SEC S16W6//STEEM tokenomics

• Previously at STEEM Blockchain there was a constant STEEM token generation or creation mechanism.

• As an evolving mechanism in STEEM token issuance they adopt the fixed supply model and it is indicated by its name that there was a fixed supply of tokens created after this model and there was no more constant creation of new STEEM tokens.

• Implementation of fixed supply model results into fixed supply of tokens which was a leading cause of increasing STEEM demand in market and hence it was a positive evolutionary mechanism that was designed.

Before going into actual concept and token distribution mechanism there is a need to have a brief look at STEEM white paper 🗞️ and let's read and understand the inflation rate with me first;

• That was a general understanding of inflation rate.

SteemWhitepaper

• Above from the terms and conditions and from general guidelines of STEEM white paper I have taken a screenshot from which it is clear that STEEM inflation rate would decline each year with 0.5% rate and from December 2016 it has started and at that time it's earlier inflation rate was 9.5%.That was what you can also understood from screenshot I have shared.Now in depth concept of inflation I am going to discuss below.

• This is basically I have written my concept and it's effect at availability of tokens in market.

You can clearly understand that as from time to time inflation rate of STEEM would decrease so it would you result in its low mining and low mining would be a leading cause of ultimate decline in supply of this token and decline supply automatically cause pump in the demand of a particular token and in this case pump in the STEEM price so inflation rate decline with time is positive indication in this way.

• Above the description I have explained because before token distribution evolution mining ⛏️ was primary and first way of token distribution.

• After mining process evolution staking was another mechanism in token distribution.Now when content creators rewards claims then they receive rewards in the form of liquid steem and locked tokens which are staked STEEM as you can see in my payout which is near to claim in screenshot above.

• Token distribution also evolved in a way that the more the user would stay engage with STEEM in content creation and in remaining engage with others,the more there would be chances he have to receive tokens as his rewards.

• Overall impact of inflation rate decline with time, mining mechanism evolution to staking and more social media activities increase in overall community participation and leads to increasing STEEM token demand and reduction in its supply so automatically price pumps in this way.

There are two types of staking trends:

• Positive or high staking trends.
• Low staking trends.

Importance of staking trends understanding in community participation and token stability is that positive or high staking trends have direct relationship with community participation and token stability and low staking trends have inverse relationship with high community participation and high token stability.

• Whenever a person invest in something then he always try to make a proper research about fundamentals of particular project that either it is beneficial and trustworthy or not.

• We can clearly understand now that if there is high or increase level of staking trend then it means that people are more interested in STEEM and they have more trust at STEEM.

• If staking trends are increasing then it means due to increase trust, interest and confidence among users leads them to be more active at STEEM by creating high quality content and by engaging with users through upvoting,resteeming and engaging actions with others.

• With such level of increase in confidence among users it cause increase in STEEM token demand and reduction in its supply so automatically price of STEEM also pumps.So it price of STEEM is high then it means it is stable.

• This is you can see in the screenshot that how much trust level I have for STEEM that I am striving hard with full dedication for increasing my steem power which is basically my staking.

• These screenshots are showing my most recent,month of march power ups in which I converted my 1214 STEEM into power and maintain my #club5050...

• Low staking trends simply means that people are less interesting in locking up their assets and lack of interest could be due to multiple reasons like lack of trust at STEEM,no interest in its fundamentals or lack of innovations at STEEM.

• If there are low staking trends then people have lack of confidence, trust and interest for STEEM and they are avoiding to invest in STEEM so this is a negative sentiment by people.

• If there are low staking trends then due to the causes like lack of trust at STEEM,no interest in its fundamentals or lack of innovations at STEEM could leads to less participation level of users at STEEM because people don't consider STEEM interesting and beneficial for them and they would not actively participate in STEEM community.

• Low participation level of STEEM means people have less demand for this token and in this way it's demand decrease and supply tend to increase which cause negativity in supply and demand dynamics and cause STEEM to dump and dump means that token is more prone to get unstable.

This is a practical example of low staking I am sharing from the time at which I joined steemit

• She was an old Indonesian well recognized steemian @nadiaturrina who powered down her account when there were some suspiciousness created related to her identity so she simply transferred her locked steem assets into liquid steem by a process of power down and in this way this was a negative trend followed by her but you can take her as an example.

That's why power down is discouraged always because when many users would start to power down their accounts then it would make STEEM with the time.

Proof of brain is helpful in shaping STEEM ecosystem in following ways.

• Proof of brain let users to create and produce valuable content and in return depending upon their content quality they receive rewards in form of steem tokens.

• When by using brain users produce quality content then they also receive rewards which acts as encouragement for them and they feel it interesting to produce content and receive rewards and it leads to increase their participation level at steem so in this way STEEM becomes more diverse community.

• This is my personal example that how I respond on different comments I have received at my content which I created by proof of brain and then I also responded on comments of others by using proof of brain by perceiving first that what others are saying and then by creating quality and relevant response.

• Content creators are rewarded depending up on the quality of their content. If someone is producing high quality content then he would be increased by positive comments upvotes and resteems.

• Content creators are rewarded on base of their quality posts as well as quality engagement with others.The more the content and engagement is of high quality and of popularity,the more there would be token distribution as a reward which would act like motivation for content creators and they remain motivated to be active at STEEM too.

