How Much STEEM Will You Be Holding When STEEM Goes Poof?

The STEEM blockchain has two primary currencies: STEEM and SBD. You can can trade these coins on the internal market. The blockchain includes a convert button which lets you convert STEEM to SBD. Originally, the system would convert SBD to a STEEM at a price set by the witnesses.

To prevent something called "a death spiral," the designers of STEEM included code that would break the dollar peg of SBD if the SBD market capitalization exceeded 10% of the STEEM capitalization.

I never cared much for SBD. I prefer to receive my rewards as 100% powered up STEEM.

The witnesses on the HIVE blockchain decided they wanted to position HBD as a world class stablecoin. They created a large HBD stabilization fund, improved the conversion functions and raised the haircut to 30%.

In the absolute stupidest move I have ever seen, the whales then raised the interest on HBD to 20%.

The site Ausbit Bank created a page shows the current HBD and HIVE market capitalization. The HBD marcap jumped over $14 million. We have already seen several million HBD converted to HIVE. This pushes down the price of HIVE.

The HBD market capitalization is now down to $11,123,822 .

The HIVE Marketcap calculated at HIVE = 0.109 was $89,274,118. HIVE has since dropped to a dime.

The reported HBD marcap to HIVE marcap is currently 12.460%. Since hive is trading at a dime, the ratio is probably above 13%.

HBD holders are both smart and risk adverse. If HBD holders converted 1 million HBD to HIVE, they would end up dumping 10 million HIVE onto a weak market. This would push down the price causing more HBD holders to convert even more of their HBD to HIVE at an even lower price.

This is a fun process to watch. It is called a death spiral.

Stablecoins behave a bit like debt. I have watched hundreds of companies thrown into death spirals because their CEOs took on too much debt.

Unfortunately, if HIVE drops so low that the witnesses no longer make a profit witnessing the blockchain; then they will stop and the blockchain goes poof.

The Steem Engine blockchain went poof. The coins simply vanished.

How Much STEEM Will You Be Holding When STEEM Goes Poof?

Personally, I cannot imagine STEEM lasting a hundred years. There will be some point when the witnesses lose interest and STEEM goes poof.

While examining the potential death spiral of HIVE, I asked: How many tokens are you expecting to hold when the various descendents of STEEM go poof.

I would like to go out a dophin. I have 10,079,799 VESTS worth 6,201.757 STEEM POWER. I had several hundred thousand tokens on STEEM Engine when it went poof.

I feel sad that the value of my upvote fell to under the two penny cut off. It is now worth a scant $0.0197.

I have 10,776,205 VESTS on HIVE worth 6,545 plus several million tokens on Hive Engine worth about 3000 HIVE worth a few hundred dollars.

The Healthiest Approach to STEEM

I think the healthiest approach to STEEM is to accept that one's base investment in the platform might disappear at any time. We must satisfy ourselves with earnings.

I realize that I am lucky to get any upvotes. I decided to power up 100% of my author rewards.

I currently power down the bulk of my curation rewards.

Conclusion

The HBD thing really has me down. Watching the value of my vote fall again hit me hard.

I hope that HIVE survives its HBD fiasco. STEEM was smart to de-emphasize its stable coin and should last longer.

We have a fun platform. The platform must be supported by its users. I've known all along that the true support for the platform comes from people who are willing to hold the tokens when the chips are down.

The ultimate challenge is that far too many accounts exist for the sole purpose of harvesting rewards.

It is fun watching the ratio of HBD to HIVE on ausbit bank. The 20% interest on HBD was a clever ploy to extract profit from the chumps who believed in the platform.

I generated a picture of a bee watching a death spiral on night cafe.