Introduction

In the last 30 days, STEEM price has dramatically decreased from $0.60 to $0.18 by 70%, which is much greater than designed inflation rate, which maybe around 7% a week currently. Some blame the devs saying the devs are dumping their shares, or some others point the whales' powerdown as a cause, but these arguments are not supported by actual data. This post attempts to provide some insights and to clarify what is happening to STEEM and SBD now by deeply looking at actual data.

Looking at Exchanges

Exchanges are good starting points to find the way because most of trades happen in exchanges. Using a exchange list in Exchange Report, I collected deposit/withdraw amounts during the last 30 days(9/24~10/23), and aggregated them. The results obviously tell that STEEM has very strong selling pressures, -45,645 STEEM per day on average, while SBD has more buys than sells, +3,510 SBD per day.

Now focus on STEEM first. The net amount of -1.36 million is consisted of 1.55 million of buying and 2.91 million of selling. Then a question can come up, "How much did the devs sell?" Here is the answer. The devs sold about 527k STEEM, which is 18% of the total sold STEEM. Meanwhile, top 50 whales sold about 452k STEEM (Not precisely calculated and not 100% is from powerdown), which is 16%. Interestingly the biggest seller is smooth-c, who are doing SBD conversion, followed by kush (it is not kushed) who did the same SBD conversion. Including my bot account, these three accounts devoted to SBD conversion consist of 31% of total sell amount.

Regarding SBD, 52% of buying is from the SBD conversion accounts, 291k SBD out of 559k. So it seems the converters work properly. Roughly assume that daily average volume is 20k, they bought about half of them(9k SBD) to improve SBD pegging, and thanks to them SBD has 3.5k buying pressure on daily average.

However, a question poped up in my mind, "Why SBD price is slowly increasing or fluctuating while buying pressure is positive?" So I looked into deeper.

Imbalance of SBD Market

Shortly, I think that the cause is less competition in bidding SBD. During the last 30 days, there are around a hundred accounts whose net transfer amount is positive (presumably they bought SBD). In contrast, sellers are over 800 accounts, eight times more than buyers. In addition, top two buyers (or can be one) consists of 52% of total buy, while top two sellers consists 34%. Given less competetion, buyers do not have to bid up their prices, since sellers are more likely to decrease their prices or dump SBD competitively.

Additionally, sellers are more prone to sell because SBD was given as rewards(so feel like free money) or they need to cash out for paying projects (like steemfest who sold 75k SBD(17%) during the period).

What Should We Do?

This is totally free market so we cannot blame anyone about the price. While SBD conversion is one of the cause of price decreases, it is also part of Steem system and it improves the debt ratio and SBD pegging. Steem even gives an incentive for doing that with price feed discount in order to have better pegging. However, if this less competition continues, we are going to give free money to SBD converters at the expense of STEEM price decrease (the top converter said he earned about 3% overall, and he is converting over $50k per week). We urgently need more participants who compete each other for buying SBD.

I Will Do...

I already provided SBD market making bot to encourage more participants and keep SBD price stable. I am running the bot and put around 7,000 SBD. From now, as former top 19 witness, I will buy SBD at least at $0.95 regardless of potential losses, since previous witness income can compensate part of the loss. If I elected top 19 again I will increase the minimum price to 0.97 and will regularly add funds from my witness income. I hope others (especially witnesses who can be considered as staffs of Steem) will gladly participate and help SBD conversion.