There is no doubt that SMTs are a great idea and will have widespread use. My question is why do people think they will increase the value of STEEM? If it cost $1 USD to create an SMT and it operates independently of any other store if value like STEEM, other than bringing attention to our STEEM blockchain, how will it increase the value of STEEM. I obviously hope it will but don't see the direct causality! Any insights?
The big thing is that SMTs actually don’t operate totally independent. The market for purchase & exchange of SMTs is powered and denominated in Steem. So if someone wanted to buy $10,000 of a SMT, they have to buy $10,000 of Steem first.
If organizations launch initial token offerings it works like Ethereums erc-20 system. All that incoming value is captured in Steem which the token creator trades their SMT for, but they still hold the Steem. Sure they could dump it for cash immediately and negate the new value added to Steem, but more likely they’ll need the SP for bandwidth for their project/community, to facilitate directly signing up new users via the new resource credit system, and to reward their community with their Steem powered votes. (See paragraph below on multiple votable tokens!) A great example of this is the @appics App which already had their initial token sale in preparation for SMTs. As the sale occurred their wallet filled with more than a quarter million Steem which is still there. That’s a lot of Steem demand for just one initial project among many!
There is also a function called automated market makers, which will drive Steem scarcity. Creating a SMT may have little cost, but creators can ensure that their tokens have real value and can always be redeemed for Steem/cash by funding their market. If a SMT issued a million tokens, they may choose to put 10,000 Steem into a type of smart contract/bot called a market maker. This essentially would set a starting price that the token is worth at least .01 Steem each. It may fluctuate from there, but that market maker will be there ensuring liquidity and trading to maintain that basic “floor.”
Every SMT based post or piece of content will still participate in the larger Steem system. Posts will have multiple “votable tokens.” So there is still desire to hold SP for monetary rewards. I think many SMTs will have little monetary value in and of themselves, but become great means of sorting content & engaging members within a community, with Steem still doing a lot of the heavy lifting in terms of monetary value distribution.
Best explanation I have seen to date. Thank you.
It is possible that the SMTs could bring exposure, but you never know.
I am neither hopeful or pessimistic about the outcome. Time will tell.
Posted using Partiko iOS
Well started. There is a lot of time between now and then!
To the question in your title, my Magic 8-Ball says:
Hi! I'm a bot, and this answer was posted automatically. Check this post out for more information.