The Contenders
The altcoin market in late October 2016 is a study in contrasts. While Bitcoin consolidates its post-halving gains above $650 and the broader cryptocurrency market cap holds near $12 billion, individual altcoins are telling wildly divergent stories. Two projects in particular — Waves and Steem — embody the extreme ends of the performance spectrum, offering a window into what separates winners from losers in the rapidly evolving digital asset landscape.
Waves, a blockchain platform for custom token issuance and decentralized trading, is on a tear. The WAVES token has surged 34 percent in the past week alone, making it one of the top-performing altcoins of October. Its market capitalization has climbed past $31 million, with trading volumes reaching over $324,000 in 24 hours — substantial for a project that only launched its mainnet in June 2016.
Steem, the blockchain-based social media token that powers the Steemit platform, tells the opposite story. After a meteoric rise in the summer that saw STEEM briefly reach a market cap exceeding $400 million, the token is in freefall. Weekly losses of 23 percent have pushed the price down to $0.20, with a market cap that has shriveled to just $37 million. The decline is accelerating, with another 12 percent dropped in the last 24 hours alone.
Tech Stack Showdown
Waves is built on a custom Proof-of-Stake consensus mechanism with a focus on simplicity and accessibility. The platform allows users to create and distribute their own tokens without writing a single line of code — a feature that has drawn comparisons to Ethereum but with a distinctly user-friendly approach. The Waves DEX (decentralized exchange) enables peer-to-peer trading of these custom tokens directly on the blockchain, eliminating the need for centralized exchanges.
The technical architecture of Waves emphasizes speed and low transaction costs. Block times average around 60 seconds, and the network uses a leased Proof-of-Stake model that allows token holders to lease their balance to full nodes without giving up custody. This design democratizes participation in network security while keeping the barrier to entry low.
Steem operates on a fundamentally different model. It is a delegated Proof-of-Stake blockchain designed specifically for social media content. Users earn STEEM by posting, commenting, and curating content on Steemit. The system uses a complex three-token model — STEEM, Steem Power (vested STEEM), and Steem Dollars (a dollar-pegged token) — that creates intricate incentive structures for content creators and curators.
The problem is that Steem’s economic model relies heavily on inflation to reward participants. New STEEM is created continuously and distributed to content creators, curators, and witnesses. When user growth slows — as it has since the initial hype faded — the inflation becomes a drag on the token price, creating a self-reinforcing downward spiral.
Community and Ecosystem
Waves has been methodically building partnerships and infrastructure throughout 2016. The platform has attracted projects launching ICOs on its blockchain, and its fiat gateway functionality — allowing users to deposit and withdraw traditional currencies — positions it as a bridge between the crypto and fiat worlds. Russian entrepreneur Sasha Ivanov, Waves’ founder, has been actively courting institutional interest, and the project has established a presence in Moscow’s emerging blockchain scene.
Steemit’s community, once among the most vocal and enthusiastic in crypto, is showing signs of fatigue. Early adopters who earned substantial rewards during the platform’s launch phase have begun cashing out, flooding the market with sell pressure. New users, attracted by the promise of earning money for content, find that the rewards are increasingly concentrated among a small group of large stakeholders — the so-called “whales” who hold significant Steem Power and can single-handedly determine which posts receive substantial payouts.
Adoption Metrics
The numbers tell a stark story. Waves is trending upward across nearly every metric: trading volume is up, market cap is growing, and the number of tokens created on the platform is accelerating. The Waves community on social media is expanding, and developer activity on the project’s GitHub repository remains robust.
Steem, by contrast, is hemorrhaging value across the board. The 24-hour trading volume of just $85,000 is a fraction of what it was during the summer peak. The circulating supply of 185 million STEEM continues to inflate, adding sell pressure to an already depressed market. Steem Dollars, once tightly pegged to the US dollar, are trading at a discount, signaling waning confidence in the platform’s economic stability.
The broader altcoin market provides additional context. Litecoin holds steady at $3.92 with an $188 million market cap. Monero trades at $6.52, benefiting from growing interest in privacy coins ahead of the Zcash launch. Dash, despite a 9 percent weekly decline, maintains a market cap of $68 million. Augur’s REP token sits at $5.29 with a market cap of $58 million.
The Final Verdict
The divergence between Waves and Steem illustrates a fundamental principle of the altcoin market: technology alone does not determine value. Tokenomics matter. Economic models that rely on perpetual inflation to incentivize participation create structural sell pressure that can overwhelm even strong community engagement. Waves, with its more conservative token issuance and practical focus on token creation and trading, demonstrates that utility-driven models can gain traction even in a bearish altcoin environment.
For investors evaluating altcoins in late 2016, the lesson is clear. Look beyond the hype cycle and examine the underlying economic incentives. Projects with sustainable tokenomics, clear use cases, and active development will weather market downturns better than those dependent on constant user growth to offset structural inflation. The altcoin market is maturing, and the winners will be those that can deliver real utility, not just viral marketing.
As Bitcoin’s post-halving rally continues to draw capital into the crypto space, select altcoins with strong fundamentals will benefit from the rising tide. But the Steem cautionary tale serves as a reminder that not all boats rise equally — and some may well sink.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Cryptocurrency investments carry significant risk. Always conduct your own research before making investment decisions.
steem going from $400M market cap to a fraction of that in months was the original content is king reality check
steemit was ahead of its time tbh. paying creators in tokens is basically what lens and friend.tech tried years later
steem was basically the first social token and it crashed exactly like every social token since. some patterns never change
Waves doing +34% while Steem collapsed shows how random altcoin season actually was. No thesis, just momentum and hype.
Waves at $31M market cap doing 34% weekly gains. pure momentum, zero fundamentals. the 2016 altcoin playbook in a nutshell