Last night at work I was talking to a friend about my risky PALNet investment. I told him I was a 'whale' and control well over 1% of the inflation pool.
I can create 100 coins a day.
Cool, how much is a coin worth?
Right now, 17 cents.
17 cents
It was at this moment that the full ROI perspective hit me.
$1.70 a vote.
$17 a day.
$510 a month.
WHAT?!
$510 a month? I've only spent 5000 Steem ($2000) acquiring coins. So it would only take 4 months of self-upvoting to make all my money back and still have 22000 PAL leftover? That can't be right... but it is.
This can't be sustainable.
A brief moment of panic creeps though me when I think about this.
If something sounds too good to be true...
Then it usually is.
So, that's a bit rattling. The monstrosity allowing me to create all that inflation is the 12.6 million PAL sell wall on Steem-Engine. All those coins with no owners... just sitting there... generating inflation. Even though I only have 22000 staked coins I'm creating inflation like I have 200,000.
Best case scenario, PALNet generates enough value to clear the sell wall and distribute all 12.6 million coins to a healthy decentralized community.
Where does that 12.6 million Steem go?
Well, it's supposed to power up the @minnowsupport account. From there, users can tip PAL to @minnowsupport for an upvote, destroying the PAL and creating a healthy economy sink to counterbalance inflation.
But... 12.6 million Steem... wtf?
Can you image what happens if PALNet actually gets 12.6 million Steem? That's 4% of all coins in existence. Multiply that by 3 to 12% if you're just looking at liquid coins that aren't powered up.
Can you imagine how much the price of Steem would go up if PALNet generates enough value to take all those liquid coins off the market? In effect, the value of PALNet also increases when the value of Steem increases because of the peg and the PAL-Steem trading pair on Steem-Engine.
Is this a reasonable expectation?
I'm thinking it can't be. I'm thinking PALNet will be forced to burn away the remaining sell wall at some point and let the free market decide the value of PAL. A moment like this might be a full year away, but it will be looming unless PALNet is somehow able to generate that value that would justify the 12.6 million sell wall being bought out.
Time for Exploits?
This makes me think that maybe I should be exploiting the system as an act of defiance to the sell wall. Just upvote myself and keep dumping all my coins on the market to show that too much inflation is being created for the sell wall to ever be bought out in the first place.
The other less dipshit option is to try and bring value to PALNet so that both PAL and Steem gain value. I already have a bunch of ideas on that front that I have explicitly detailed, so that's what I'll do.
Conclusion
PALNet is not decentralized. Whoever controls SCOT bot controls everything. That means exploiting the system isn't really an option because they can just slap you down at this point.
However, that doesn't really matter, because I didn't come here for ROI. I came here to bring value to an open source community. That's what I intend to do.
I've decided to strip my DrugWars bot down to the foundation and rebuild it into a Steem-Engine liquidity-maker bot. Maybe I'll bring some value to Steem-Engine and even make some money while I'm at it.
Regardless, PALNet should seriously consider stopping the sell wall from generating inflation. Those 12.6 million dead coins are going to mint 1.26 million new coins over the next year. What percent of those 1.26 million PAL will be used to undercut the sell wall?
We can see that the way things are set up is completely unsustainable unless PALNet develops quite a bit of value. Honestly, they just might do it. It certainly feels like they are cranking out product 10 times faster than Steemit Inc ever could.
P. S.
As a large stake holder, 50% curation is pretty fun. You can splash coins around everywhere and half of them still get kicked back to you. Maybe Steem's EIP won't be such an utter disaster.
Very interesting stuff. I hadn’t looked at the sell wall in that way. Here’s my (selfish) question to you — if you were to launch palnet over again (assuming you had full control over the launch parameters) what would you do differently about releasing those 12.6M?
Would you do it through higher inflation at the start? High mining inflation specifically? More airdrops - but spread them out? Programmatic selling (can we please call this the Steemit, Inc plan!?)?
Curious to know what you’d do if it were under your control ;)
I think they did a really good job with the airdrop.
