Can the Blocktrades SP delegation service be exploited for profit?
The great @blocktrades, owner of the Blocktrades instant crypto exchange service, recently started up a new offering: instant Steem Power delegation rentals. Now you go to the blocktrades website, choose "Delegated Steem Power" from the right-hand dropdown box, decide what currency to pay in, send your funds - and BAM you're now renting Steem Power. Couldn't be easier. Is it a money machine? Will Steem's vast troll farms and spam apparatus use this to drain the rewards pool?
How much is it worth?
There is a lively discussion on the original announcement post about whether or not this is a good idea. A good idea for Steem, that is -- or will abusers just rent all of BT's vast pile of SP and vote their own spam posts until Steem is destroyed? So I decided to find out how much money you'd make just renting SP and self-voting all day, every day. I wrote a comment somewhere on that wall of text that said "of course you can profit from renting this, it's obvious blah blah." Turns out.... drumroll.... the math I used to support that claim was from a few months ago when a STEEM upvote was worth a lot more. Today, the story is different.
It turns out that if you rent SP from Blocktrades for 90 days, you won't quite break even. Of course this assumes that the STEEM price is constant over that whole period, and that the Steem rewards pool is about constant over that period, and everybody else on Steem votes about the same over that whole period.
The math
My analysis is a bit slap-dash, but it should be a pretty good approximation.
I decided to use my own account to work out the numbers. I have 2,453 SP currently, and my upvote at 51.56% voting power is worth $0.109, which according to Steem's internal conversion rate is 0.0966 STEEM. This means that a 100% upvote from my account would be worth 0.187 STEEM (just divide the low-power upvote by the voting power and you get the approximate strength of a full-power vote). I get 10 of those per day, so if I cast them all for myself, I would "earn" 1.87 STEEM per day. This is about 56 STEEM for 30 days, or 168 for 90 days.
How much does one of those delegations cost from blocktrades?
The 90-day delegation costs 172 STEEM! That means over the course of 90 days, I'd actually lose 4 STEEM -- and that's if I tried to upvote myself continuously all the time. 30-day delegation is even more expensive, so you'd lose even more money on that.
So what is delegation good for?
Well, a good rule of thumb is that if you can't make money self-voting, you definitely can't make money through curation. Believe me, I've been trying to make a living at that racket for over a year now.
So... you could rent SP from blocktrades and set up a reputation farm, where you repeatedly upvote several of your own accounts to increase their reputation score. The reputation score is worth some, but it would be very very expensive to earn a reputation in the high 60's, much less in the 70's - and I don't think rep means much below that.
You could build a voting bot that sells upvotes, a la minnowbooster. But the fact that you can't earn money by self-voting means that if you make money by selling votes, your customers will necessarily be losing money. Keep that in mind next time you try buying votes from someone! In today's world of razor-thin curation margins, there is a really good chance you're losing money on your payment.
Other than that, delegation is good for throwing around nice upvotes, feeling cool, and all the things it's always been good for. All the things except raking in the cash.
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Your math seems wrong to me. I have half of that sp and regularly get much more for a curation reward when I upvote other people. Why would you only upvote yourself anyway? Not sure of that strategy. I do upvote my own posts, but that's only a few a day if that and than maybe a couple of comments a week to boost them.
I'm not thinking of making a living off of curation, but using it to boost my real sp when I have no other money to invest. Once I get to some level around 5000 sp of my own (assuming I do) I would not lease anymore as far as I think right now.
Hey by the way, it looks like you earned 3.6 STEEM in the past week curating. According to my math up there, if you had just purely self-vote, you'd have made about 6.8 STEEM instead. Is your delegation new? Because that would throw off my math.
Anyway, I'm pretty sure that self-voting is a lot more profitable than curation, even though you're a good curator. Obviously that doesn't mean you should start spam self-voting... ;)
What would I be self-voting on? I don't make that much when I vote for my comments. I think I make 9 cents maybe - but I can make well over 10 cents on good curations. I thought my 3.6 was good, but please tell me more!
I also use about 40% of my votes for other people's comments and for votes that will not make a good curation income - just to show support.
When I self-vote my posts - that comes in Author rewards. Now I'm confused - very normal for steemit!
Exactly, earning money through self-voting comes as author rewards. When I say "earning through self-voting," I really mean voting on nothing but your own stuff, and making sure that you vote on at least 10 posts or comments per day to make sure you don't waste your voting power. It's super spammy, and sort of the maximally-antisocial strategy. And it's not very fun, and I don't recommend that anybody does it. It's just for comparison purposes. :)
I'm trying to avoid the spammy ideas for sure. I do try to use my voting power daily, but not to vote on myself except for new postsand comments I want to push to the top. I still don't know why that would pay better. Is it because others upvote your comment behind you?
