No, It's Not More Profitable To Go 100% Power Up Once SBD Is At Parity With STEEM
Every time SBD goes back to the same level of STEEM, a position which I call "being at parity", there is this trend among Steemit authors that it will be more profitable to take your rewards in 100% Steem Power.
Everybody has the right to choose and implement his own strategy about his Steemit activity, so please don't take this as a "the ultimate truth", but rather as a way to see which ROI is better, based on market conditions.
So, let's make some calculations (again...). I'm gonna use this rewards algorithm, taken from my site steem.supply.
Suppose Your Post Made 10 in STU
Here's a visual breakdown of your rewards, if you choose 50% / 50%, at the current market prices:
So your overall profit is $17.14.
Whereas if you would have choose 100% power up you would have made $7.5. Because, if you choose 100% power up you are paid in the Steem Power worth of dollar.
So if STEEM would be $3.51, you would get 7.5 / 3.51= 2.13 SP.
When Does It Get Profitable To Use 100% Power Up?
Again, the same page comes to the rescue. I just put the SBD slider in the $1 position, and here's what you'd get if SBD would trade at around $1:
At this point, the amount shown near your posts in Steemit will actually be real. So if SBD trades at - or below - $1, then it's pretty much the same thing if you get it 50/50 or 100% power up. As long as SBD stays above $1 you get better ROI.
Please keep in mind that SBD was designed to be at $1 and what the markets are doing right now is pretty much an anomaly from the Steem governance point of view (but something very real from the point of view of the market, who is always right).
Feel free to play with the sliders at the page mentioned above to test various scenarios.
Steem on!
I'm a serial entrepreneur, blogger and ultrarunner. You can find me mainly on my blog at Dragos Roua where I write about productivity, business, relationships and running. Here on Steemit you may stay updated by following me @dragosroua.
Wanna know when you're getting paid?
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I know the feeling. That's why I created steem.supply, an easy to use and accurate tool for calculating your Steemit rewards |
And the witnesses that don't work to get SBD back to $1 shouldn't be given votes. And witnesses that have bid bots should not be witnesses.
But, I'm just a little minnow.
It’s not the witnesses job to keep sbd at $1. The market determines the price. You need to remember a lot of the sbd is on the exchanges where buyers and sellers determine the price.
I dare to disagree. I think witnesses should do whatever they can to keep the system balanced and in good order. In this specific case, because SBD is a debt based asset, a significant imbalance in it - as natural as it would be, being established by the markets - will dramatically affect the entire economics of Steemit and the value of STEEM.
As @deanlogic pointed out, it's ok to have a gazillion other assets on top of the blockchain, each with its own inflation and rewards pool, as long as they're not debt-based, like SBD. I would say the SBD design is a legacy flaw that must be carried over, somehow.
Maybe I’m Missing something, but I’m
Not sure how the witnesses could manipulate the price to counteract market movement. I understand it’s a debt based token but once it’s on the market how can they control the prices?
They can't control the price, they control the supply. A basic market rule says that if supply is big, price is small and viceversa (this is not always true, btw, but most of the time it is). That's the only way witnesses can "control" SBD. If you look at what I wrote it's about keeping the system balanced and in good order. Not about controlling it. Delegated Proof of Stake is a very peculiar governance system...
I'm OK with SBD as high as it can go. I agree with the bid bots.
STEEM can go as high as it can go.
SBD going high as it goes defeats the purpose, so we should only reward out in STEEM and Steem POWER. Then SMTs can take over for SBD.
So, that just reduces the chances of new members getting any significant rewards, at least with SBD prices high new members get some more, at $1.00 income would go down which would just mean even less people staying with Steemit after a couple of weeks. So which would be better keeping the initial purpose or having Steemit grow?
To keep the initial purpose. It would make STEEM more valuable and less prone to price manipulation.
So, if the initial purpose is wrong Steemit still has to keep it? Change moves everything if you close your eyes to it, then you get nowhere.
The initial purpose was not wrong. Witnesses failed to keep SBD to what is was supposed to be. And, I believe, a few of the whales on Steem used this flaw to manipulate the price. When the price goes up, there are less rewards for the minnows because the bigger fish post and upvote more.
Just because people are looking for short-term gains at the price of the long-term health of the system, doesn't make them correct, it makes them near-sighted.
Truth be told, most minnows including will want the SBD to go as high as it can get. That is more reward at least at the initial stage and help many of us who want to build the real thing - steem and steem power.
I remember I can get as high 3.5 SP with one and reward I get. I am knowing the worth of that now that I get 1 SP for 1 SBD at most.
So I say...SBD to the ceiling first, then Steem to the moon.
STEEM will never go To The Moon as long as SBD is allowed to be manipulated and be higher.
If SBD stayed at $1 and people chose Full Power as supporting the system, then the STEEM price would increase, since it takes longer to get the STEEM out. The best way to earn more rewards is to have more Steem POWER directly. By cashing out on SBD, because it went to $14, people are not improving their minnow status or keeping Steem healthy. No system works well with high amounts of debt.
On a side note, "To The Moon" for STEEM/SBD isn't going to be like BitCoin.
