Latest Update 2019-02-05
Power down rate has been reduced to the normal systematic selling rate of approx 700 000 SP per month. Before the reduction approx 8 million SP made it onto exchanges. The reduction of power down is a step in a better direction.
Latest Update 2019-01-22
Power Down still continues. One good thing however is that Steemit Inc. has agreed to consider giving funds to a community elect governing body, if you want to be part of the public discussions please visit the Steem Alliance Discord https://discord.gg/U7kQC8J. Please continue to support this petition and comment below until the power down is stopped.
Latest Update 2018-01-21
Power Down still continues.
Latest update: 2018-01-20
@ned and the witnesses present in the Steemdevs Slack seem to have made peace. We asked if we could set aside our differences and work together to make Steem great and Ned said “Yes, I will”.
I further suggested we all take a breather, have some cold ones and enjoy the rest of our Sundays.
Hopefully the funds that were sent to Bittrex 3 hours earlier will be returned to chain and future power downs stopped.
As duly elected witness of the Steem blockchain, I hereby bring to the attention of the community a matter of utmost severity; which requires community unity to present a case of dissatisfaction and a vote of no confidence in Steemit Inc. and Ned himself; should the current 34 million Steem Power power down of the @steemit account continue.
D-Day is tomorrow, where 2.6 Million STEEM would have powered down to liquid form to be placed on exchanges and hidden from view and accountability.
I ask that everyone in the community who is reading this and agrees, to please voice your concerns and reply with "Stop the Power Down!" in comment on this post. Resteems, social shares and further upvotes to this post to will be of great help to enhance visibility.
Why is a Power Down bad?
Steemit's stake will be 100% liquid, which means it can be dumped at a moment's notice and negatively affect the market price of STEEM. There have always been concerns on the bitcoin chain about Satoshi's stake and what would happen if it became active and dumped on the market, in this case Steemit's total stake across all its accounts, is well over 30% of total supply (circa 70 Million tokens/SP) and such market crash fears will be greater than those that exist on bitcoin.
One of the unique features of Steem is the 13 week vesting period which potentially creates a new taxonomy class of Limited Circulation Token (LCT) or Limited Float Token (LFT), this concept enhances the stability of the Steem price, in that it is slower to react to general cryptocurrency market volatility due to the fact that there are limited tokens in free circulation and most are subject to power down becoming liquid. By making an additional 30% of the total supply liquid, begs the question of what is the point of powering up if the central entity is not leading the way in promoting this feature, then vesting periods might as well be done away with because the spirit of vesting has already been broken if the founder and founding corporation are not vested.
Steemit Inc. is largely criticised by the community for its current lack of transparency, moving funds off of the chain will only serve to allow Steemit to further operate in an untransparent manner and erode the trust of the community even more. Untransparent actions could involve selling more than their current programmatic selling rate of 800 000 STEEM per month, outside of the purveyance of the community; dispersing their stake across multiple anonymous accounts which could break community trust by influencing voting on content and witnesses, as well as issuing unsanctioned delegations to their own end and that of potential nepotistic consorts, further eroding the rewards pool towards benefactors of their choosing.
Moving funds earmarked for the furtherance and growth of the network to exchanges, flies in the face of the recent "Proof-of-Keys" movement which urged users to move their balances off of exchanges to blockchain wallets where thier funds are secure and fail-safes like multisig can be implemented. The recent hack on Cryptopia and historical hacks on Bitfinex, MtGox etc serve to re-inforce that point.
Dormant Virus Effect - by dispersing their stake across multiple anonymous accounts, Steemit Inc, will be able to ensure that their stake will traverse to any forked chain that retains user balances or benefit from all airdrops that might otherwise have excluded the Steemit accounts and as such ensure that they have dormant power waiting to be unleashed on any such new chains and greatly reduces the attraction to fork to new use-cases of Steem or airdrop on existing Steem users for fear of airdropping on an undesired monopoly.
Events that led to the Power Down
Seven days ago, ex Steemit employee Johan Nordberg posted (on his own repo) a Github Pull Request idea for a hard fork that would nullify Steemit's account keys for the purposes of freezing or forking their stake out of the chain.
This idea sparked discussion between a variety of Steem stakeholders, witnesses and investors alike, where they took the opportunity to voice their dissatisfaction with the status quo and continual lack of communication, transparency and progress exhibited by Steemit Inc.
A few of the points being:
Steemit Inc having acquired a significant "ninja-mined" stake upon formation of the chain, done in a manner that constituted insider trading, by releasing buggy mining scripts with ambiguous instructions which only a few managed to figure out by the time they had amassed their stake. This stake has many risks, including those highlighted in the section above.
Hiring a compliment of allegedly 60 plus staff (some alleged to be nepotistic hires) before the late 2018 layoff and continually selling 800 000 STEEM per month to cover expenses; remember STEEM was valued between 1 USD and approx 9 USD during 2018 so their extracted value would have much more than today's USD value. Even with such a high extracted sell-off value and large staff compliment, all that was mostly achieved in 2018 was HF20, which had a hard landing despite Steemit inc. having sufficient sell-off resources to hire external, professional code validators.
The continual selling off of Steemit stake putting downward pressure on the STEEM price and CMC ranking; STEEM was once a top ten token and Steemit failed to capitalise on that.
The lack of desire of Steemit Inc. to openly collaborate with community developers to grow the ecosystem together and largely acting like sole custodians of the chain with a non-collaborative sentiment.
