STEEM, STEEM Power, Vests, and Steem Dollars. wtf is this shit?

in steem •  7 months ago

I saw this comment on a post that made me want to make this post.

The comment was in response to the post If you could change one thing about STEEM/Steemit, what would it be?.

The question in itself is inaccurate as STEEM Power doesn't exist, it isn't a currency. I see value in the existing tokens so let me explain.

STEEM

STEEM is the core token of this platform, it would be silly to call it anything else or to get rid of it. The heart of the system is to produce and trade STEEM. There isn't much to say here, but the next ones require more discussion.

STEEM Power

Does not exist

Yup, there is no currency called STEEM Power, in fact, there isn't even such thing as STEEM Power. It's just a name, it's not a currency, it isn't even a thing. Again, this will make sense as we get further along.

Vests

Now here is where people get lost. Vests are stupidly confusing and not very well understood. When you power up and buy "STEEM power" you are buying vests. Vests represent how much ownership you have on the platform. It is like buying stock, you claim a small piece of ownership. If you have enough ownership you gain influence. In the stock world, this influence is shareholder meetings and even the ability to influence the direction of a company if your stake is large enough. On STEEM this influence is voting power. The more ownership (Vests) you own, the larger you can influence (Vote) on the platform.

So if there is no such thing as Steem Power, and I am buying vests and not Steem Power, why is it called STEEM Power?

STEEM power is simply a human readable metric to understand how much ownership you have on the STEEM platform. STEEM power tells you how much STEEM your vests are worth if you took them all out at this point. When you power up you buy vests at the current rate based on the blockchain attrbute steem_per_mvests. As time goes on, the amount of vests you gain per STEEM when powering up goes down. Meaing it is more expensive to buy vests as they inflate in price. If you purchased 1 million vests today, it would cost you 490.234 STEEM. Two years ago you could buy 1 million vests for only 197.416 STEEM as you can see from this comment.

If you power up now, and do nothing else, in one year your "STEEM power" will be worth more, not because you own "STEEM power" but because the amount of vests you purchased are more expensive to purchase and would require more STEEM to get the same amount.

What you should understand from this is you are trading your STEEM for vests when you power up, and in the future that same trade will be more expensive. So if you look at your wallet you will see your STEEM power go up even if you don't vote or post because the amount of vests you own are more valuable. STEEM power is just a useful metric to see how valuable your stake (ownership) is.

STEEM Backed Dollars

A lot of people don't see the value in SBD and think this currency should be removed. A lot of people don't understand what this currency really is.

SBD is a contract, or debt instrument to buy $1 worth of STEEM at a later date. There is value in this "pegged" asset as it allows for a stable (not anymore) currency for commercial transactions.

If I wanted to sell my Teenage Mutant Ninja Turtle collection for $100 on the STEEM platform, I would need to look up the price of STEEM and calculate how much $100 represents and then use that to conduct the transaction. Having an asset that closely represents $1 US Dollar allows us to easily price a product or service for sale.

Imagine Amazon selling products using STEEM. Every time we visited the product page the price would be changing as STEEM goes up or down. (Up please). By having a "pegged" asset, the price would be fixed and the customer experience would be better.

Unfortunately, right now, the peg doesn't work. SBD is worth more than $1 and that creates good and bad side effects. I am not going to go into the discussion of the current state of the peg in this post outside of explaining why it is there and why it is important.

Why you should vote me as witness

Witness & Administrator of four full nodes

X48EJ

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Though everything mentioned in Steemit FAQ, here you made it more elaborate. Very helpful and thanks for the effort.

I doubt if the SBD is necessary, since its peg was vastly violated in both directions.
Whether it is necessary or not, I oppose enforcing the peg, especially when it requires violation or otherwise unwanted changes of other parameters such as the debt limit (STEEM worth of Total SBD in circulation).
I do love the internal market and wish it included more currencies.
It is the only cryptocurrency exchange that worked for me so far.

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You got a 10.25% upvote from @oceanwhale With 35+ Bonus Upvotes courtesy of @stimialiti! Delegate us Steem Power & get 100%daily rewards Payout! 20 SP, 50, 75, 100, 150, 200, 300, 500,1000 or Fill in any amount of SP. Click For details | Discord server

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Great post! You've earned a 14.29% upvote from @dolphinbot

Thanks the information has got lot of clarity and it will become easier for its user to understand the concept

Thank you very informative and helpfull.

You have laid out the whole point in a simple and accessible language. I think it will put everything on the shelves in the minds of many users, especially those who are here recently. Nice article, thanks.

thanks i now know about steem power :) but still dont see why we have steem and steem dollars its not pegged any more to 1 usd so it is pointless having it only need sp and 1 other.