Top notch.
Wouldn't change a thing.
I think 12.6 million coins is a bit ridiculous.
You can't expect to suck up 4% of Steem's market cap in a reasonable amount of time.
I would have done 1 or 2 million and made it so those coins didn't generate inflation.
"Mining" is interesting. You can't really call it mining because it doesn't mine anything or validate the network, but then again maybe you can... virtual mining...
PAL mining is just another form of staking; a version of staking where the users are expected to only be worried about ROI instead of being active in the community. It's a very good thing to have because there is plenty of demand for it.
The one thing that really bothers me about it is that PALM doesn't have a cap. The Mega-Miners do have a cap which means they can be worth more than the 100 Steem peg once they are all bought out. However, the Miners not being capped puts another soft-cap on the Mega-Miners which I think is annoying. This puts a 132 (33*4) Steem cap on Mega-Miners because miners cost 33 and MM cost 100 but MM generate 4 times more PAL.
If it were up to me I would put a cap on PALM and PALMM. Once they were all bought out I would liquidate all PALMM and the owners would receive 4 PALM for each PALMM that got burned. That way you don't needlessly have 2 assets that do the same thing but you can still give the bulk-buy deal in the beginning.
For the most part I have no complaints.
All the problems with PALNet are totally fixable at this point.
Yeah I agree. I ask because I’m launching my own tribe/token and am currently working on the parameters for the launch. It’s hard to figure out exactly how to distribute millions of tokens in a fair way.
I like the idea of selling 1-2 million tokens at the sell wall and not having inflation for them. It may be a little tough to set that up as the inflation rate is based on the total and not “per token”.. I.e. you set the inflation to be X number of tokens per Y number of blocks.
The other option is to start with a really high inflation rate and let the early adopters earn tokens for using the platform — like Steem did. The problem is that you may end up with an unfair distribution kind of like Steem.
I love those ideas on mining. I see a lot of potential there to do some interesting implementations.
Palnet did a great job. The sell wall is pretty daunting, but I’m having trouble finding a fair alternative to it while still being able to distribute millions of tokens. Thanks for your input! Let me know if you come up with any other great ideas that I could possibly steal from ya! 😉
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Appreciate the numbers you provided in the post and the perspective it gives. This too is a numbers game. Feeling fortunate to get in early on this game and hope that by adding value, I too can help the price of PAL increase.
And here I am powering down my 210 to sell... I figured the value was farrrr to high a couple days after powering up. Glad I'm not the only one that thought the current setup wasn't sustainable. I don't know that the system is something able to be quickly fixed however, since as you mentioned, it's in a type of sidechain with steem-engine / Scot, but... I'm kind of in the line of thought that "what if steem-engine dies for whatever reason", I know they are getting there. I still have that lingering "exit scam" seed planted in my mind from shitty projects, which worries me, not in that the devs would exit, because they are committed to steem.. but what if an accident of some type happens, and the one or two main devs can't continue? Their business is still small and in the control of a few people. Personally IMO, for self sustainable futures, a decentralized approach needs to happen.
Indeed, it's a very high risk high reward scenario to be sure.
As an aspiring developer this project has a very big draw for me.
The risk of the Steem I put in was well worth the reward of being a mega-whale
plus the ability to create apps for the community that everyone can profit from indirectly.
I've been putting my extra time on my profile project, getting close to a ready to let the world use status.
Honestly, I don't like communities as they are. At all. Be it palnet, weedcash, or otherwise,they feel... Unauthentic. Maybe once they customize condenser with a new theme and layout.... It all has a feeling of.., well, idk, a cheap money grab. Which kinda sounds like the wrong way to put it, but that's what it feels like.
Yeah they are very stem-cell.
They haven't quite forked into a real product yet.
baby steps, Rome wasn't created in a day, it's true. lol. I do look forward to the things to come, very optimistic about whatever the future holds. An anxious wait., hopefully we don't throw a fit when we see what we imagine as the end result, yea? hahaha
Ignored 12.6 M token sale order.
