A few days have passed since the news came out, that Justin Sun and the TRON Foundation have taken over Steemit Inc. A lot is still unclear and I must admit that I do not give too much on what has been communicated so far. Ultimately, only Justin might know what his plans are, and reading and listening to what he has said so far does not provide a conclusive picture - to say the least. Therefore, I have tried to analyse the situation independently of what was said and to answer the most important questions I have asked myself. Finally, I have tried to

What has the TRON foundation bought?

First and foremost, the Tron Foundation has bought equity ownership in Steemit Inc. By owning Steemit Inc they now a large stake of Steem Power as well as the brand rights for Steemit as well as the domain names steemit.com and steemitwallet.com.

What have they not bought?

The TRON Foundation has not bought the Steem blockchain or the software that runs the blockchain. The blockchain is run by our witnesses as well as other nodes and the software is open source.

How does the acquistion affect the financial situation of Steemit Inc?

Steemit Inc was financially constraint and struggling to raise enough cash to fund its operations as well development work. As a consequence, development work was relatively slow and the price of Steem constantly depressed due to them selling Steem on the open market to get cash. The TRON foundation appears to be much more solidly financed, which means that if they wanted to, they could stop selling down their Steem stake immediately and that development process could speed up significantly. Both of this would be positive for the Steem price.

Interest alignment of Steemit Inc with the other Steem stakeholders

Even though this might not always have appeared to be this way, the general interests of Steemit Inc and the Steem holders and users used to be aligned. All stakeholders had a strong interest to see the Steem community grow and ultimately the Steem price to rise.
The TRON Foundation, however, might not have the its interests aligned with the remaining stakeholders of Steem. While they should also have an interest to see the value of its Steem holding prosper, its main interest should be to improve the value of TRON.

Can they migrate the Steem blockchain to TRON?

The answer to this is simple - no. They do not own or operate the blockchain, so they cannot migrate the blockchain to TRON.

Can they migrate Steemit to TRON?

Another clear answer - yes. If they were to build a similar system based on the TRON blockchain, they could link Steemit.com to this blockchain. This would most likely result in many new users, which do not know the difference, ending up on the TRON version of steemit.

Can they migrate the Steem coin to a TRON based token?

While the TRON Foundation cannot force anybody to exchange the existing Steem for a TRON based Steem token, they could of course offer this in a voluntary exchange offer. However, given that the value of this new token would be highly uncertain, I would not expect many holders to opt for this alternative.

Can they migrate the existing DApps to the TRON blockchain?

While they cannot force DApp owners to migrate to the TRON network, the TRON foundation could give the DApp owners incentives to migrate or at least to set up TRON as a second option. These incentives could range from technical support over offering money for migrating up to full take-overs of existing DApps.

Could the TRON foundation vote out the existing witnesses?

Yes and no. While it is unclear which Steem amount the TRON foundation has gained through the acquisition of Steemit Inc, it is estimated to be 20% of the total circulating amount. This would be roughly 70m Steem or Steem Power. 53m Steem and Steem Power sit in the accounts of @steemit and @misterdelegation, which have both changed their keys prior to the announcement of the acquisition and should thus be the minimum estimate in my view. Top 20 witnesses currently currently receive votes between 40m and 50m Steem Power, so Steemit could clearly influence the election of witnesses. However, if they would indeed by able to replace all existing witnesses would need to be seen as I would suspect that the rest of the community would try to fight back - and one way would be to concentrate votes on the witnesses with the highest votes in order not to lose any votes.

Could the Steemit stake be forked out?

Technically this would be possible, but the question is, if this would be a good idea.

Could Steem survive without Steemit?

Technically, yes. But would Steem prosper without Steemit? This is highly uncertain. There is still a lot of development work to be done - would the community really step up and fill the gap which the departure of Steemit and its development team would result in? I doubt it. Also, we would lack money to finance strong API nodes, which are capable of handling the traffic. Who would operate these?

Based on these considerations, I have made up my mind on what I would do if I was in their situation:

The only reason why I would have bought Steemit in the first place would have been for its community. The Steem stake and the domain are nice add-ons - but without the community this is not worth much. As my first priority, I would thus try to win the community. I would be supportive, make sure that the development is ongoing, that communities and SMTs are finished and the Steem price is doing relatively well. I would do marketing for Steem / Steemit and would try to make sure that my existing community does also use Steemit.

However, ultimately, I would try to integrate Steem into the TRON blockchain. Technically, this should not be the most difficult part and it would clearly be a logical step as it would save a lot of money which would otherwise be double spent for operations and development of two separate block chain. However, psychologically this is a highly critical operation for the Steem stake holders, which I would not to lose or even worse - to fork me out of the chain.

In a second step I would thus build some connections between the two block chains. As an example, I would provide a possibility for Steem Users and DApps to use the TRON blockchain as a place where they can host their smart contracts, a functionality which Steem currently lacks. Also, I would integrate Steem into the TRON wallet and vice versa. Finally, I would market the product to as many outside users as possible. Besides the fact that this would add value to the platform, it would also result in the inflow of new users, which have no historic sentiment towards Steem but instead see Steemit and TRON as different sides of the same coin. At some point in time users would no longer realize which block chain they are actually using.

Once the link between the two communities have strengthened, I would offer Steem owners to convert their Steem and Steem Power into TRON. Currently, the total market cap of Steem is just below USD 80m, compared to USD 1,350m for TRON. Given that the TRON foundation owns an estimated 20% stake of the Steem token already and that not every owner would convert, most likely less than 4% of the current supply of TRON would need to go to Steem holders. I think that this step is crucial to make sure that prior Steemians become committed TRON community members in the future.

Finally, once the dust has settled, I would fully integrate the two block chains into one chain.

Is this the route which Justin Sun and the TRON Foundation will go? Frankly, I do not know. But from my point of view this is the most likely scenario.

What do you think?

All the best,
Tim