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We are trying to bring the peg back, but witnesses have the tools to push the peg up if SBD goes down, but don't have the correct tools to push it down if it goes up.

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ic, why did they remove it to begin with

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They didn't remove it, STEEM and SBD got listed on a Korean exchange and laymen with no experience in STEEM fomo'd (fear of missing out) and bought SBD instead of the core token STEEM which caused it to moon. Ever since it hasn't quite been the same.

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Do you think that this will be solved with the next hardfork?

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No, there is nothing in the next hard fork that will influence SBD price or give us witnesses more tools to do that. The next hard fork hasn't been finalized and may change.

Good explanation.

As I understand it, an SBD is a promise from the blockchain to pay the holder $1 USD worth of STEEM in exchange for it.

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Yep, you read it right. You hold 1 SBD and, in theory, you should be able to get 1 USD worth of Steem at any moment in the future that you decide to exchange it.

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Unless the SBD/STEEM ratio gets right up to 10%, at which point I think this isn't totally honoured.

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Anyone for a haircut?

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Let's hope not! I think the Steem price would have to fall to about $0.40 before that.

This is a very helpful explaination, but I have one question, what is an mVEST? Thanks for helping the wider community by helping us understand steemit, @themarkymark !

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I am so using this meme when I finally become a minnow!

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Oh wow lol

Great post explaining all the differences.

If the idea was to peg SBD to the USD why did they not peg it in the first place rather that having a peg that just prevented it from falling below 1 USD ?
Is this just snafu ? or is it a case of people assuming one thing when reality is something completely different ?

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They did peg it, the problem is they didn't create enough tools to push it down. The main concern was it falling, I don't think it spiking was a major worry.

We have ways to push it down, but they cause other effects that can have undesirable results.

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According to Dan L (i cant be bothered finding the spelling of his last name as you know who i am talking about) it was never pegged to stop it from going up only pegged to stop it falling below.

I can see that it may be useful to have a stable price.

that was the clearest explanation of vests/steem power I have seen, thanks.

understanding these components can really be mindblowing when getting started with steem. now we have another source that explains the system quickly in a short blog-entry. thanks! :-)

From one brain fart er to another:

This part of your post made me crack up!

"The comment was in response to the post If you could change one thing about STEEM/Steemit, what would it be?.

The question in itself is inaccurate as STEEM Power doesn't exist, it isn't a currency."

Not to gainsay the information in your post, which I found helpful, but nothing on the internet exist. None of the corporation, companies or websites actually exist. In reality they are someone imaginations (brain farts) made real virtually and is why it made me laugh. One could say that crypto currencies don't actually exist, nor do the values pro ported exist and is what makes crypto fiat currency's, which have a future value of 0.

Voted for you as a witness because your explanations are something that I can understand. Steemians need that more than most people will ever know.

This is a great explanation. I knew a lot of this, but it makes more sense now. Thank you!

@themarkymark thank u for the clarification it is an important post 👍🏼

Thank you so much @themarkymark. This is very useful information for a newbie like me. I spent almost a month to study Steem Blockchain and Steemit. Many concepts were clear by the end of the month but still there were many questions that remained unanswered. Few of them are answered today. But Still there are a lot many left.

Right now I am mostly curious about SMTs. I still don't understand why do we need them? And how they would work? If you could explain this with an example of real life application of SMTs, like you did in this post! That would be really great. Mega Cheers :-)

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SMT is supposed to allow you to make your own tokens

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Thanks for the reply @themarkymark. But I fail to understand how it will help someone who wants to make their own token. Just a branding gimmick? Like "we live in the world of blockchain, let's make our own token" or it will have some real life value. I am still not able to digest the "usage"
I am afraid I am bothering you too much. But I am really curious to know about this!

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I suggest reading the whitepaper.

https://smt.steem.io/

Nice post! Very useful to understand all this stuff

You totally stole one of my writing ideas :P fortnite later?

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Would need to be much later as I have guests.

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Screw the guests! They will be thrilled watching you

Wonderful words and beautiful information done well
I wish you good luck
You are a successful person

information that is very useful for all steemit users.
hopefully you always succeed in the future

@themarkymark - great page explaining the differences between Steem, SBDs, Steem Power & Vests. Simply delivered these definitions of the Steemit universe.

thanks for all the great work - I've been so confused about how everything worked this past month but you broke it down very concisely. BTW - I'm watching firefly with my wife (her first time) right now - just watched the first episode - We both really dig your Witness voting animation. Keep up the hustle!

