<h1>A Quick Explanation...</h1>
<p>I've been banging my head on the wall for the last day because I thought I had found a fatal flaw that could possibly be the Achille's Heel of STEEM. I was wrong. <a href="https://steemit.com/steemit/@trending/please-be-kind-to-market-traders-we-have-just-as-much-of-an-interest-in-steem-s-success-as-you-do">(Apologies again to @liberosist for being testy.) </a></p>
<p>I formulated that <strong>&quot;Powering Down = BAD&quot;</strong> because I had seen a few posts criticizing whale-size holders who were doing so. But for both whales and small-time traders like myself, I believe there can be <strong>substantial profit</strong> who are actively trading both the internal Blockchain and external markets by always (or almost always) powering down.</p>
<p>I suspect the Whales are intentionally leaving this opportunity open to enable outsider non-STEEM traders such as myself to take advantage of the spread - and to demonstrate the value of investing in the ecosystem. It worked to <em>&quot;hook me in,&quot;</em> and now that I understand the Powering Down feature, I'm even more excited. I didn't fully understand how it worked, so I thought maybe someone else could get use from this.</p>
<h1>Why I'm Powering Down</h1>
<p>I already knew that Powering Down granted yourself a weekly stream of STEEM liquidity that you can use any way you want at roughly a rate of 1:104 per week. But I didn't know that while you power down, y<em>our SP continues to grow until the payout is made. </em></p>
<p>Combined with the rewards you get that you earn from making posts and replies on the regular, that means even while you power down, <strong>your overall share of the SP reward pool can continue to grow upwards. </strong>That's even before taking into account the fact you can trade the STEEM markets to net additional STEEM, as I talk about below. </p>
<p>The reason I recommend that you consider powering down - particularly if you're <strong>active daily on STEEM</strong> and pay any attention at all to the markets - is because there is such a <em>large discount</em> every time I check the market for SMDs. <a href="https://steemit.com/money/@trending/case-study-how-to-trade-market-distortions-to-profit-with-steem-and-bitcoin-i-put-my-money-where-my-mouth-is">I can't resist buying $3.40 worth of exchangeable value at cost of $2.80 to me.</a></p>
<h1>How To Use STEEM To Earn More STEEM...<img src="https://img1.steemit.com/0x0/https://s3.amazonaws.com/mwrhodes/steem/power-down.png" /></h1>
<p>If you're looking to increase the net amount of STEEM you hold over time, there's an opportunity in using your weekly STEEM Power payout to purchase discounted SMDs on the <a href="https://steemit.com/market">internal market.</a></p>
<p><strong>This is what I'm doing.</strong> Once you purchase SMDs, immediately convert some or all to STEEM using the built-in feature. A week later, your STEEM will arrive in your account at the current open market prices. </p>
<p>After the conversion takes place, you'll have ended up with more STEEM than you have started with, unless there was a substantial price increase over the next week that erases your SMD discount. </p>
<p>(If current trends hold and no new liquidity rewards are added, it seems likely to me that SMDs will continue to remain at a discount to USD.) </p>
<p>But even if there <em>is</em> a huge price spike upwards, you can simply sell your converted STEEM on the open market, hold in Bitcoin, and then <strong>buy back in</strong> after the price retreats. (Even the most steadfast Whales and Holders understand that prices are fated to swing down occasionally.)</p>
<h1>Here, There is Opportunity Everywhere</h1>
<p>If you're able, in my humble and only somewhat-educated opinion, <strong>you should consider powering down and using your liquidity however you best see fit each week.</strong> The only requirement to take advantage of this opportunity is to make sure you're around to trade the markets at the end of the 7 day SMD conversion period. </p>
<p><a href="https://steemit.com/steemit/@trending/please-be-kind-to-market-traders-we-have-just-as-much-of-an-interest-in-steem-s-success-as-you-do#@liberosist/re-trending-re-liberosist-re-trending-please-be-kind-to-market-traders-we-have-just-as-much-of-an-interest-in-steem-s-success-as-you-do-20160730t195850198z">(As @liberosist pointed out, if you'd prefer a &quot;hands off&quot; approach, simply plowing everything you've got into SP power at all probably makes more sense.)  </a></p>
<p>Some weeks, it might make the most sense to simply re-invest your payout back into more STEEM Power, particularly when you don't see any trading opportunities for SMD on the internal market. <a href="https://steemit.com/steemit/@trending/am-i-missing-something-why-not-always-be-powering-down-your-sp">From my assessment there is <strong>very little risk or cost</strong> in doing this.</a></p>
<p>This is obviously my personal opinion and what I'm doing, and this advice <em>could</em> end up in a net loss for you - but I honestly can't see how you could lose much here over the long-term if you're paying attention.  </p>
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