I get you...but every minnow's motivation at first is making some money. He gets frustrated if his effort is not yielding any.
After the person has been fully initiated into the system, then he starts thinking of building some power.
I guess I am selfishly thinking from a minnow's perspectie or my own perspective. Steem is the real deal but Steem Power grows faster with a good SBD to steem/sp ratio.
So actually when the price of steem increases, the 50% of SP become a very unfavorable deal ... I've read somewhere (I believe it was in the whitepaper) that the SBD / SP ratio was supposed to be ok up to 10% (debt to equity). Yet the amount of SBD circulating is closer to 1 or 2%.
It's 4% now: SBD -> 10 mil, STEEM -> 250 mil. So there's still a lot of room to grow and balance any potential pump and dump schemes.
quick unrelated question - would it be possible to implement functionality to see (and maybe compare) who "viewed" a post (as opposed to who "voted" on a post) ? I mean, at first sight since the views are counted, I guess it shouldn't be impossible to also record either the viewer account name or, if views from outside the platform are counted, record a generic "external/not logged-in" viewer.
And another quick one: on steem.supply I see "for 1 SBD you get 1.01 steem" Where do you get that ? certainly not on blocktrades !
That's up to the Condenser team, I will try to post an issue on Github and see where it fits with their current roadmap.
Prices are pulled from Coinmarketcap, which averages many price feeds. It's up to the individual user to find better deals.
Thanks @dragosroua for sharing these amazing stats of SBD and STEEM, was very knowledgeable..
So many people don't know this, they keep posting with full sp rewards and they feel they are doing the best. Good one @dragosroua.
Resteemed! They need to know.
So basically I don't even need to think about this unless SBD drops below $1.
I still don't understand why it's so important for SBD to be at $1. As someone else said, shouldn't the market decide rather than witnesses? Apologies for my ignorance as usual! 😊
But, let's say that Steem stayed where it is and SBD went to $10. Apart from the fact that a lot of content creators would be very happy, what would be the consequence of that?
They seem to have been dead-set on creating a "stablecoin" even though they are always destined to fail. Bitshares/BitUSD in the past, and now steem/SBD, and I'm sure EOS will have its own weird stablecoin implementations especially considering they're working with Bitfinex now, who are the Tether stablecoin creators as well.
I din't realise there were other "stablecoins" created @charitybot. I thought SBD was the only one. I've so much to learn! 😊
Thanks for the info.
The idea is to have, like @charitybot says, a "stable" currency, which is very important in certain businesses. Like e-commerce, for instance. If you use a volatile means of exchange, you can't really make e-commerce, because the supply chain will explode. On the other hand, a volatile token will please a lot of traders (or should I say speculators) specifically because it's volatile.
It's a tradeoff. And while I don't think there is a perfect "stablecoin" mechanism out there, I'll do my best to support the one I'm using now, as a witness.
Oh. I see @dragosroua. I understand the trade off now.
That has answered a question I had about why anyone would sell goods using crypto as a currency when it is so volatile. I just couldn't see how it would work. But now I see that that is the point of SBD.
So the bit that really remains to be seen then is, whether or not, SBD can truly be pegged to the dollar. There seem t be those who believe that it can't.
I've taken a step forward today in my understanding of this. Horrah! and thanks. 😊
I keep telling newbies this.
I have always preferred 50/50 payouts. My strategy is to convert my sbd to steem and then power up instead of using the 100% SP.
Thanks for throwing more light on this.
It's about taking time to do some calculation. For now 50/50 is the best deal for going full Steem Power.
Until SBD comes crashing to $1, which I personally don't want because I am all about building steem power.
The only scenario in which I see a good option the power up 100%, is when the price of the steem and the SBD is less than 1 USD and its parity is less than 1
Suppose that the steem and the sbd have a price of 0.3 USD and 0.29 USD
Power up 100%
0.25 * 75% = 0.1875 / 0.3 = 0.625 SP
50/50
0.25 * 75% = 0.1875 * 50% = 0.09375
You receive
~ 0.09375 SBD
and
0.09375 / 0.3 ~ = 0.3125SP
The SBD / steem parity for this example is 0.97
0.09375 * 0.97 = 0.0909375 steems + 0.3125 sp = 0.4034375 steems
In this scenario is better power up 100%
0.625 Steems for power up 100% and 0.403 Steems 50/50
Thank you for the clarification, while I could figure 50/50 still would be more profitable I didn't have a clear idea why. 🙏🏼
Is it possible for the SBD to drop below $1 or how does that work?
Yes, it may go under $1, but then again, witnesses will adjust their bias to limit its supply which will eventually increase the price back up.
Thanks very much @dragosroua for making this clear to us. I have been seeing this going around and didn't know how ttue it was until now that I have been clarified . Everyone needs to see this so they would be able to make the right decisions .
Hmm.. Do.. Shouldn't we as witnesses force SBD to $1?
And report back the SBD value and not the USD value, when updating the SBD feed?
Because currently it doesn't work as designed, it seems..
A few witnesses, me included, are raising their bias, which means more SBD is printed, which means its supply goes up, which means its price will eventually go down. If you follow my weekly witness updates, you'd be already knowing this ;)