Are Steem-Engine Tokens an indicator for future success of SMT's ?

in #smt10 months ago

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A lot of the hopes for the steem blockchain are placed on the success of SMT's. In spite of being integrated directly into the steem blockchain SMT's are actually quite similar to Steem-Engine Tokens. It is therefore interesting to learn from the experiences collected with Steem-Engine Tokens and more precisely from Scot-Tokens.

Are we right to put so much hope into SMT's when we see the development of the Steem-Engine Tokens?

There are some quite successfull tokens on Steem-Engine but they are few. We can't help to notice that for most of the Scot-Tokens, the tokens that will come closest to SMT's, the value of the tokens, expressed in USD or in Steem, has been going gradually down over time.

What are Scot-Tokens doing wrong?

Most scot tokens are lacking quality sinks. Meaning that there are no real ways to use these tokens. It is true that some tokens lost their sinks because of #newsteem and the fact that it is not possible to sell votes on steem anymore. Many tokens simply have no real application and therefore the only use they have is to be sold for steem. This puts a constant sales pressure on the coins and with an organically growing supply due to the inflationary system, the prices can only go in one direction. It is not surprising now that most of the Scot-Tokens lost a huge percentage of their initial value.

Can a token with an inflationary model work at small scale?

The problem with Scot Tokens and probably also with SMT's is that they are built on an inflationary model. A certain level of inflation feeds a reward pool that is then distributed to the contributors and the stakeholders. This is nice and in a way an interesting reward model. But can it work at a small scale?

The demand for Steem, Scot-Tokens and SMT's needs to grow at the same rate than the inflation. Otherwise the demand can't follow the supply and it will lead to a loss in prices. Steem is very big and has a quite healthy ecosystem with many use cases for the coin. So there might be a growing demand in steem and the transformation into steem power will slow down inflationary tendencies.
When new tokens are created with such a system, there might be an initial hype with overpriced tokens but if there is no real use case for the tokens, the demand will quickly go down and with it the prices.

Will SMT's bring concrete use cases and according sinks?

To be able to allow stable prices, SMT's will have to overcome the weaknesses of the Scot-Tokens. First of all, they will need to make sure that the demand for the coin will be constant and increasing over time. The danger is that we will assist to a new wave of Ico's that will result in people either being riped off or in tokens that nobody wants.

To fullfill the blockchain's hope SMT's will need to be better

  • SMT's will need to provide ways to spend the tokens for things that people really want. If they fail to provide that, the coins will simply be sold.
  • The creators of SMT's should plan the supply of the token well and be able to adapt it on a market. The proceeds of the initial sale should be partially used for that and to create demand for the token.

Investors should be careful

If SMT's will be run like Scot Tokens, it is clear that they will face a similar fate. So for investors of any kind it will be important to be careful while investing in SMT's. How much inflation will there be? Who will be the stake holders? Are there real and interesting use cases for the Token? How can the Token be exchanged?

As long as SMT's will be based on a similar inflationary model, it is safe to expect prices to go down over time. SMT's will need to be much better than that. Fortunately the whole blockchain made it's experiences and it might be a way to start with an improved version.

By @achim03

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A project run by @achim03

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I agree with most of the things that you have said, but there are some good examples of steem-engine tokens which have a use case and have more-less a stable price... I mean at SteemLEO, DEC, ENG tokens first, and probably there are others also that I don't know...

Anyways, inflation is not a big problem (of course in normal %) if there is a use case for tokens which will create a bigger demand and price rise... Direct payments with tokens for goods and services is one of the ways to go...

And also, this is still a beginning and these things need time to evolve and to be implemented...

Thank you very much for your comment. When I look at DEC for example the splinterlands people monitor the supply very closely and make sure to adapt it to the demand. Like that they can ensure stable prices. I think this is a good plan and hopefully SMT's will also follow it.

Both will have a place on the steem blockchain.

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Thank you for stopping by and leaving a comment. I think that there is plenty of space for both. As long as the projects are good...

Hi dear friend @happyvoter.

All these tips for SMT and ST are really valuable.
You have made a simple but accurate analysis.

The nerve point for any token is to give it a utilitarian character. It must have a real use that is attractive to the holders, otherwise it will disappear.

This feature can be found in many of the Steem-Engine tokens and it is precisely these, which have had the lowest depreciation rate.

Inflation is a problem. It is certainly so. But the big advantage in the blockchain steem is that the inflation rate is fixed, therefore it is estimated and 100% projectable. In this way we do not face uncertainty.

Your friend, Juan.

Inflation is a problem. It is certainly so. But the big advantage in the blockchain steem is that the inflation rate is fixed, therefore it is estimated and 100% projectable. In this way we do not face uncertainty.

You are totally right about that. Since it can be projected and monitored, token creators should always keep growth and inflation into perspective and when necessary influence it to provide stable prices.

Thanks a lot for your comment!

My pleasure.
Keep steem on!

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To support your work, I also upvoted your post!

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Resteemed already @happyvoter
Upvote on the way (once VP will be fully recharged).

Thanks a lot. I've set ph-fund as beneficiary 20% but it seems it didn't show. I will send it after payout.

Congratulations @happyvoter!
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I always thought SMT would go beyond Steem Engine and connect traditional social media platforms.