STEEM(IT) Distribution - Rebuttal to @sigmajin ‘Cooking the Books’ Claim..
First things first. This is far from at attack on @sigmajin. @sigmajin has been an active member of the community, commenting on many of my post. Whether agreeing, or disagreeing, I appreciate their contributions.
The post I am rebutting can be found here.
It’s generally a claim that my maths here and here is ill thought out, and wrong. In this post I am going to ignore theoretical calculations and drill down into what has happening (and why it has happened) over the last week..
Problem
The biggest problem for both of us is that, as user base swells (in the last 3 days Week Active Users has increased 13.6%) each new user is starting at pretty much ZERO (well $7…), and synthetically pushes a number of large account into the 'top 1%’.
As you can see from this Screen Shot 87% of accounts have ‘Newbie’ Status, that is, account value between $4-$40.
@sigmajin point referring to,
’Top 1%’ of accounts makes a poor centralisation statistic
is correct. However there is not a fair way of representing Distribution at this juncture. It couldn’t be anything but top heavy. I started using Steemit 2 months ago when there was 300-400 daily active users, now there is almost 7,000. Generally, my Steem Power Holding are going to be bigger than someone who started after me, because my contribution will have been that much bigger, to date… It is too early, however what matters is the trajectory we are on…
For this reason, in my Weekly Statistics Post I have decided to add a measure which follows the Top 100 Accounts Control of Steem Power. Emphasis being on Control. Because Contribution rewards for Curation and Holding Steem Power are weighted to users gross Steem Power Holdings, they are of coarse going to get the ’Lions Share’ of new Steem created in Gross terms, however what is important is whether the Top 100 accounts ownership in net terms is decreasing?… If it is, this will lend credence to the claim (made by myself, and many other users) that Steem will become distributed away from the Top holders, over time..
I glossed over the outcome of this Statistic in this weeks edition, so I thought I would drill down into detail a little further;
Number don’t lie…ONLY time will tell…
Top 100 Accounts Million Vests (MV) Control
WEEK 1
A bit of background to these numbers. I pulled these numbers off Steemd Richlist one week apart, and will continue to do so in my Weekly Statistics Post. I have made 2 Calculations, The first calculation is for the Top 100 Accounts, the Second is for the Top 100 Accounts less @steemit account. The reason I have made this distinction is that, the @steemit account is the developers account which controls over half the Steem Supply, and as far as I am aware will be used to develop the Steem(it) concept moving forward. This account will thus, be distributed slowly over time.
Depending on which calculation you prefer, the Top 100 accounts controlled either 90.09% or 78.84% of the Steem Power (LAST week) in existence.
WEEK 2
As you can see, over the coarse of my first week recording this Statistic, The Top 100 Accounts Control of Steem Power has fallen by between 0.35% or 0.52% depending on which calculation you prefer.
Why has SP Control of Top 100 Accounts Fallen….?
The @steemit Example
Now, a very interesting account to look at individually is the @steemit account, which is essential a non functioning account in terms of Curation and Creation.
This shows a net fall of 0.85% in Steem Power Control over one single week. This account is in Power Down mode, and does not contribute to the Steemit platform, which is why we see it's fall in Steem Power Control much greater than the average Top 100 account... This represents the costs of being a passive Steem Power Holder...
Powering Up/Powering Down:
There are a number of users across Steemit both Powering Up, and Powering Down. This week, the numbers have been weighted to Powering Down. This has resulted in the number of MV reducing by 2,338MV over the past week from 407,773 to 405,435. Because MV represent as share in the 'pot' of Steem making up Steem Power, if many users are powering down, everyone who is not Powering Down is gaining control of Steem Power.
This is another area that aids in the Distribution of Steem. Users Powering Down and selling, distribute Steem naturally. The fact that 14 out of the top 25 accounts were Powered Down last week, lends further to the claim that Steem is being Distributed away from the top down.
