Analyzing the $STEEM Token APY: Advantages and Disadvantages

Hello everyone, How are you doing, I welcome you again to my blog in the Steem Alliance community.

Today, we will discuss an interesting topic on the platform which will be: Analyzing the $STEEM Token APY: Advantages and Disadvantages

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• Introduction

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As we all are familiar with, the $STEEM token is the native token of the Steem blockchain as usual for all blockchains to have their unique native token, therefore $STEEM is the native token of the Steem chain.

It is a token that offers several advantages within and outside its chain, and one of its advantages is that it offers users a chance to acquire an Annual Percentage Yield (APY) through different usage like delegating and staking.

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As an outside investor or someone new looking for this chance, understanding the advantages and disadvantages of $STEEM APY can help with making the right conclusions before partaking in the Steem environment.

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What is $STEEM APY?

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The real rate of return on investment is what is known as the Annual Percentage Yield (APY), and this takes into account the effect of compounding interest in that particular year.

Staking $STEEM tokens or providing liquidity to some by delegating the token are two ways to earn APY in the context of $STEEM.

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The Potential of $STEEM APY

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A chance for Passive Income: - The possibility of earning passive income is one of the primary benefits of earning APY on $STEEM, Users can earn rewards over time without actively trading or creating content just by staking their $STEEM tokens

This is mostly beneficial to Long-term Steem holders who are confident in the blockchain's potential future value and may find this particular idea promising for their portfolio.

Contribution to the Steem Ecosystem: When users stake $STEEM tokens, they lock their tokens into the network, which contributes to the blockchain's security and stability as well, and this also helps and adds to the general well-being and development of the Steem eco-system been profitable to both parties.

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Potential for a Price Increase: - The underlying value of $STEEM tokens can also increase while earning APY, and this can even double the potential for more rewards, and profiting from price increments can make holding $STEEM a worthwhile investment strategy, me on the other hand will stick to bagging more $STEEM bags.

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DisAdvantages of the $STEEM APY

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Market Volatility: - The volatility of cryptocurrencies like $STEEM is well-known, and this is one of the things that is drawing investors' interest back, the earned APY's real value may be affected by significant fluctuations in the value of $STEEM tokens.

Therefore in the end, the rewards might not be enough to make up for the token's lowered value if the price of the token falls significantly.

Lock-Up period - Tokens are usually locked up for a predetermined amount of time when staking $STEEM although on other platforms, it only takes 5 days to undelegated one's money from the steemitwallet, therefore within this period, Users won't be able to trade or access their tokens during this time, which could be a disadvantage if market conditions change or one need liquidity quickly.

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Possible Inflation: - In anything in crypto, supply, and demand are what really matters and it's likely that the $STEEM token may experience inflationary pressure as a result of staking rewards, therefore as more tokens are distributed as earnings, supply will increase, which can bring a risk of price worth in the possibility that demand is not as much.

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Conclusion

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Earning a regular APY on $STEEM tokens brings an interesting method for making an honest earning, the advantages of returns and potential price appreciation are interesting but only I suggested that for long-hold investors as making any great earnings in crypto requires patience, but at the same time, the risks of market volatility, lock-up periods, and inflationary pressures must be taken into actions before proceeding whether or not this is a good investment choice for you.

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