Steemit has been one of the wider known crypto projects, the main product being a social media website that is closely linked to the STEEM blockchain and cryptocurrency. The platform rewards users for their attention and content with STEEM, which is generated by the STEEM blockchain. Steemit is only one of the websites that currently uses the underlying protocol, but now Steemit Inc is forced to drop off 70% of its employees and restructure as the bear market takes a toll on the income of the company.

The Past

The STEEM blockchain has been launched by Dan Larimer (BTS, EOS) and Ned Scott back in 2016. The launch through Bitcointalk’s forums was not particularly transparent, the blockchain has been relaunched after the initial try and it was said to be mostly instamined by the developers as most people were not prepared for the new mining technicalities of the project.

After introducing the Steemit platform, Co-Founder Dan Larimer left the project to pursue another idea which became EOS afterwards.

The Model

STEEM is the blockchain that generates revenue for both the users and the developers who spend their time on Steemit. Since the company behind the platform never organized an ICO they use the funds from the initial mining process and stake the funds needed for operation. This means that the project is most probably using its funds from a treasury to keep the project alive while the bear market keeps its toll.

The problem with this is that the central authority, namely Steemit Inc, relies mostly on an inflationary (DPoS) model to keep the actual use-case of the Steemit blockchain alive. The blockchain has no use case whatsoever if the services built on top of it stop and as it currently stands the hosting and development expenses seem to take a toll on the company behind it.

Ned’s update

Ned Scott published an update where he explains that 70% of the people working on Steemit have been laid off as the direct result of the cryptocurrency market. Steemit will still continue to exist according to the statement, but the company will go over a full restructuring and reevaluation.

The full statement can be seen here:

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The STEEM market

Since the addition to its first big exchange STEEM has been forming constantly smaller market cycles and even though every one of them has resulted in huge gains for those who bought the bottom, so did almost every other cryptocurrency during the bull market.

In terms of USD, the price of STEEM has been hit by a more than 95% decline compared to the January peaks. The current price of 1 STEEM is $0.37, while peak prices were around $8.

Usage of the platform doesn’t fill us with confidence either, similarly to the price the number of authors is heavily dropping as the incentives are way lower compared to earlier this year.

(Image taken from @arcange)

A relief could happen if the markets turn around, but we are not sure if this would have a big enough impact to save the company that is behind the management of the Steemit platform.