Because on every post, all of the curators put together get no more than 25% of the total post reward, but the author gets the rest all to themself.
So the strategy would be to make comments so people will upvote? I try to do that, but I rarely upvote my own comment.
No shame no gain here on Steemit.
You're right, I was playing fast and loose with my statement that self-voting is more profitable than curation.
If you could perfectly predict what posts were going to go viral with high accuracy, you'd make a killing curating. An absolute killing. But that's hard to do -- and I bet if you look at your curation history you'll have many many more tiny rewards than big ones.
I actually do pretty well. My small rewards are on comments to reward conversation. I am pretty good at telling the future on what posts will do well for me and getting better with practice.
My upvotes on posts payoff well most of the time. I try to vote in the first 10 votes, after 30 minutes and under 50 cents. This way I get posts without bots for the most part. Then I do well even if the post does not do that great. If the post does really well - I do really well unless whales slam me :)
Sounds like you have a pretty good system for what works for you. I know I've read this before, but why after 30 minutes?
For me - less stress, good opportunity, and fewer bots that cut the reward.
Going to have to try this. Really need to make more time for steemit, seems like so much potential. Life just keeps getting in the way.
lol - yes, that is true - or steemit gets in the way of life :)
There's a mathematical reason to vote at 30 minutes also: in the first 30 minutes after a post is first published, the curation reward is less than usual. At 1 minute, you only get 1/30 of the usual reward; at 2 minutes, 2/30 of the reward, and so on.
Hi Phil
I've been wondering about this rental service since its release, and @minnowbooster's for a few months now.
I'm glad you've had a look at the calcs, i was skeptical at the pricing, but suspect they may be trying to make it slightly unprofitable if you chose to self-vote 10 X a day throughout the delegation. Which if is the case, I say 'fair play' to these services.
So, is renting SP worth it? I think you can make it worth it, but it's going to require work.
Good curation, good self-promotion, and blogs that people are interested in all bound together and you could be in on it.
People like @stackin who is a good steem/self promoter rents 30000 SP, must easily be making it worth whatever he pays.
I'm still considering it, if only for the month - i want 20k upwards though, that's a lot of outlay if it goes t*ts up!
Good stuff
Ash
If you value SP and SBD more than the currency you use to buy the power rental then YES.
If you value your money to buy things you need to survive then NO.
You cannot buy food or pay rent with Steem dollars.
This is supposedly the foundation of all markets, the value of human judgment.
I am believing this less every day.
Maybe not directly, but I've paid a lot of rent and bought a lot of food with USD that I got from selling Steem dollars. So... I disagree.
I hope too as well one day ;)
I paid my electric bill, bought a smartphone, sent money to my daughter in Thailand, and so many more with my STEEM and Steem Dollar. I totally disagree that you cannot use Steem Dollars to buy or pay for these things.
I hadn't done the math on it, but figured it wouldn't be profitable or the demand would be massive and supply would quickly run out.
Now a question since currently Steem is low compared to the previous 90 day average. So if Steem increases to say $1.10 vs $0.90 how much would that change the math?
I assumed that Blocktrades denominates their delegation prices in Steem, so that the instantaneous rate isn't affected by other exchange rates.
I'm saying if I invested $100 into renting for 90 days, then at day 30 the price goes back up and stay in the $1.10 range for the last 60 days. Once the amount rented is agreed upon the new price doesn't change how much was delegated.
I haven't looked into the math enough to know if the value of Steem effects the value of our votes. If Steem doubles does our vote values increase too?
Not looking to rent something that I'd rather just own. Just trying to understand the way this works more then anything.
True, you'd do better if the Steem price rose after your delegation started.
Thanks for the info. So vote values are influenced by the price of Steem. My vote is still so small I haven't noticed any difference with the price drop so wasn't sure.
The change in vote value is always a couple days behind the change in STEEM value as well; it's complicated...
Good to know. Thanks again for taking the time to clear that up for me.
Exactly! That is what getting a delegation service should be about. For me, it is all about giving back to the community, handing handful upvote to undervalued contents and up voting steemians that have been commenting and actually reading my contents. Well others might have their own plans of use! Thanks @biophil
a nice post thanks for sharing, I am newly joined in steemit mogasaya can follow you keep on.
It is bad for the site to be injecting unearned currency and Inflating the sense of available value. The more value in this site the more people will spam just for money. The less value and people will write for creativity and not profit.
Unearned?
Nice to see someone took the time to explain this. I always wondered if this was worth my time.
hi @biophil do you use steemit.chat or discord?
@biophil my man, check this out @smith-house