valuable in the future as the platform grows. And also, Steem Power, and your influence in the community.
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Why can you not just put them back into SP after that one week period if you want? How much loss are we talking about if you do that? Very little, I would think.
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But what's the point of doing that? Might as well not Power Down if it's your goal to put it back in! But I get your point.
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My point is that there is very little reason not to power down given the opportunities and options presented, since you can just plow the Steem you just got paid right back into the system if the other 2 options don't interest you.
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If you are committed to the platform, there's no point powering down. But yes, if you are undecided, it makes sense.
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I posted this in response to your comment below:
https://steemit.com/steemit/@trending/please-be-kind-to-market-traders-we-have-just-as-much-of-an-interest-in-steem-s-success-as-you-do
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I'll give you my upvote.
Please reciprocate in my post https://steemit.com/introduceyourself/@gustavopasquini/hello-steemers-new-member-introduced-in-steemit-community-video
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