Why Steem tokenomics failed & how Masmic fixes it
Steem blockchain was made purposely for content platforms, so that good content creators can earn for their contributions online in Steem token. It was a great idea in principle and till now, it’s fair to say that Steem has been the most popular one among all crypto-enabled social networks. It started in 2016 and currently has between 1–2 million members.
However, as it is a crypto token project, it was also important to design its tokenomics model in such a way that with growing userbase/traction, the value of token should increase. But it failed miserably in this regard.
Let’s see how:
Steemit — content creators are rewarded not by someone who paid for it, but from additional supply of Steem tokens which enters the market through inflation. This additional inflationary supply creates selling or downward pressure on Steem token price. And there’s no actual demand side which buys Steem tokens for its actual utility to use on the platform. With no demand side and continuously increasing supply, it is inevitable that price of token will crash over the long term.
Currently, price is supported only by demand side of the speculative kind, those who believe that price will rise in future with little clue as to how and why! And others don’t want to sell now after a huge loss of their token value, but are overlooking the fact that without any healthy demand side, price of token is only going to decline further.
Its price decline during the current bear market is beyond imagination. From $7.46 in Jan 2018, the price of Steem token has now declined to $0.13 -> a 98.2% decline!!! For a little more perspective — this is equivalent to 70% decline for 11 times from all time high of $7.46. And the value might further decline because its tokenomics model is fundamentally broken!
Based on our detailed analysis of previous tokenomics models including Steem/BNB/BAT etc., we’ve taken sincere effort to make sure that we learn from these previous models and design Masmic tokenomics in a way that there’s a legitimate demand side as well which creates buying pressure for MAT (Masmic Attention Token).
The model is very simple. Masmic is a global marketplace for user attention, ideas and knowledge. The attention of users on Masmic has monetary value for those who want to promote their products or services, or looking to crowdsource micro-gig tasks. For this, they will need to buy MATs in order to post Q&A bounty on Masmic. Content creators on Masmic will earn MATs not from inflationary supply like in Steem, but from the actual demand side which pays in MATs to get something in return — maybe early beta users, or product feedback, or crowdsourcing ideas or anything else which they deem fit.
Hence, there is a healthy balance between demand side and supply side on Masmic. Because of this, as Masmic userbase keeps on growing, the value of userbase will grow and this will grow the likelihood of advertisers to leverage Masmic by buying and paying in MAT tokens.
A similar analogy would be, say Facebook in its initial years coming out with Facebook coin with a fixed total supply. And advertisers will have to pay in Facebook coin to advertise on Facebook. With increasing userbase and more awareness among advertisers, the demand for Facebook coins is going to grow which will translate into higher price of Facebook coin as the supply is fixed.
But while the advertisements on Facebook are more annoying to users as they get no incentives, on Masmic, because of incentives, user engagement will be better and limited rewards leads to healthy competition for better quality submissions.
So, a win-win for both advertisers (demand side) and contributors (supply side), and a well designed token model!
Join as a presale buyer of MAT which starts Oct 1 2019 on www.masmic.com and get benefited from the future growth of Masmic platform.
