Image credit: @majes.tytyty
Just yesterday @Steemitblog officially put up a post to solicit the opinions of users regarding the 4 weeks power down proposed by @thecryptodrive.
@Thecryptodrive's proposal has been around for a few months now and is not new to those following the narratives on Steem. However, what is new is that the proposal has caught the eyes of Steemit Inc.
@Thecryptodrive believes that the present 13 installments (over a period of 13 weeks) that complete the power down of account is too long and creates an entry barrier for the big players. Here is how he puts it,
The premise behind this change is to reduce the barrier to entry for investment into Steem and PoB SMT's, currently it is daunting for investors to lock-up their capital for 13 weeks. While 4 weeks is still high compared to other chains like EOS, it is a positive incremental iteration in the right direction, with low risk of market sell-off.
The proponent wants us to believe that if the power down period could be completed within four weeks or less, potential investors will be motivated to power up their Steem, knowing that they could easily exit should the market sentiments turn against them.
On the surface and especially in the short-term, the proposal of @thecryptodrive seems to have good intentions for Steem. However, if history were to be consulted and if the cap of critical thinking were to be worn, then it will not take long to realize that heeding to this dangerous proposal will have grave consequences on the price of Steem in the long run.
Today, here we are lamenting and complaining about the falling price of Steem relative to other altcoins. But we forget to realize that apart from the bear market, a major economic change led by @ned and @dan that was implemented about three years ago arguably laid the foundation for the crisis we see today.
Before the monumental economic change was made, it took about 104 weeks to completely power down a Steem account. However, the 104 weeks period was replaced with the 13 weeks period we now have today. And the consequences, if you ask me, have fallen nothing short of being disastrous for the price of Steem.
Even as far back as three years ago, @beanz brilliantly captured the danger ahead when she wrote:
With all of the other drastic changes to the economics we also have this one. This can be looked at in 2 ways. In one way, it opens the doors to short term speculators which can be a positive thing. However it also brings the influence of a weekly powerdown all the way from 1/104 to 1/13. I consider this drastic adjustment to be extremely risky and a dramatic change to the original ideology behind steem power.
Interestingly, @thecryptodrive himself who brings this puzzling proposal to the table expresses the same fear, the fear that a 4 weeks power down could have negative impact on the price of Steem. Here are his words:
It can be further reduced in a future hardfork if proven to not have adverse market effects.
If @thecryptodrive is sure that the 4 weeks power down is viable and robust enough, why then does he weigh the possibility of an adverse effect on the market price of Steem.
The truth of the matter is that the even the present 13 weeks power down period (when newly introduced) allowed massive capital flight, greatly depicting the Steem market capitalization. Those who have effortlessly amassed large amount of Steem in the formative days were able to exit with millions of dollars, slamming the door on the faces of the rest of us. In the past three years alone, Steem has dropped over 70 places in the rankings on CoinMarketCap.
Unfortunately, the call for a faster power down period is growing again. The truth is that a faster power down period than the status quo will only further crash the price of Steem because, as we have clearly seen in the past, it creates selling pressure that does more harm than good to Steem.
Even in real life, the banks pay more interest to those who run a fixed deposit account than they do to those who run a savings account. This is because fixed deposits stabilizes the lending activities of the bank when compared to the unstable funds in the savings accounts.
The same thing applies to Steem Power. Because Steem distributes incentives for holding it, the holder must be willing to sacrifice reasonable amount of time for the purpose of stability and the sustainability of the Steem blockchain. After all, an English adage says that you can't eat your cake and have it.
I fear that those supporting the 4 weeks power down period are clearly trying to eat their cake and still have it. Powering up Steem remains a matter of choice, so those who cannot take the risk should gladly enjoy their place as a speculator with their liquid Steem.
Until I come your way again, I wish you a full Steem ahead.
*cc:@blocktrades and @aggroed