What Happens When the SBD Print Rate is Zero?
A quick look at steemd, at the foot of the right-hand column, will show that the "SBD print rate" is currently at 0%. What does this mean for your rewards?
The obvious thing you will see is that your reward payouts have zero SBD; instead, those SBD are paid out as STEEM. This means that the "50% SBD / 50% SP" payout option is almost the same as the "Power Up 100%" option, the only difference is that you will be getting "50% STEEM / 50% SP" rather than "100% SP".
How does this affect the "profitability" of the Steem blockchain?
This is a bit more interesting and perhaps counter-intuitive to many. Using the value of an upvote, as published by the Upvote Calculator, and assuming full upvotes every day, the rewards generated by an account are currently just under 22% APR in STEEM terms. However, if we calculate the reward payouts, including the curation rewards and a 50-50 reward split and the SBD Print Rate, your actual rewards payout yields an effective 16.5% APR.
Notice that the difference between the two values is 5.5%, which is exactly 25% of the pending rewards. This means that curators are getting the full 25% allocated to them. (Yes, I know there are ways of changing this, but we are looking at the basic dynamics of the Steem ecosystem.)
Removal of the creation of new SBDs therefore leads to something I would like to call the Basic Steem Ecosystem (BSE). In this effectively single-currency system, we get a stable 75% of rewards to the author and 25% to curators.
One thing that is less obvious in the current BSE is that rewards, in terms of STEEM, are independent of the price of STEEM!
The STEEM market
Yes, we would all like to see higher Dollar values - makes us feel wealthier - but in terms of the percentages gained in STEEM terms, the value of STEEM in US$ is irrelevant. Again, this seems crazy, but why is it true?
The value of an upvote is determined by the amount available in the Rewards Fund and the level of upvote activity (the Recent Claims). If we stick to looking at the Steem ecosystem entirely in STEEM, the value of an upvote in STEEM is determined by blockchain activity and not by the US$ value in the external market.
The value quoted above, of 22% APR, is far higher than the inflation rate (which is now about 8.7%) because not all STEEM is vested SP, and not all SP actively upvotes at full power. If and when Steem blockchain activity were to increase (by mass adoption and higher retention rate) then we should see this figure drift downwards towards the inflation rate. As an example, about one year ago, the upvote value generated around 70% APR!
As an aside, I would like to suggest that Steem Inc put together an economic team to simulate and stress-test the Steem ecosystem; this should include economists and game theorists. I read way too many comments that try to use fiat monetarist policies to analyse Steem; this is not a monetarist ecosystem. I shall leave aside the politics of central banks promoting monetarism as a self-serving mechanism to keep governments under control. The point here is that these blockchain-based ecosystems are new systems and there is very little research (that I have found) on their dynamics. Steem has a head start and should be at the forefront of analysing the best possible set of rules that are encoded to produce the best possible ecosystem. This is worthy of much longer discussions, so will not hijack this post!
What happens when the SBD Print Rate increases again is complicated, and that does depend on the US$ prices; it also warrants a different post. However, the message here is that if you think that the Steem blockchain has a future, then you need to take advantage of the current situation. The Steem blockchain ecosystem, seen in STEEM terms, remains highly profitable for holders of SP, for authors and for curators. This is not the time to cash-out, it is the time to accumulate and see the benefits when the price in US$ terms rises again. Also note that the whole cryptocurrency market is caught in a down-draught due to nervous global stockmarkets; the excess funds that, in my opinion, have been driving cryptos are currently sitting on the sidelines.
Enjoy the pioneer spirit!
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- -Please Comment, Resteem and Upvote. Thanks!
@rycharde manages the AAKOM project and the MAP forum.
Also check out the new MAP Rewarder for passive income!
Thank you, as always, for a thought-provoking article and for the encouragement to keep on keeping on :) Just hit my one year on Steemit and in reflection, for the time I have spent on here - it hasn't been a good monetary investment. But the community is great and I am certainly learning a lot.
And thank you so much for the SBI. It all helps :)
yeah, @accelerator is also a year old - my original @rycharde is a couple of months older. NASDAQ took some 15 years to recover from the dotcom bubble, but it did recover. Hopefully it won't take that long for cryptos - or at least some cryptos - to pull themselves out of the bear market. Then you'll feel a bit better :-)
I am hoping with you :)
It is fascinating to see Steem trading below SBD. I guess the peg is working again.
I also am looking forward to seeing how the rewards pan out when Steem and SBD are trading lower relative to the USD.
If anything, this is the time to post. Theoretically, we should be able to see higher rewards in terms of Steem as the price relative to $ declines.
Thanks for sharing this most interesting analysis.
Thanks for your comment. I keep track of such numbers as part of managing the MAP Rewarder fund. The upvote value, reflected in the pending rewards, has been fairly stable over the past month, edging slightly upwards the past week, but we are talking small increments, eg., from 21.6% to 21.9% APR. If activity does slow down then, yes, we may see this figure drift upwards a bit more.
I remain to be convinced that the so-called SBD peg to the US$ is actually a peg; that it currently sits at $1 is due to the overall external market. With STEEM falling below the value of SBD means that the print rate may be stuck at zero for some time. The test of the peg is whether STEEM prices can change while SBD remains relatively stable. We shall see...
What has changed significantly is that there is no longer an "uplift" in rewards due to a high SBD. This means all vote buyers and sellers need to adjust their expectations.
Well, I don't understand most of it, but I can see that you're providing a valuable service for the community. I just now noticed that you can put tags on comments. Huh. I didn't think of that or notice that before.
I have that browser plugin that shows me the current pricing and voting power and reputation, too. I'm just kind of in awe of the way the Steem price has been dropping.
That just means it's time to post. :)
"This is not the time to cash-out, it is the time to accumulate and see the benefits when the price in US$ terms rises again."
I am with you on that. Despite the lower prices I have been loving the SP lately. I started when the price was high and it felt like I was getting nowhere for a while.
This is off the topic at hand, but I also think that since there are fewer people posting, it is easier to be noticed and that is great for small accounts like mine.
A year ago, STEEM was at about $1.50 (peaked at about $2.50 a month earlier), but for the first half of 2017 it was around 20 cents. The jump from 20 cents to around $2 meant people's accounts increased ten-fold in dollar terms. As you say, earning STEEM now and waiting for the price to rise again seems a good strategy.
The bear market was obvious from January onwards; the time to have sold was either then or the fake rally in May. I've said before that if the crypto market cap does not hold $250bn, then we are staring down at a market without a traditional technical support. My tentative guess is to expect going down a further 50% to $120bn. Grim, but everyone needs to decide what to do based on their personal finances... and expectations.
Nice post,informative,nice photogtapghy thanks for your hard word keep up the good work god bless you,
I think you didn't use #partiko yet have a look at this https://steemit.com/partiko/@aftabkhan123/partiko-new-update-arrives it is the fastest app i have ever used for steemit
Posted using Partiko Android
Cryptos will undergo another crash after the housing crash in 2018-2020
I think that depends on whose money is driving prices. The middle classes in industrialised countries have been decimated the last decade or so and yet... stock markets are at all-time highs!
And gold is plummeting
It will print again in October.
After HF20?
Yes. It will be.
Thank you very much for the wonderfully informative article. I have been quite confused lately about what's been going on with SBD and the 50/50 payment option for post-payouts, so it is nice to know a bit more about why this is happening. I guess we'll just have to wait and see what will happen going forward!