Inactive Top 100 Accounts:
When you go to Steem Whales it’s interesting to see how many of the accounts are completely in-active on a Curation and Creation measure;
Around 35% of the Top 100 accounts are not Curating or Creating meaningfully.
Around 58% of the Top 100 accounts are not Creating Content.
These accounts are all donation their dilution back into the Steemit Ecosystem, which has resulted in Steem Power distribution weighted between 0.35% and 0.52% away for the Top 100 in the last 7 days. This is the penalty for being an inactive user, the penalty of being a passive Steem Power holder.
The Creation Problem for the Top 100 Accounts:
Let’s hypothetical say that there is a users in the Top 100 with an account worth $1,000,000 in Steem. IF the price of Steem Remains Constant;
Rough Numbers
Account Value: $1,000,000
Current Dilution Rate: ~0.9% per day
Dilution Per Day: $9,000
Steem Power Rewards: 90% of Dilution
Steem Power Rewards: $8,100
Rewards Needed Per Day to Keep % Control of SP: $900
Rewards Weighting to Creation: $675 (75%)
Rewards Weighting to Curation $225 (25%)
So, If a user with a $1m account is of average ability on a Curation basis (which is relative to your voting power), They would earn ~$225 per day from this activity. In order to not be diluted, and thus give away some of their Steem Power Control, they would need to post, and earn a payout of around $675 per day on average. Because Creation is not relative to your voting power, this is where the difficulty for the larger account holders come in.
When you add in the fact that 58 out of the Top 100 have not earned any significant Post Rewards since Steemit’s inception, I can conclude that, I expect the dilution to continue amongst the Top 100 accounts moving forward.
Summary
Overall, there are a lot of variables to consider for the Steem Distribution model. Much of it is predicated on the level of contribution the Top accounts makes to the Steemit. Luckily, the top user accounts are filled with individuals who understand the importance of Distribution, both for the community and for the Value of Their Steem Power holdings.
When we see changes in the Contribution Rewards Splits from 50:50 to 75:25 in favour of Creating Content, I believe this is a sign that the developers are monitoring this situation closely, and are prepared to make decisions that distribute power away from themselves and back to the community at large.
All we can do is wait and see how things unfold. This week, the numbers suggest to me that the distribution is happening in a significant way.. If there is one think I have learnt over the last 8 years being a Futures Trader, the past is a suggestion of the future, but not a reflection…
When addressing the sensationalist ‘Cooking the Books’ claim aimed at myself…
You might be able to ‘Cook Books’, but you can’t ‘Cook Reality’
Sources
http://www.freepik.com
https://steemd.com
https://steemd.com/distribution
https://steemd.com/richlist
Steemit Statistics Week 1
Steemit Statistics Week 2
Steemit Statistics Week 3
Steemit Distribution Revisited
Thanks for another great statistical analysis! I don't have the time to crunch all these numbers myself, so really appreciate people like you who do take the time to produce these excellent reports. It's encouraging to see this distribution of SP control away from the top accounts, and definitely worth keeping an eye on it in the weeks ahead. It might be interesting to plot a graph of the percentage rate of change over time, so we can see if this trend is accelerating or not.
After I've got a few weeks under my belt, I will definitely get some graphs going :) Thanks @cryptomancer
You are both right. While you talk and present numbers on a weekly basis and prove that there are dilution and distribution in great effect.
@sigmajin simply says that that dilution and distribution is affecting more those accounts in power than smallest ones. If we had fairer say Gauss distribution of SP(vests) things would be "perfect".
New accounts can gain their part of pie only by creating content which is fair, to begin with, since it puts more emphasis on quality content creation than on natural distribution.
In the time when content creators "take ownership" of this platform, things will be better and I just wish that there will be enough curators with enough power so that they could bring their votes a point that it matters. Else only content creators will be valuing other content creators.
