My First Steem Investment "Failure" was Not That Bad!

Things move fast in normal life and when we add the complexity of being digital, its move exponentially faster. Steem has been a cornerstone of my investment strategy for over a year now and while it has not brought me the appreciation or income I want, the plan was never for it to do so in the short term. I have always looked at it as a long term play in capturing the value of the evolving technologies of blockchain and social media. In the meantime, there have been a number of opportunities created within the ecosystem to leverage our stakes to assist in broadening the reach of the community and content provided. My favorite, Splinterlands, has been an innovative way to engage the community while providing assets we can leverage to invest and earn while enjoying the journey.

One of the great benefits of the great Steem protocol is that it runs on a Delegated Proof of Stake (DPOS) which allows us to allocate our stakes as we deem to participate on a number of projects. One of the most common uses is to delegate our Steem Power for projects that are developing to add value to the ecosystem. In exchange, many offer returns based on performance, tokens or just the participation of a community. However, despite the delegation, the stake remains our own with no obligation to be tied up other than the five day lockup after deciding to eliminate the delegation.

One of the delegations that I made a couple of months ago was that of the game of chance called Magic Dice. It initially took the Steem community by storm as it was the first broad based dice game on the protocol. We had previously seen these on other protocols like EOS and Ethereum but with Steem, it brought a number of benefits like free and fast transactions. I never participated as I handle Steem like an investment and not gambling but it was impressive to see the traction it gained as it quickly reached to be the top transactional Dapp on the protocol for a short period of time.

The Magic Dice team quickly took advantage of the momentum and offered an interesting incentive system for those that would not only play the game but also those who would delegate. They started to issue tokens (not on a blockchain which should have been the first red flag) to those who played and delegated to the Dapp. They also took it a step farther and committed to providing a profit share type structure where holders of the MAGIC token would share in the performance of the Dapp based on their share of token. It soon became a race to who accumulated the most tokens to build a great stake for future distributions.

As I saw the model, I decided to delegate some Steem Power as a way to participate in the momentum they have achieved as I continue to see how this type of Dapp has become very popular among the popular blockchain platforms. In fact, I recall that in the first quarter of 2019, these type of Apps accounted for the highest percentage of transactions of the most popular blockchains like EOS, Ethereum, and Steem. In my head, there was very little to lose. Unfortunately for many, that was not true as one day, without notice, the team behind Magic Dice decided to pick up and leave; taking all of the liquid Steem and SBD held with them. This included liquid crypto that was held on the part of players at that point in time.

However, like I mentioned, delegated Steem Power is only of the stakeholder so I immediately withdrew my delegation and got it back in five days. Out of pure luck, I had withdrawn my share of the distributions from their site days before them leaving which provided 4.033 Steem and 0.32 SBD. Only because of that luck, am I able to say today that despite it being a scam and a poor investment decision. I still made a 3.84% annualized return in the 74 days I had 500 Steem Power delegated to it! This is still better that what I would have gotten in the bank or in “risk free” assets from the Treasury.

Source

This experience has served as a great experience for me and probably for many more in the community. However, it was also able to highlight for me the strength in potential of the DPOS protocol in that we control on stakes as long as we adequately secure our private keys with proper risk management. It is also a great way for projects to continue to attract resources to develop their ideas although it may become more challenging to prove their trust because of these experiences from those that are dishonest. We have never heard again from Magic Dice but it will surely have implications in the future of the ecosystem for time to come!

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