Continual delay of promises and roadmap milestones such as SMT's, which are now beyond a joke and almost past being relevant in the wake of many chains already offering basic token creation functionality. Many projects relying on SMT's, such as https://appics.com/ have now been left in the lurch as their ICO's depended on SMT's.
Lack of interest in investor communication, community communication as well as external marketing despite having hired PR staff during 2018. Ned's attempt at public communication via Youtube stream, dubbed "The Bridge" aired approx 2 episodes and then left abandoned without notice or reason.
Such discussion around the repeated failures of Steemit Inc. ensued and came to point where 60+ stakeholders, witnesses and dapp owners decided to move to a private chat which was created a few months back as a contingency to the Slack provided by Steemit Inc. Therein discussions were held over various solutions such as forking the existing chain to freeze Steemit's accounts, forking to a new token, entering into discussions with Steemit Inc. to establish a middle ground such as a community trust or governance model where Steemit would cede a portion of their stake into in addition to control of key github repos that should be under community governance or the status quo which nobody wants.
After Ned reached out to us offering to come to the table, a smaller focussed committee was voted in by the Slack channel to act in unison to first try to come to a mutual compromise with Steemit and this was further reduced to a few people who would engage Ned directly and report back to the committee. I disclose I was voted into the committee but am not one of the few in direct talks with Ned.
One of the first objectives of the talks were to establish a cease-fire where Steemit would cancel their Power Down in good faith that there would be no forking action taken while discussions were taking place. Despite assurances given, Steemit has not yet cancelled their power down and it will become liquid tomorrow, hence the urgency of this petition.
It has also been noted that Ned has made significant effort to engratiate himself with the public by appearing on three Discord shows, releasing the Hivemind post and creating an About Us page on Steemit.com stating their MVV (Mission Visions and Values), it is speculated this is all misdirection and only expedited for the sake of gaining public support in the wake of the recent happenings.
Steemit's Head-on Collision Course with the SEC
Recent media articles have shown that the SEC litmus test for a token being a security takes into consideration both centralised stake and development:
On June 14, the SEC’s Director of the Division of Corporate Finance Bill Hinman said that a key factor in determining whether a token is considered a security under existing regulations is the level of decentralization of the project. If a blockchain network is sufficiently decentralized and no central party has control over the majority of the project’s elements, including its monetary policy and development, the SEC director said in a speech that the native token of the blockchain network cannot be considered a security under existing regulation.
Hinman said: “If the network on which the token or coin is to function is sufficiently decentralized – where purchasers would no longer reasonably expect a person or group to carry out essential managerial or entrepreneurial efforts – the assets may not represent an investment contract. Moreover, when the efforts of the third party are no longer a key factor for determining the enterprise’s success, material information asymmetries recede.”
Given the stake Steemit holds and the level of centralised control over blockchain repos it currently has, will likely jeopardise the entire project into being labelled a security at some future point in time unless drastic measures are taken to reduce those two.
Further in another recent media release, the DASH Network have taken preventative steps to decentralise their token; by creating an irrevocable community trust where the greater network is named sole beneficiary.
With this setup, DCG took the first step to ensure that the Dash network would always have full control over the direction of the project, without resorting to the drastic and disruptive step of defunding DCG and developing an entirely new team to replicate its primary functions.
It also enables the network to replace the leadership team of DCG instead of necessitating replacement of the entire organization should it determine DCG’s performance is unacceptable.
This event in the Steem network creates a perfect opportunity to reflect on the captive nature of our chain in respect to the centralisation of stake and development with Steemit Inc. as the core, and come to a mutually beneficial roadmap for a decentralised future where both Steemit and the community can thrive and co-exist with the aid of a community governing body, thereby further distancing the platform from SEC securities classification.
I personally echo all of the dissatisfaction over the repeated value extraction exhibited by Steemit Inc. without giving back significant growth and progress to the network, however I strongly believe they have developer resources and contacts that are of benefit to the community if used wisely and efficiently, I am thus in favour of mutual discussions to come to an understanding between the community and Steemit Inc. to come to a favourable solution which will be a catalyst for growth and structural reform to protect our network from being classed as a security.
The above is my desired first course of action, failing which I am a servant of the community and will consider carefully the will of the community before deciding what alternative to support. To that end I have created a Discord channel with the placeholder name Steem Reform where anyone is welcome to discuss and voice their opinion, Discord is important because it is where most of the community is at and allows for both voice and text discussions. The primary objective being the petition to cancel the Steemit Inc. power down and then discuss a reform structure alternative for the Steem network.
Quick Reference of some other public statements
Please contact me in DM on Discord, thecryptodrive#8144, if you are a witness, dapp owner, significant stakeholder or community leader and would like your post featured here.
Calls to Action
Comment your support in the petition to stop the Steemit Inc. Power Down.
Join this temporary community Discord server https://discord.gg/b7hggWs to stand united and discuss a way forward for the network as a whole. (I will hand over this channel to any governance structure elected if they desire it)
Upvote, resteem or social share this post for maximum voice and impact; this is a decline payout post so your voting power will not be drained and will not affect the rewards pool.
Thank you for your time in reading this and I look forward to hearing your voices be heard throughout the network, wise words once said:
“Fools multiply when wise men are silent.” - Nelson Mandela
Ricardo Ferreira (@thecryptodrive)
BuildTeam CEO and Steem Witness
Image Reference: Pixabay