U can see how fast supply is raising
What's the difference between "unstaked" and "liquid"?
Are those coins currently in the process of being powered down?
yes - 4 weeks powering down, liquid u can just dump right now
This is all I got out of it ... ;D
But yeah, the wall will have to come down at some point but perhaps it is good there now so that more can buy cheaply. I am hoping that there are many similar (different use cases) projects starting on Steem that will drive demand and transactions far and wide. Some will be worth millions, many will be worth many thousands, 1 or 2 billions? it is all good for Steem, all good for the projects.
I think you can be responsible for 100 tokens per day only because some of those who have stake are not voting.
Assuming 2.1 million inflation the first year, divide by 365 and you get 5753 so with 1% of staked PAL you’d be doling out 58 a day if everyone was voting at their maximum potential.
Indeed, I have noticed my upvotes are a little less lately,
Some big accounts must have threw down some votes.
I just dont see the value in palnet.io..
Yea it has no bots yet. But the trending and hot page stil isnt very special..
Yea you can buy in early and hope that you will later on be like a steem whale just on palnet..
But I think I stay with steem.. Or hope for a real new beginning via community fork not via centralized token fun..
For me personally, it was an amazing opportunity to become a very large stake holder for relatively very little risk.
I've been talking about fixing the trending and hot tab for over a year. How much work have I actually put toward that goal? Not much.
However, now that I'm a huge stake holder on PAL I can try to bring value to the platform that I have a lot of stake on. I no longer have to make money directly, if I bring enough indirect value to PAL I'll be doing just fine.
That is one of our goals to have awesome, original content on the trending and hot tabs and is why we have a bunch of the moderators and lidership from PALNet (large stake holders) following our manual curation account @msp-curation
That is deeply concerning. This means that it may be exploited in the future by less reputable people. People that don't care about the long term value of Steem, or don't care if their own actions fuck it over for everyone, as long as they get their's, just like they've been doing with Steem.
I am seriously concerned about the centralization as well.
I like the idea of the community and rewarding with different coins...but if I did end up coming up with a killer idea...would I even want it to be centralized like that, when I hate it so much in things myself, even if it meant making a fuckton off of it? Would I have to plan on eventually having it controlled by a non-profit if it was successful? This is not the kinda stuff my brain is used to thinking about and I don't like it. I prefer thinking about how to do things.
I actually just bought some PAL though, because my upvote on PAL is pathetic. I bought an extra 100 and put in buys at lower spots, just in case. Because I don't have the money to get a fuckton of PAL right this second...and I'm not sure if I would want to, because things aren't abundantly clear what the future of it will be.
Possibly the most positive thing in regards to possibly actually sticking around and building something good is that Minnow Support issued the coin and it's done by one of the largest communities here. I don't think they'd cut and run with all of our money.
Most killer dapps will be just that: decentralized.
They'll start out only connected to one asset, but if they get popular of if you work on them long enough they will branch out to multiple assets. The key is making open-source code modular so you can plug-and-play across multiple chains and operating systems.
Interoperability is the key to networking.
I love sprinkling around my meager upvote to bring people up to the dust threshold. I’m curious what the dust is for PAL.
I grabbed 30 something PAL this morning for 10 steem, I wanted more like you got but I’m happy to almost be at 400 now. Slowly increasing both PAL and steem.
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any vote that gives less than 0.002 is dust currently due to the 50/50 split and 3 decimal precision.
In my conversations with MSP miss it appears that they will use their stakes to crush rampant self-upvoting. They both control much of the token distribution and their leader controls scot-bot so, as you point out, they have the power to shape the economy the way they want. Good heads up on that sell wall!
And, best of luck with that liquidity bot. Steem-engine needa market makers because many pairs just aren't that liquid!
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Even if I never upvote myself I still get 50% curation kickback.
As someone who bought all my coins I may have a bit less stake than MSP admins,
but I don't have to follow any of the rules they've agreed to
because my stake wasn't airdropped onto my account for free.
