RE: Open letter to Dan - how witness pay is ruining the economy, and how this can easily be addressed
I think he makes some good points though and I can see both sides of view. I for one would be annoyed if I was a witness and my rewards were suddenly cut. I can also see it from the side of the ordinary user to whom this looks like an "old boys club" type of situation. It is a matter of having these discussions and settling on a good balance which works best. We need to keep iterating and find what is best for the whole community.
I would also make the point that another way of looking at witnesses powering down is as a form of rapid redistribution. I suspect that the witnesses will be criticised no matter what they do. If they refuse to power down they will be accused of hogging Steem and trying to prevent redistribution. If they do they are accused of profiteering and collapsing the price.
If any changes are made they need to be considered carefully and discussed openly. Rapid, poorly discussed changes are suicide for any market based platform and Steem is no exception.
Let's continue the discussion and look at gradual, reasoned evolution.
"Gradual, reasoned evolution" is exactly what we need - and are seeing - despite all of those who seem willing to push the panic button while this platform remains in its infancy. Also, the temporary cost of Steemfest has been a meaningful contributor to the downward pressure on the price of STEEM for the last few weeks. As this pressure eases off, the marketing benefits of this event will begin to show up. Because of this, I do not think anyone will have a clear enough picture of the currency to make an informed decision about whether or not to make big changes to anything as fundamental as witness pay for at least a month or two.
When I put my investor hat on, the perception of instability - arising from messing with anything related to the currency or the core network that supports it - looks like a far more serious threat to the future of STEEM than whale (mis)behavior or witness compensation.
Excellent points. I have not seen the role of Steemfest in selling pressure discussed much but you are absolutely right. Not only is there significant selling directly to fund the budget of the event but people attending are also cashing out to cover expenses.
Right. Even back-of-the-envelope calculations suggest that an event costing some $100K to host in combination with 160+ people paying (in many cases) $thousands each to attend will put downward pressure on the price of the currency in proportion to the extent that these expenses are funded by the sale of STEEM.
or ... that's just another excuse
@mada Exactly.
Your last statement is ridiculous. Steemit is an untested and unproven experiment in crypto, even Dan clearly said this. Do you really expect the first iteration of this system to be perfect ?
Investors don't care if the code is forked ( messing is the wrong word btw, code is never perfect and always tweaked ) what they care is if the project is going to make them a return, that's all investors care, and if you think being passive and not adaptive to problems shows stability then you probably also think steem power gives you interests. lol
Seriously though, when the price goes from 4$ back to lower pre launch level the perception of stability doesn't matter much, the reality of stability does.
It's not ridiculous. I'm personally an investor having voluntarily powered back up a large amount of my stake (I dont have a number off hand but I suspect hundreds of thousands of STEEM, certainly >100K). I do not like tinkering generally as I find it to often be counterproductive as the law of unintended consequences is a strong consideration. I'm less inclined to invest in a platform that engages in it. I want my decision as an investor to choose to invest in a platform with certain properties to be respected, especially when my investment is locked-in for two years. I also don't want to discourage participation by future investors who won't know what they are buying (and expected to lock-into) when the platform has a reputation for changing out from under them.
This does not rule out any changes (rarely) if an excellent case can be made for them, but damaging stability and undermining my investment decisions retroactively mean that they start out with two strikes against them always.
The question of price doesn't really imply much. I recently saw a list of some cryptos that have had >90% declines (including some multiple times) and it isn't uncommon at all. Add to that more specific observation of the fact that very limited supply (due to locking) meant that the pump in Steem was probably much higher and less sustainable than even other crypto pumps and the whole "decline from $4" story doesn't hold much water with me.
If you do not like this platform you are absolutely free to not invest in it. One of the great thing about mostly-unregulated markets is that competition thrives. There are thousands of blockchains to choose from if you don't like how this one works.
Steem has had many forks already and most investors on the platform have no say to decide whether a fork will be implemented or not, only a handful of people can decide. Has this damaged the stability perception of steem ?
