RE: Proposed Upgrade for Blockchain Incentives
With the changes likely coming to the inflation rate, how would this kind of adoption affect the daily rewards pool? How would it impact scalability?
Currently, the rewards are enticing and payouts can be fairly lucrative for good writers/bloggers - with only a few thousand active users. But what would happen to payouts if Steemit and the various other platforms were to reach one million users over the next several months? How would the rewards pool look if there were 100,000 active users per week instead of less than 10,000 - price being the same as it is today to keep it simple? (I realize that prices would likely rise if there was rapid, large-scale adoption.)
My understanding was that one of the reasons for the higher inflation was that it would allow for better scalability. Was that a misunderstanding? Don't get me wrong - I think the proposed changes are a net positive for the currency, I just wanted to know how this can affect the pool. I would imagine that this would significantly reduce the average possible payout over time as the user base increases, unless there is a near equal rise in Steem price.
Any clarification is appreciated.
Assuming a fixed market cap, an increase in competition will result in lower average rewards. The most popular content will still command a relatively hefty reward.
The scenario where the market cap remains flat but our user base grows 100x is one that I consider unlikely. Knowing how markets work, it wouldn't surprise me in the least to see a 100x growth in user activity result in a 500x growth in market cap.
To put it in perspective, if every bitcoin transaction represented 1 user, there there is currently an average of 250,000 daily users of BTC. That means BTC has 78x the number of daily users and only 40x the number of weekly users. In this situation we see that bitcoin has 600x the market cap.
So, do you believe that the inflation rate is mostly irrelevant to scalability then? What I understand is that the market cap may rise and the price of Steem may rise, but the number of Steem in circulation may not increase proportionally. Wouldn't this mean that authors and curators will get higher value in rewards per unit, but the number of units would be limited - less overall users would be receiving rewards. Is that right?
STEEM is very divisible, so more overall users would be receiving rewards. Each reward would comprise of less STEEM but the STEEM would be worth more.
Ah, yes. You're right. I was thinking about it on a whole unit, vote, and dollar basis. The divisibility is obvious and I can't believe I overlooked that. Sorry for inadvertently wasting your time, but thank you for responding.
I've been very curious about this. How many places does the block chain calculate out to currently and is that expandable as prices rise? I see more SP decimal places on some third party interfaces that don't show on the current site.
I feel that minnows even now should be rewarded in whatever small fraction of SP they earn from rewards, even if it doesn't meet a .01 payout threshold. Seeing progress is important for user retention, and would frame rewards as more of a points system redeemable for currency, fostering a more long term - less immediate mindset.