All the moderators have agreed to certain restrictions like not selling for a year.
Captain Renault: I'm shocked! Shocked to find that gambling is going on in here.
[a croupier hands Renault a pile of money]
Croupier: Your winnings, sir.
Captain Renault: [sotto voce] Oh, thank you very much.
[aloud]
Captain Renault: Everybody out at once.
I never saw Casablanca.
"Best case scenario, PALNet generates enough value to clear the sell wall and distribute all 12.6 million coins to a healthy decentralized community."
wait a minute, it's not like that 12.6 million tokens are tapping into the inflation pool thereby creating a NEED to decentralize. They're sitting on the market at an asking price much higher than the market price, not being rewarded. No best case needed when we are in it. :)
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I disagree, the sell wall in combination with the airdrop caused PAL to flash crash much lower than it's fair value.
Everyone can see the sell wall and know that PAL can't go above a 1:1 trading ratio even though there are 20 times less coins in circulation.
Inflation being generated by the sell wall is creating 10 times more inflation than there should be. Maybe just 5 times if you expect only half of all coins should be powered up.
This is obviously all gross speculation. I think we can all expect some very large changes coming in the near future.
I can see what you're saying and admit I never saw it that way. It would require that those buying would want the price to go over 1 steem though in order to deter them. However, if in actuality people were just buying in order to gain a stake (rather than merely speculate an existing investment) in the inflation (ie powering up to gain more), I would contest that the sell wall does not hurt at all. Sure, maybe it will prevent the price from exceeding 1 steem anytime soon. But I believe that this native demand for the token is likely just building momentum now and not yet realized as to how many people actually want PAL. If so being the case, I expect and thus far seem to be right in seeing PAL continue to climb to meet the sell wall (as demand for the inflation outstrips existing supply). If PAL meets the sell wall then it would prove that the inflation generated by the sell wall has indeed not hurt... it just took time for the demand to normalize to the sudden supply of the claimdrop.
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Considering that the price is hovering around 0.45 - 0.50 I'd have to assume you were right. There seems to be a lot of accumulation going on.
We also have to consider if Steem is on the precipice of doing something crazy like going x10. Looking at the history of Steem this is not a ridiculous notion. If that were to happen it would only take one big buyer to look at PALNet and be like:
and the entire market below the sell wall would be instantly cleared out.
Realistically anyone can buy out the market up to the sell wall.
It's only 10k coins.
Word. Either way. This is probably the most excited I've been about steem in a while. Token economy, here we go!
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Hope you're right about steem EIP 😆. Those numbers do make you think; and although seeming hard just now to find all that value, the persons behind the project have been consistently coming up with great ideas so... it will be fun to see where we're heading!
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nice writing :)
I don't know why I fee that palcoin will go higher in the price than steem and all good coins that are bringing value as well. People in the future will be interested to earn those tokens more than earning steem. It's just a feeling and I'm not sure about. But why not if that will make people happy.
Interesting information. I would do the same if I had disposable cash
This could be seen as an another incentive to buy PAL right now, since you're gaining a lot more influence with the PAL bought than one would think from face value. This is major news to a many people, if not almost everyone. Nice find!
Dear @edicted
What you wrote is already bringing up a huge red flag. Just like you said: This can't be sustainable.
It does sound like very reasonable thing to do. I wonder how future will play out.
ps.
Great read. I only created my account on PALnet just a moment ago and I'm currently researching about this platform.
I'm just wondering if there is anything special about this particular front-end? We've busy.org, steempeak.com, sportshub.io and probably many more. Is there any particular reason to focus our attention on Palnet? Any idea?
I've also noticed that if I upvote something on Steemit then it's also upvoted right away on PALnet (and vice-versa). Interesting concept. The only thing is that all I can see is growing supply and I don't see much created demand for that PALnet coin. So selling pressure will most likely only increase. Plus this mentioned "the sell wall" is a huge put off.
Would you mind sharing your experience with us? I would surely appreciate it.
Yours
Piotr