There is probably some truth to it, but the fact that the price went back to even lower than pre-launch levels is concerning for most investors.
Why would you assume that? lol read my posts please
[answering your question from below]
Yes, I believe some of the forks have damaged Steems reputation for stability and investors being able to make an informed buy-in decision. For example, early vesting decisions were made on the basis of 50% of the reward fund going to curation rewards, which accrue to VEST/SP holders as a class. That this was slashed by 50% and the difference shifted to bloggers, directly hurt the interests of investors, and raises red flags for me as an investor to be wary of risking (term locked) capital here. This was a very serious reputational negative from the perspective of those considering an investment (apart from whether this turned out to be good for the blogging platform as intended-- I don't think it did)
Numerically by far most of the many (14?) forks have been code fixes (which nobody opposes) and not design or economic changes. Most of the rest have been minor changes, so the damage is so far limited, but that is not a reason to make it worse.
Also, I'm told that the price of VESTS (which is the "investor" token in the platform) is not lower than pre-launch nor even lower than pre- July pump. STEEM is an entry/exit token not intended to be held long term so comparing its value over a period of months is meaningless. I have not checked the numbers on this claim myself, so if it is incorrect I apologize in advance for the misinformation.
Cost per VESTs is still higher but the supply of steem have more than doubled since then so the cost per vest should actually be a lot more higher.
If the supply didn't move and the cost per VESTs was higher then you could say a share in the platform is more expensive but with 100% inflation the price should have been at least twice higher but its only 0.20$ more expensive.
Steem's value is always meaningfull because it represents the rewards on the platform, the lower the price the less interests and investments you will get.
Funny take on my comment. You seem to have quite missed the point.
Obviously, most investors are uninterested in the specifics of the code on which a project like this runs. Obviously, bugs will need to be fixed - and other minor corrections made - on an ongoing basis. And the return on investment is naturally an investor's main (and usually only) priority.
And yet, a serious investor estimates the potential for this investment return, and the risks associated with it, in different ways than you seem to imagine. A real investor looks at business fundamentals and upside potential. Perceived stability (of the core team, of the cost structure which includes witness pay in Steemit's case, etc), strong leadership (like staying the course to see plans through even if some poorly informed minor stakeholders get scared and start making trouble), and the revenue model's perceived viability (Steemit's revenue model is an advertising model which attempts to disintermediate the attention economy. It is experimental and thus inherently risky) are what I mean by business fundamentals.
A low token price alongside strong business fundamentals will be read by many serious investors as a good opportunity. The business fundamentals of this venture currently appear strong, and just having a workable MVP like Steemit BETA so early on in an ambitious project like this is extremely impressive. But if we start messing around with these fundamentals because of noise that idiots misread as signal, the project is in trouble.
What is your point then? Why did you say this?
the perception of instability - arising from messing with anything related to the currency or the core network that supports it - looks like a far more serious threat to the future of STEEM than whale (mis)behavior or witness compensation.
Yeah, because fundamentals must be really strong if the price is low duh..Investors will first ask themselves why the free fall, a low price is not necessarily a good opportunity and in steemit's case it's definetely not.( Read my latest posts if you are curious to know why)
[answering your question from below]
What? You're the one explaining (correctly) that rapidly inflating the number of STEEM doesn't actually do anything. VESTS is not particularly an inflationary unit. The number of VESTS has only increased slightly since July. What the price of VESTS having increased (slightly) tells us is that the market cap has increased (slightly).
I think we'd probably all be better off seeing prices quoted and charts made on the basis of VESTS.
True.
The point of my post is not about the fact they are powering down. Many other people are powering down and that's their right. The point of my post is that they are currently being incentivized to powerdown because anyway the witness compensation if so high that it more than covers the powerdown and they actually increase their stake all the while cashing out at maximum rate. Cut down the witness pay to something reasonable, and witnesses will suddenly stop seeing stake as a cheap renewable resource.