This is fascinating to me. I love statistical analysis and enjoy checking steemwhales.com to see some of the interesting metrics there.
I like how there is also room for unlimited stats to be talked about. I enjoy them all @lukestokes also does a great job with statistical analysis.
From the best I can gather, the wealth is slowly being redistributed so that new whales are being created and the more minnows dolphins and whales we have, the larger the checks and balances will be to prevent any one person from gaining to much power and ruining the platform for others.
Very well put @bendjmiller222
Thank you! I always look forward to seeing your posts in my feed as I like to weigh in on the valuable information you provide.
You could look at relative change instead to give you an idea of whether the platform is working.
It's true that the surge in new sign-ups distorts things. But can you collect weekly figures about the dolphins? If the platform is working, the absolute numbers of dolphins should be rising. If they are rising very slowly, then there is a problem.
I will look at expending my Top 100 category, se we can visualise where the re-distribution is ending up. Thanks for your post @candy49
I think i have too many "followed" people, i completely missed this post in my feed.... let me ruminate on it for a bit and run some more numbers.
I'm fairly new to steem so I wasn't aware of just how high the current dilution rate is, but .9% per day is extreme. My estimated account value is $1682, which means I need to generate ~$15 of content per day between curating and authoring just to break even? And I was thinking of powering up a significantly higher amount, but this is now dissuading me.
Today I spent 6 hours writing 2 thoughtful blogs that have a total of $1.24 in rewards and curating receives <$1 for a full day. I imagine many others are in the same boat. Without lucky upvotes it seems contributing to the platform is untenable.
Yes, dilution rate will fall significantly after about 9 months. Daut44, you should look at it like this: Steem power (vests) are shares in the company. With new people arriving (people creating posts and curating), 1 new share are issued to them, but old shareholders get protection from this by receiving 9 shares on top of that. That way you are diluted by less than 10 % a year (after 9 months) if you post nothing. Currently you are diluted more, so you should be more active next 9 months
But realize that even though you only made $1.24, you also most likely gained followers who can can increase the value of your future posts if you take the time and continue to create great content.
At the same time, even with dilution, you have made far more than the time poured into all social media sites combined (I am guessing).
All you get on Steem is a chance to be rewarded, not a guarantee. Please refer me to a platform which will pay you more than $1.24 for "writing 2 thoughtful blogs".
I think you mean "refer me to a platform which will pay you more than a negative amount of money after dilution is accounted for" for writing 5000+ words. and the answer to that is "all of them".
Your logic is faulty. Dilution does not not imply that you pay for posting. Anyway, 50% of your payout is not diluted.
Also, let's assume we had no dilution. Who is supposed to pay for your blog posts? You expect to be paid but you are not willing to take the consequence of the need to pay others as well.
Steem is not a magic box which just pays everybody who shows up. All that Steem does is constantly redistribute funds from those who contribute less to those who contribute more.
Replied to this below, but basically I was unclear on what my frustration was: that investing before building a following is a mistake here due to dilution hurting heavily invested people more and a lack of a following makes it so paying off "break even rewards" is harder.
I fully understand that steem needs to be mined/witnessed to pay for blogs and this causes the dilution, but the distribution of them is disproportionate to effort and following and the "upper middle class" investors are the ones currently struggling. The saving grace is, as @hisnameisolllie said in the parent post, the distribution of wealth will drastically change due to the dilution rates.
Dilution doesn't mean you lose money. That is down to the Price of Steem, which is speculative. Every 'startup investor' experiences high levels of dilution from the outset, but that doesn't mean they are losing money,... it doesn't matter if the share price is going up. All your 'losing' is %ownership...
I understand, and forgive me for being unclear, but my main objection was with investing actually having negative effects with respect to dilution. For instance, say someone made a steemit account, started posting content, created a following, and built up a bankroll from his following consistently upvoting his articles. Now he can easily offset dilution rates by working moderate amounts: he creates content and enough of his followers upvote it to make it worth his while putting his limited amount of time towards article writing and blogging. And before he built a following, he had a small amount on the site so he was able to meet his break even requirement easier.
