I have been selling some LEO - even though I believe that the project is going to increase a lot from where it is and what I am selling is probably going to be worth a lot more. I am selling, even though I don't use the value to live and I already have a fair bit of HIVE. So why sell if I believe the project is undervalued and will realize more of its potential in the near future?
Liquidity.
Only just over 2% of LEO is liquid, making the market very thin. While scarcity is great for an increase in value, I have seen what happens on blockchains when that value is too concentrated in the hands of a few, especially when it is this stake that is responsible for token distribution. Essentially, I want LEO in more hands so that more benefit from it and as price increases, there is a wider base of support to stabilize it.
But, I am also interested in earning myself through my content, which I think in general isn't the worst on the platform and is relatively unique in flavor, not something generic that anyone can produce. I put a lot of thought and effort into my content so that it is interesting, useful and engaging, as well as I put a lot of effort into making sure that I engage with my audience the best I can.
I appreciate the comments and the votes I get a lot, so don't think that me selling some LEO is something I do without thought or because I don't value it, it is quite the opposite. Not everyone can earn their way in, but the higher the price climbs, the more people will be priced out of the market and no longer have the will to participate. I believe that having some stake in a project matters a great deal for the motivation that drives interaction and positive experience. I also think that buying stake has more motivating value than earning it, because it affects the sunk cost emotional response in the brain.
While some people can earn on Hive, they might struggle to earn on LEO, as it is a niche community for content. However, this shouldn't stop them from wanting to be an owner of the LEO network. However, the higher the exchange rate is, the less likely people will exchange, plus, the less they will get. I understand, I understand... we all want a very high price (for me on both LEO and HIVE), but we also want sustainability of that price and more importantly, the community in general. With a niche experience, we don't want to make the mistake and lock people out too early to the point that they feel they can no longer own their position.
This of course puts me in two minds, as while I want to increase my stake, I also want others to have the opportunity to build theirs too. I don't see the value in having a large stake in a platform with a very narrow userbase, or have something that resembles early Steem. However, I also think that it isn't down to distribution through content production alone, for as I said, some people who only earn this way do not value their earnings, as we have seen for almost 5 years. I like that people are willing to buy into projects, yet I am unsure how many are buying into LEO with fiat in comparison to buying in with Hive. I don't mind people buying with Hive either, as this builds a stronger bridge between the two projects and shows how valuable the community connection is to a project built on Hive.
While with my 10,000-odd LEO, I am far from the largest holders, it is still a significant position and makes the movements in price valuable, meaning that I want it to go up, but an increase in price due to scarcity alone at this point isn't what any holder would want long term, as it would mean if anyone does sell a significant amount, the price would plummet. Instead, we want to get into the position where there is a high volume of trade combined with a large number of reasons for holders not to sell. This means that small amounts of selling would be possible and valuable, while still being able to hold a lot to take advantage of the various staking benefits.
While the marketcap of LEO is a very healthy 2.2M - the volume on Hive-Engine the last 24 hours is only $2600. Considering the exciting swings in price, this isn't very high at all, which makes the market cap a little irrelevant, since if a large holder was to sell, it would decimate it. Sure, it would be bought up by holders and the scarcity would continue, but it doesn't bring the stability we would be after, it would likely just narrow the holder pool further, which would likely become a negative for future investors.
I am pretty much the definition of a long-term holder, and I have to force myself to sell anything, as it goes against my nature. There is the temptation to keep building stake, but I think that it is more valuable to have significant distribution at this point, where the people who hold the tokens value it highly. With the way I value LEO, I do not know how long I will keep trickling liquidity into the market, but I have been actively doing this for the last few months (powering up about half) so that more people have the opportunity to get in, even while I know that it is costing me based on my view of the future value as I know I am selling "cheap".
This is a little outside my area of expertise, so perhaps on community feedback I might change my approach again and just start stacking completely. Yet, I do think that for the health of the LEO community to thrive long term, it has to be rewarding for participants who offer value from the content creation perspective, as well as for the investors who underpin the value of the token itself. When these work hand in hand, the sky is the limit and the growth of the token value will be tied to the real interaction on the chain, rather than trying to engineer a community artificially - which we have seen several times, doesn't work well and rarely as intended.
I am very interested to know your thoughts on this.
Taraz
[ Gen1: Hive ]