What is Steem (STEEM)

Who created it

Dan Larimer Ned Scott (Steemit, Inc.)

Why it was created

To create a public content platform on the blockchain where value is distributed between authors and curators via crypto rewards, incentivising the growth of communities and applications without the traditional advertising model.

How it’s used

• Rewards for authors for posts and activity in social apps on Steem
• Rewards for curators for voting/selecting content (curation)
• Staking/vesting (Steem Power) to increase voting influence and participate in the economy
• Participation in network governance (voting for witnesses/ecosystem parameters)
• Payments/transfers within the ecosystem and in dApps on Steem
• Access to network resources via limits and the resource model (on-chain operations)

Risks

• Governance capture via a large stake (DPoS): on Steem, voting for block producers (“witnesses”) is stake-weighted; with sufficient stake concentration, control can effectively be taken and network rules can be changed.
• 2020 precedent: conflict around the Steemit acquisition and Justin Sun’s (TRON) involvement: the episode involved accusations of a “takeover”, a fight for witness slots, and subsequent escalation.
• Risk of “an exchange voting with your coins”: in the same story, it was alleged that large exchanges (including Binance, Huobi, Poloniex) could have used customers’ coins to vote — this undermines trust in “decentralisation” if STEEM is held custodially.
• Precedents of “zeroing/freezing/seizing” balances via forks: there were situations where updates/forks led to balances of certain addresses being zeroed or large volumes being frozen — the mere technical possibility of such actions is seen as “too centralised”. Changpeng Zhao wrote about this explicitly.
• Fork wars and ecosystem split (Steem vs Hive): in sharp conflicts the community has genuinely split into different chains, creating confusion (where the “real” ecosystem is), migration of dApps/users, and a more toxic information environment around the project.
• Legal/forceful escalation: it went as far as claims of “theft” of funds, involvement of lawyers, and discussion of court prospects — for investors, this signals a high “political” component and unpredictable decisions.
• Manipulation of content rewards (bots, vote-selling, gaming): Steem/Steemit’s economy is built around voting and the reward pool, creating incentives to “game” the system — bots/paid upvotes/artificial activity can crowd out organic quality and damage trust in fair reward distribution.

FAQ

What is STEEM and what is it used for?

STEEM is the native token of the Steem blockchain. It is used for fees and/or resource limits, staking (Steem Power), governance via voting, and distributing rewards for content and activity.

What are the main STEEM risks related to distrust and “gaming”, not the price?

The key risks are governance capture through stake concentration (DPoS), the influence of custodial exchanges on voting, conflict-driven forks/ecosystem splits, and manipulation of the rewards system (bots, vote-selling, gaming).

What happened in 2020 and why does it matter to investors?

A major governance conflict showed that when stake is highly concentrated and witness voting becomes politicised, the network can turn into a power struggle — and part of the community may move to an alternative chain/fork.

Can someone “vote with my coins” if STEEM is on an exchange?

If STEEM is held custodially on an exchange, the exchange technically controls the keys. That means it can move the assets and, depending on the setup, may potentially use them for governance actions. To reduce this risk, self-custody (your own wallet/keys) is preferable.

What is Steem Power (SP) and why does it matter for liquidity risk?

SP is “staked/vested” STEEM. It increases influence (voting weight) and participation in rewards/governance, but converting it back to liquid STEEM happens gradually via “power down”. In stress scenarios, an immediate exit may be impossible.

Why does power down take weeks, and why is that risky?

The gradual withdrawal is designed to stabilise the network and reduce immediate sell pressure. For users it creates risk: in conflicts, fork debates, or a trust crisis, part of the position can remain “locked” until the schedule completes.

What risks does Steem’s content reward system have?

The reward-pool economy creates incentives for manipulation: bots, artificial activity, “buying upvotes”, and coordinated groups can shift rewards towards technically/organisationally strong actors and weaken trust in fair distribution.

Which keys are most critical on Steem and how do you protect yourself?

The most critical are the owner and active keys: if compromised, account takeover and fund outflows are possible. Use the posting key for publishing; keep owner/active offline, never enter keys on dubious sites, and maintain strict device/account hygiene.

Is STEEM/Steem today more about investing or usage?

Historically, Steem was strong as a “social blockchain” rewarding content. For investors, the key question is real ecosystem activity and trust in governance: if both are weak, STEEM becomes more speculative than purely utilitarian.

When is STEEM considered especially high-risk from a trust perspective?

When internal conflicts intensify, the role of large holders/custodial players in governance grows, fork debates escalate, or reward fairness visibly deteriorates due to bots and vote-selling.