Meanwhile, an investor who has no following powers up a significant amount of money without a prior on site following, so no matter how much effort, formatting, and insight go into his posts, he may not receive the attention necessary to pay off the time spent working on his content.
My frustration is with investing being punished due to a lack of a grass roots buildup before investing. And I'm glad this subthread discussion happened before I powered up 5+ figures into the site because, ignoring steem price fluctuations, I would be diluting faster than my content can be upvoted.
@daut44 Bear in mind that, as a Steem Power holder, you will recieve 90% of the Dillution back as a reward for your long term commitment, Also, this Dillution rate is falling at a significant rate. In 12 months it will be around 0.18% per day.
If you check out my Steem Distribution Post (link at the bottom of this Parent Post), it is explained...
I agree with you. This is problem. I think the thing bots. Bots vote for the popular and rich. And the poor have no choice.
Great post, I really don't see how anyone would want to power up in this distribution stage of the network.
Easy, in 12 months, you will have 300% more Steem if you Power Up, than you would if you leave it in Steem (Granted it will be Powered Up). Dilution Rate over the next 12 months is ~340%, Steem Power Holders will recieve 90% of that in incentives, so roughly ~300%
But that steem power will be worth roughly 10% less?
If the price remains constant, you would have 3x the amount of Steem Power, than you current have now, in 12 months, thus it will be worth 3x as much.
You would have the same amount of Steem in 12 months, and it will be worth the same amount too...
DM me on chat if you want me to explain it a bit better...
I can't say you've fully cleared it up for me, but I would like to thank you for your time.
Steem will be worth 71% less, in % Ownership Terms...Steem Power would be worth 34% less
I'm having a very hard time wrapping my head around these dilution calculations, never been much of a math wizard. My question all boils down to this: If there are no unexpected price fluctuations but the expected decline because of dilution and you don't power down. Will the value of your steem power in one year have decreased or increased?
These past days, I have been wondering about the distribution.... It seemed to me that only those in power and those who have been writing since the beginning and other lucky ones gets valuable rewards. I have read very good articles, lost in the categories, that got nothing.... Hope this will change in a near future.
I stumbled here and there on articles like yours, but just lucky to find it. I'm not in numbers and analysis like you do, but I appreciate greatly your view on this.
@cathou009 I believe that this will change as Steemit evolves... We are still in beta at the moment. Once we have an update that indexes content properly, it will become a far more level playing field.
Where many users are making a mistake is, they are not networking on steem.chat, or commenting/contributing on other users work. Everyone needs to get themselves out there before they'll get noticed... To expect that they'll be noticed by just posting, with no followers is a fallacy
I'm like you in that regard, I was sincerely looking through tons of new content that were buried, and was sad about it. I hope it gets better hopefully with those improvements that ollie mentioned. But I don't have so much hope. These days you have to battle bots for a dime in curation. The only way to hit it right you have to create valuable content constantly and after some time and luck your work will pay out. It's hard to create content and especially good one. But if u fight for your place you will get to it sooner or later.
Thanks for your posts @leksimus On the Curation side, I agree, it is become increasingly difficult to make a decent 'return on investment/time'. @wang has just turned his bot down to 5 minutes after posting. and there are so many users on his back, there are already 50-100 votes by 15 minutes.
This then makes it difficult for new quality users to be heard above the noise. It's not impossible, like you said, you need to fight for your place, by creating good content... I believe these problems will be addressed in time, it's in the founders interests to make this a fair environment...
It's an interesting statistic Thanks
Looking at the statistics the Newbie's needs to start investing in Steem power, having 58000 free riders just tagging along waiting to strike it lucky with a possible big "Blog" isn't helping the platform, they need to invest in order to support the market cap!
why should they?