A quick look at Steem's rewards for curator-investors

If we want people to invest in Steem, we need to explain the benefits of curation. Steem isn't just a blockchain that rewards content creators, but it's also a blockchain that rewards investors who are willing to engage in manual or automated content discovery.

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A couple months ago, @cmp2020 posted that in recent times his bot voting account, @cub1 has been accruing curation rewards and interest at a rate of about 30% APR (You can join the account's voting trail, here). Personally, I've been wondering if that is an outlier or if it's typical for Steem curation at the moment. With the recent launch of the steemdb.io block explorer, I have been able to get an inkling about the answer to that question using data from the last 7 days.

This evening, I pulled the curation numbers from 19 Steem accounts of varying sizes, and graphed what I found. Here is the graph:

The X-Axis, across the bottom, lists the effective voting power of an account. The Y-Axis on the left-hand side shows the APR that the account is returning. This includes curation rewards and 3.26% "interest" in the form of blockchain inflation. Note that in the case of delegations, the interest is paid to the delegator, not to the voting account. (This analysis did not include any fees that may be paid to "bid bots" or payouts to delegators. It also doesn't incorporate power-ups or power-downs that may have happened during the previous 7 days.)

And here are the numbers:

I control some of these accounts, but not others. For the ones I don't control, I made a best guess as to whether they're bots or operated manually. "Effective SP" is the SP in the account after subtracting outbound delegations and adding inbound delegations.

Observations

It's not obvious to me that there's an advantage for accounts of any particular size, although small accounts may exhibit more variability. All the way from ~60 SP ($12) to ~4,000,000 SP ($800,000), accounts are currently returning similar amounts - between 10% and 45% APR, with a trend line centered around 25% APR.

It's also not obvious to me that there's any advantage for either manual or bot voting. Returns on bot and manual accounts all look similar to me.

Discussion

Having been here for four years now, I can say that these returns are far above what I would normally expect. I assume it's because of the reduction in competition after the recent community split. In the long run, we have seen returns more in the neighborhood of 5% to 15% on our accounts. I hope and expect that competition will return and the rates will go down again. (Isn't it strange to be hoping for a lower rate of return? But to me, that would signal a more robust ecosystem and hopefully a higher value on STEEM itself.)

Additionally, this list of accounts is undoubtedly biased, since I basically just pulled the numbers for arbitrary accounts as they occurred to me.

In my opinion, the good news here is that the blockchain seems to reward accounts of all sizes in consistent fashion, regardless of whether they're operated by manual voters or by bots. We appear to have a "level playing field".

The one thing that concerns me here is that there's no obvious indication that content discovery skill plays much of a role. Information about that may become more clear under longer time scales, but the new block explorer hasn't been online for long enough to supply much historical data on the account curation pages. In order to see the role that skill plays, we'd probably need to look at more accounts for a longer time period at the smaller end of the scale, so maybe that'll be a future project.

In closing, I'll repeat that if we want people to invest in Steem, we need to explain the benefits of curation. Steem isn't just a blockchain that rewards content creators, but - perhaps more importantly - it's also a blockchain that rewards investors who are willing to engage in manual or automated content discovery.

For discussion, what do you think is the ideal ratio of voters to authors on the Steem blockchain? My gut feeling is that for the ecosystem to really thrive by reliably bringing attractive content to the surface, we need somewhere between 100 and 1,000 curators for every content creator. In order to attract that level of curation interest, shining a spotlight on curation rewards may be helpful. Please comment with your own thoughts.

The experimental @penny4thoughts account will distribute 18% of the rewards from this post to the authors of relevant and substantive replies.

Disclaimer: This is my opinion, not investment advice. Do your own research.

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Thank you for your time and attention.

As a general rule, I up-vote comments that demonstrate "proof of reading".

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Steve Palmer is an IT professional with three decades of professional experience in data communications and information systems. He holds a bachelor's degree in mathematics, a master's degree in computer science, and a master's degree in information systems and technology management. He has been awarded 3 US patents.