RE: Ned's Making $700k+ Every Week: Is the Steem Power Interest Rate Too High?
As per the whitpaper:
At first glance, 100% annual increase in the STEEM supply may appear to be hyper-inflationary and unsustainable.
Because 90% of all STEEM created is distributed back to holders of SP, the result is similar to having a 2:1 “split” every year rather true inflation. The total rate of expenditures used to reward contributors is about 10% of the market capitalization per year, a rate well below what Bitcoin sustained for the first 7 years after it launched.
As of May 1, 2016, over 98.49% of all STEEM has been converted to SP. This demonstrates that demand to hold long term dominates. In this environment both liquid STEEM and SP are diluted to fund rewards.
We need to differentiate Steem and SteemPower.
Steem on the exchange will increase by 11.51% (12%) a year. That is what he refers as instantaneous rate. But your interest rate on your Steem Power will be close to 90%/year.
It's kind of misleading to use these terms uncritically without understanding all the implications of a rapidly increasing money supply. We should be careful about giving the impression that a 90% return on investment is somehow built into the economics of Steem.
Shhhh.... Shush now... TO THE MOON!!!
Heheheh. :)
Am I missing something?
It can be confusing but it's not badly worded in the white paper as to being misleading. I understood there isn't a 90% return of investment and I think most understood it as well but I agree we should be careful not to give the opposite impression.