Do we need a Dark Pool in our Platform? :)

Alright this is meant to be a joke. Also guys, it is not as bad as it sounds, please let me explain. I won't talk about dark pool too much until later and that is also mostly for fun so please do not take this seriously.

You all know about EIP and the latest hard fork that happened in August. There was/is still significant controversy if the EIP, 50-50 reward split and the downvote pool is good or bad for the steem economy. We do not have an answer, as time will tell the real answer. However, I am one of the proponents who said for a while that EIP is good for the economy. No if or but, it is good, period. I do not post, but I am quite active behind the scene. I tried to prove that using charts for a while. Point is quite simple, if you look at the Steem/BTC pair, which is the most important for any alt-coins, it has stabilized almost as soon as EIP was implemented.

The chart of Steem/BTC above is something I shared with a friend of mine on Oct 16, 2019, to make a point that price had been stable. But you know people don’t understand stability in crypto :) things must “moon” for them all the time. Outsiders like me often smile at that, because in financial markets moon-rekt-pump are not the terms we commonly use. However, there is nothing wrong with that as long as we are communicating.

Above is the same Steem/BTC chart today. It is the best performing crypto on coinmarketcap.com today. It is trading at the top of the range, tomorrow it may not. To me that is least important. Price does not matter, it's the volume that matters, and today we show the best volume over the last 4 months. Actually it is the best volume on Steem/BTC ever on Binance. That is significant to me. Therefore, we are all excited, and publishing several positive articles on steem like from @aggroed, @theycallmedan, and @acidyo among others:

https://steemit.com/palnet/@aggroed/guys-your-chance-to-earn-steem-is-dwindling-get-back-to-writing

https://steemit.com/hive-100421/@theycallmedan/zfjdulsk

https://steemit.com/steem/@acidyo/some-thoughts-and-facts-on-steem

The first two are very bullish post, I urge people to read and listen to it, and the third one is a balanced view on what should be done.

Alright I am getting to the title. A dark pool is just a fancy name for a closed secondary market for trading stocks, derivatives, and other similar financial instruments. If you want to learn more about dark pool and High Frequency Trading in general, there is a very enjoyable easy to read best seller on the market Michael Lewis’s Flash Boys, give it a try.

The reason I am talking about dark pool is because what @theycallmedan mentioned in his video. He was talking about the lack of sell side liquidity in the largest exchange that we have for Steem/BTC. He is absolutely right, if anyone trying to buy 250K steem right now, he/she will have a real problem as there is basically no sell side liquidity. Meaning, there is not enough steem on the offer on the best public exchange that we have. That is also just one individual trade. Imagine if 10 traders wants to do a trade like that (which is nothing in real life by the way), that’s 2.5M steem. Forget about it. Therefore, our market remains juvenile.

One of the solutions for thinly traded market (or even well traded market) is to have a dark pool. I do not know how much you guys know this, but currently about 70%-80% of the daily volume of the US stock market happens within the dark pool. If you have a brokerage account, most common ones like TD Ameritrade, Schwab, whatever, mostly likely your 53 shares of AAPL stock that you bought for your IRA, likely executed inside the dark pool. Most of our trades never see the daylight these days, and that’s perfectly fine there is nothing illegal or wrong about it. As a consumer, it actually helps you to get a better price. How do you know that your order was executed inside the dark pool? There are many ways, but the simplest is when you see on your brokerage statement that you bought 20 shares of NVDA at 249.237653 last Friday, you know almost certainly that your order went into a dark pool. Try putting more that 2 decimal places on your TD Ameritrade webpage :) Whenever it is more than 2 decimal places it is certainly an HFT trade of the other side inside a dark pool.

So why all these are important? Lets say, @theycallmedan wants to buy 250K steem, and @blocktrades wants to sell 100K Steem and I want to sell 150K steem. If there is a big block trade dark pool inside steem, we can settle this trade on the secondary market without going to Binance. Why would we want to do that... you ask. Simple, just like Dan explained, if he wants to buy 250K steem in the open market, he will likely have to push the price up 5%-10%, and that’s not cool. Inside the dark pool this trade can be settled without any slippage.

Just a thought. If it can happen in the stock market, why not here?

Anyways, I wrote this post after more than a year. I have no idea when I will write another post. Hopefully soon. There are a lot of good things that are happening on this Platform of ours, let us forget our small disagreements and make this platform better on all possible facets. Price will follow. I personally do not care about price. This is a social experiment for me. If we are even remotely successful we don’t have to worry about price. I do hope @aggroed wins his bet though :)