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One of the best ones I have seen, Great Job!

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When you got to explain.... it's kind of broken.

The majority of users here... let's admit it.... ARE PEASANTS.
When the hell did a peasant ever attend an economics class.

It's either I have one sheep.. or the fucken wolf now has my one sheep!

Many wolves here......

Peasants hold a few threads of wool... that's about it.
Not even enough to make a beannie.

Of course they're confused.

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Sameeeee, I didn't know anything of what was said here T_T I had even read the WP and didn't understand anything. But now everything that I read in the whitepaper makes sense thanks to Marky's explanation. I feel enlightened. :O

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I skimmed the whitepaper - but to be honest all i saw was a place to blog / a chance to make some coin with no real cost of entry - and when trying to search for answers here - a lot of the posts I found were written by ppl who speak/ write english as a second language - and truthfully not that well - It just made me more confused - I was holding off voting for a witness - Marky just got my vote.

This is the first time I've read about vests explained in English in like 6 months. Thanks.

Very usefull and informative post about steemit, thanks for your sharing to us, i like it and have upvote and resteem your post to more than 1680 my follower in order to make more people know your post and get benefit from your information,-greeting friendship from me @abialfatih in aceh indonesia,

thanks because i am new comer of steemit. this post help me to understand sbd,steem power.

cool, great post, very helpful for the information for me who is new in steemit, thank @themarkymark you for writing, you are always the best

Thanks champ, I honestly never understood how VESTS differed from STEEM Power! :D

Thank you for writing this post. I am one of the people who was confused by what vests are and were. Your explanation was easy enough and now i have better understanding. Having/buying vests put simply is you are inVESTING yourself into the platform, if I am comprehending your definition.

Well written. Thanks. I am quite worried about getting the steam. I am posting each day. Many times the increase in the power of the repetition increases, but the stomach is not growing. I can increase the power of the stem, I will be grateful if I suggest a special tip.

I remember doing some research into what "Vests" are awhile back (the rewards paid out as SP are shown in vests on the esteem mobile app, which sparked my curiosity) and had to dig up a 9 month old post explaining what they are and how they relate to SP and Steem. I'm glad I hold most of what I invested here in the form of SP. I pretty much always convert my rewards from authoring and everything else into steem and then power it up because of the ever dropping number of vests you get for 1 Steem powered up.

I currently have something like 15 MV. Makes me feel like a baller lol.

Thanks for the informative post. Resteemed it so hopefully some of the newer people following me will see this and understand a bit better. This post is a great example of why you have a witness vote from me.

I've been here for a few months now and feel that I have a pretty good grip on things, but this post showed that I still have a bit to learn.
The vests/SP thing completely blind sided me.

This needs to be made simpler for the end user to understand if Steem is going to go mainstream

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I think a lot of people misunderstand Steem power and have no understanding of vests.

I was actually on the track of a slightly different question - how much STEEM I as a newbie mighty want to buy to acquire the SP to help get my content noticed - but found this very useful anyway in helping me understand a bit more about the economic ecosystem. The question WTF? hasn't yet gone away but it's not as though you need a really deep understanding to start reaping the benefits (tangible and intangible) of the platform. Thanks.

thanks for writing one the best explanations of it so far ..you've cleared up a few things for me

Nice post, cleared some things up for me. Thank you :D

Thanks for sharing! A link to your post was included in the Steem.center wiki article about STEEM Tokens. Thanks and good luck again!

Thank you this was such a good read, this is giving me a better understanding of Steem.

Crikey,

Wish everything was this easily understood. Thanks for breaking it down to a single paragraph on each.

I do not like to use the designation STEEM backed Dollar, it is preferable to use the name STEEM Blockchain Dollar.
If it costs about $1, then it's a great means of payment and, of course, for newbies who are afraid of swift fluctuations in the course. Yes, his price is now different, but I think SBD still has a sense.

To be honest, I still don't understand everything on steemit platform

Thank you so much.
You just schooled a newbie.
I just followed you.

I really wish I'd read this when I joined @steemit. This has really helped as I get so confused with this stuff and find the entire blockchain concept difficult to follow. I do like the philosophies of decentralisation and of self-regulation. The former, because I am done with the big bad boys who care not a jot for the little people. Self-regulation has its own challenges, mostly because it's as good as the people who regulate themelves. That's the way of the world, though, isn't it? Thanks again.

Besides the very much needed and informative post... I love the graphic signature at the end which seems like a bounty hunter to me, from a galaxy far far away. Or it’s just a cowboy. Either way thanks for the enlightenment.