Hard fork 16 is right around the corner; bringing with it the excitement of change but also providing a substantial amount of fear within many users.
I don't know where I sit, personally I feel like I’m on the fence
The Good:
The massive interest rates will be cut dramatically. Inflation control is needed at this point and time within the Steem ecosystem to provide a more stable price. Lowering interest rates will provide the scarcity for the Steem coin, and with new sites that use Steem just ahead, the scarcity should provide an increase in value as more and more users interact with the sites.
Over-all I support the decline in interest rates. I feel it was too big to begin with, and in reality, it was only helping larger investors accumulate larger stockpiles of steem while also powering down.
This lower interest will ultimately lower the selling pressure caused by non-other than the massive interest rate. Whales will now power down much more than they will receive through interest and curation, which should provide the incentive to "not" power down so much or as frequently.
The Bad:
Although I find the decline in interest rate appealing for smaller investors or current holders of SteemPower, I also find this to also be a deterrent to powering up into SP.
Currently, powering up is provides incentives by the Interest rate. Holding liquid steem is a depreciating asset, but if you power it up, you will receive 150% apr on that same steem. At the current rate it makes much more sense to 1) Sell instantly or 2) Power up
Unfortunately I'm struggling to understand the incentives to power up when the Hard fork goes through and interest rates get slashed. Personally I don't find ~10% apr enough to lock away Steem into SP for an extended period of time with such low reward.
I also would feel that larger investors might also be hesitant to power-up, due to the lack of incentive.
The Ugly:
The Power down Schedule changing from 102weeks - 13 weeks. This is where most of the fear comes into play, and honestly, I'm not a huge fan of this change. Everything else with the hard fork sounds good, but this massive change in powering down is something I am, for the most part, completely against.
The problem I see with this upcoming change is the substantial chance of creating a downward spiral that wasn't as likely to happen with the current schedule. See, the current problem with steem and the price is users. Simply, there aren’t enough users to keep the price stable, and so it just keeps declining. But to what extent? There must be a bottom out there somewhere, and I personally feel we are there with the current condition of steemit. The whales that are powering down will only power down so far because of 2reason. 1) Powering down lowers there influence 2) The declining price means they make less from selling
So the way things are today, sooner or later the whales will weigh in the rewards vs. potential and stop selling once the price is too low for them. This will provide a bottom, and a great investment point, especially if and when a massive influx of users occurs.
But, now with a 13 week schedule of powering down, this provides the chances of an uncontrolled downward spiral, and the basis for MY fear of Steemit.
Currently, the most influence in the markets is large whale accounts powering down a fraction of their SP on a 102week schedule. But with the new schedule, the whales will now have ~ 8X the amount of liquid steem to sell. This 8X increase will also allow smaller accounts to provide influence in the markets.
I fear that the 1st month of this new schedule will bring new lows to the price of Steem due to the massive amount of liquid powered down steem entering the market. With a lower price of steem, that also correlates to a lower payout of posting rewards and also curation rewards.
Tying into the lack of incentive to power up or staying powered up, this could also affect the amount of SteemPower in the system and un-intentionally cause rewards to trend lower, as each vote carries 8x less weight each passing week. The big curation whales would, by powering down, lower their influence of payouts.
Lower payouts = lower interest from the community. A lower interest will most definitely correlate to a lower price in steem, and hence the cycle continues.
Lower SP = lower Reward = lower interests = lower steemPrice
consequently, this cycle also has the power to speed up, as more invested people in SP see the price going lower and essentially "make a run" for the SP they do have.
I hate to say that this is now a possibility... Before, I thought about it, but found it unlikely do to the longevity of locked up SP. Now, I fear that this scenario is dependent on how the whales react. If they start cashing out full Steem, it's over... probably before the new sites even open the doors.
If they decide to hold, and stay true to helping the site gain traction and new users. Then the complete opposite could occur.
Less %apr = less liquid steem = higher steem price = higher posting rewards = more interest = more users.
I hope the later scenario is what happens. But I don't have any control on how this will play out besides making the commitment to "Not Power Down" the insignificant amount I do hold.
The next month will be crucial to the success of steemit, and unfortunately the success is also dependent on the actions of a very few individuals...
Remember:
Every Large Company today started little. Many also faced extreme problems and fears of failure, but they overcame them.
Don't forget that Apple stock was worth under $1 for over a decade before they found the solution to their problems and became a company with a 600 billion dollar market cap.
I hope Steemit finds its answers, but I am also willing to give them time to do this and I hope others do the same.
Thank you for reading. Please feel free to comment on anything I mentioned or correct me if my thinking is off the mark.
Consider following me @generation.easy