• This is my personal example that how I have received rewards in form of steemcurator02 upvote and booming vote and as a high and quality content creator these upvotes and positive comments are my motivation for making me more consistent at steem blockchain.

• Curators always seek for quality content free from plegrism and AI generated content and they curate posts and then more popular and highlighted at STEEM and when they curate content then they always receive their rewards too in form of curation SP.

• At steemit curators are also encouraged when they post weekly reports for announcing best picks from wider platform, steemcurator01 vote with 100 percentage and something little bit less than 100 but equal beneficiaries of that report sets to all team members of curators and they also receive reward in this way.

• Not only this being a curator make them more influential and recognized at steemit so it also acts as a motivational source for them

• This is a screenshot in which you can see that at payout of user @sualeha steemcurator02 has also received curation SP. So this is an earning source for him as well as other curators also receive rewards in same way.

There are multiple challanges related to the distribution of rewards on STEEM, and these challenges also influence the perception of market participants in following ways.

• Unequal distribution of rewards is very challenging while distributing the token which leads to negative perception of market due to the creation of unfairness at STEEM.

• There could be limited visibility of the high quality content due to the centralized support of content creators so due to this reward distribution process could be doubtful and could create a negative sentiment in market due to discouragement among users.

• If there are too much quality content creators are coming at the platform then it becomes challenging to distribute rewards in a fair way among them so that everyone may get encouraged and if reward distribution would be given to users that are already well known and influential then it would create reward concentration to specific group of users leads to low interest and again negative perception.

• Sometimes reward distribution can also become challenging due to more number of content creators and less number of curators as there are two highly influential curators at steemit which are steemcurator01 and steemcurator02 so there is a strong need of more investors at steemit for maintain interest among users and for keeping users attractive towards steemit otherwise one day their attention could distract from STEEM.

• There are automated bots also present at steemit so these bots also cause an unfair reward distribution because bots just need delegation and without having a check and balance at content quality they vote any one depending upon the amount of delegation they have received from a particular user.

• There is a practical example of an old steemian who was Nigerian @simonnwigwe that has started using bot sevices as you can see in above screenshot because he has been caught around 10 months ago as an account farmer caught,he earned enough steem power and now he has delegated it to voting bot which is giving him vote as a return but it's very discouraging practice at steemit because it impacts fairness regarding token distribution.

• Sometimes tools for checking plegrism and AI become fail to detect plegrized and AI generated content so in this way in a rare cases that users also receive significant amount of token distribution which creates frustration for those who understood clearly based on their experience that this is not human written content.

• If there are multiple identities of same user is having and he is not caught by the detectives at platform then the users who is account farmer is exploiting the reward system which destroy the overall discipline and ecosystem of STEEM and make it less trustworthy among market participants.

• There is one more important point to discuss and it is about self voting so it means that you are giving reward to yourself which is considered illegal at STEEM so I can say that if someone is involved in self voting then it means that he is trying to manipulate the system and he is giving basically others reward to himself which is not a good practice.

• This is you can see that this is my personal account and there is a slider for upvoting at my post and if I would click on the arrow for giving me a vote then it means that I am involved in self voting but this is I have just given an example to you guys.

• With that screenshot there is also a screenshot from my steemworld in which you can clearly see that actually I never vote to myself and how I have maintained my voting CSI and along with this there is 0% self vote.

Now hopefully all these challenges related to token distribution and their influence at over all market perception are clearer to all of you.

STEEM understanding of tokenomics can provide valuable guidelines to investors in their decisions regarding staking, content creation, and rewards management.

• Investors can demonstrate and understand about their long term commitment for the steemit by staking steem holdings sweet is a positive way of influencing the perceived value of their holdings.

• Investors also have significant influence act governance because through their investment they received significant amount of voting power for voting other users so in this way they can also participate in decision making processes for the welfare of platform.

• As investors have significant holdings so when they vote on others quality content then in return day would also receive rewards of their curation in the form of STEEM power so it would be a way of empowering them to show their active engagement at STEEM.

• By upcoming of more and more investors at STEEM it cause decrease supply of token from circulation which ultimately increase demand of token and would cause STEEM stability.

• Investors should remains more focused on the creation of valuable content because the more they would create valuable posts and the more meaningful they would comment the more they would have chances to receive rewards.

• Investors can make them well recognized at STEEM by a continuity of making their content popular and in this way there reputation would also build in positive way.

• Niche expertise can also be leveraged by investors like in their respective topic in which they are expert and about which they want to share quality content they can position themselves as more trusted authorities in those niches.

• Investors increase level of participation in different discussions collaborations and in supporting others through meaningful comments and votes could be a way of enhancing their journey for earning rewards and for being more visible.

• Investors can diversify their content creation efforts for exploring and searching different topics which can increase their chances of earning though various sources.

• Investors if have detailed understanding of reward algorithm working then they can set their content Strategies for maximizing their rewards.

• Investors should also try to build relationships with influential stakeholders especially curators so that he may automatically increase his visibility and can make his chances bright of receiving rewards.

• Investors should always try to stay updated with the recent updates and trends and preferences of users so that he may adapt his content creation strategies for aligning him with evolved dynamics of platform.