How Steemit Payouts Work - A Beginners Guide

in #steemit6 years ago (edited)

A lot of new platform members seem to have a hard time understanding how, exactly, the Steem blockchain pays them for content. Really, that's understandable - the system is quite complex! Having written summaries more times than I care to count, let's address the issue fully right here, right now!

The Steemit website is a front end for the Steem blockchain, which has three primary stores of value:

  • Steem Dollars [SBD] - Steem dollars are the debt instrument of the platform. Anyone is able to exchange one SBD for one US dollar worth of STEEM (see below). For example, if the value of STEEM is USD$10, one SBD can be swapped for 0.1 STEEM. This means the SBD asset is dollar pegged from below - it should always be worth at least a dollar! If you manage to find SBD for sale for below USD$1, you can buy them, convert them to STEEM, and sell the STEEM for a tidy profit.

  • Steem [STEEM] The bread and butter coin of the Steem blockchain. STEEM is not pegged, and can go up and down freely. It can be sold at an exchange like SBD.

  • Steem Power [SP] - SP is locked up STEEM, which is earned as rewards or by turning STEEM into SP 1:1 in a process called 'powering up'. The more SP your account has, the most weight (or value) your vote has. SP can be converted back into STEEM in a process called 'powering down', but a full power down of an account takes 3 months.

Now, on to the good stuff!

The Reward Split

Let's imagine you have written a post, and the payout reads $20. When your post is 7 days old, one of several things can happen depending on the rewards option selected when you published it:

  • If you published with the 'decline payout' option selected, you get nothing. A strike-through will be visible through your pending payout. This is often used by the creators of the platform.

  • If you selected the 'Power up 100%' option, your payout is split as follows:
  1. Of the total payout, 25% is divided among the curators (the people who voted for you). This leaves you with 75% * $20 = $15

  2. You get the remaining amount paid out as SP. SP has the same value as STEEM. At the time of posting, the value of STEEM is USD$6.54, so you would be paid $15/$6.54 = 2.29 SP. This is immediately used to power up your account when you claim your rewards.

  • If you selected the 'Default (50%/50%)' option, your payout is split as follows:
  1. Of the total payout, 25% is divided among the curators (the people who voted for you). This leaves you with 75% * $20 = $15

  2. The 50/50 split means you get half of this paid out as SP, and half as SDB.

  3. For the SBD: 50%*$15 as SBD = 7.5 SBD

  4. For the SP: 50%*$15 worth of SP = $7.50 worth of SP = 1.15 SP at current market rates.

So which option was better?

  • The 'Power up 100%' option yielded 2.29 SP = USD$15

  • The 'Default (50%/50%)' option yielded 1.15 SP + 7.5 SBD = USD$72

Until the value of SBD drops back below a dollar, the second choice is far more advantageous. Even if your aim is to maximise your account's power, you can sell the SBD for STEEM to yield a total SP far greater than the 'Power up 100%' option would have yielded.

Be careful holding SBD right now! They are massively overvalued, being worth $1 (of STEEM) but trading for USD$8.62. To compound matters, the insane rise in the value of STEEM has vastly increased the rate at which SBD is minted. These two factors can be reasonably predicted to result in a drop in the trading price of SBD in the near future.

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Thanks. The payouts on Steemit has confused me to no end. This helped clear things up.

It gets even more confusing when you start digging into the witness settings!

simple but very helpful @dutch!!! thank you for explaining it...

Thanks for the good explanation. One more question: the value shown under the post is calculated with SBD=1$ right?
So at the moment the payouts in USD for everyone should be much higher?
That's how I understand your post. Is this correct?

Actual post value is measured in STEEM, and the value shown is the value of your post in USD. It's calculated by multiplying the STEEM value of your post by the USD value of STEEM.

The payout assumes that 1 SBD = $1 for now - witnesses are able to change this. This means that, like you say, if you pick a 50/50 rewards split the payout in USD is much higher than what is shown under a post. If you pick to power up 100%, the reward is spot on (ignoring the curator cut).

Thank you Dutch! For clearing the air on that one. One less thing I need to worry about.

You're welcome champ. Let me know if you have any more questions.

I am a newbee on steemit. Your post and explaination is very helpfull to me.
Thanks for sharing!


Hey, no worries Ray!

It's hard to find the information all in one place, let alone info that is up to date. If you get stuck anywhere or have any questions - just ask. =)

Can you explain how we have power to give people money from our votes (i voted for you, you got 2cents, but i did not deposit any money into my account)? That i didn't understand yet.

Any new account is created with (given permanently) and delegated with (given temporarily) some SP. This means even a brand new account has some power to allocate rewards from the rewards pool.

If you navigate to your wallet, you will see:

0.500 STEEM
(+14.506 STEEM)

That means you own 0.5 STEEM worth of SP, and are delegated 14.506 STEEM worth of SP.

Thank you.


A lot of steemians don't properly understand that the value of SBD is essential. We need to choose split option until SBD > USD

We need to choose split option while SBD > USD

The exception is if the witnesses make a change to how rewards are paid, which they are able to do!

oups (fucking french guy :) - thx for the correction).

Can you give me more informations ? I don't uderstand :(

The exception is if the witnesses make a change to how rewards are paid, which they are able to do!

The backend of Steemit is the Steem blockchain, which is updated by a group of witnesses voted into power. These witnesses set the rules of the Steem blockchain.

For example, currently when you are rewarded for posts SBD is treated as if it has a $1 value. This means if the network wants to pay you $10 worth of SBD, it gives you 10 SBD. The actual value of SBD right now is USD$8.55, so the witnesses could update the network to reward SBD valued as such, instead of $1. This means if the network tries to pay you $10 worth of SBD, you would only get a little over 1 SBD.

Sorry, it's still bit confused for me.

Did you mean the witness can do that by modifying "sbd_exchange_rate / base" parameter ?

Thx !

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Really good and informative post, Helpful for me, Thanks for sharing @dutch

Be careful to say that SBD is massively overvalued and that it is bound to go down. Other opinions are around to contradict that. SBD is not really pegged to USD but in reality it is 'half-pegged'.

It's more complex than it seems at first sight. Steem can't 'print' SBDs, it's a fixed supply. Something that has a fixed supply can certainly have a value of more than 1 USD. Pegged and certainly half-pegged cryptos are a strange thing.

This is just one post about this:

And some interesting opinions on the matter by witnesses in the replies of this post:

SBD is not really pegged to USD but in reality it is 'half-pegged'.

I mentioned this, saying SBD is pegged from below and explaining that buying it below $1 is a sure gain on your investment (bar massive market fluctuations during the 3 day SBD --> STEEM conversion).

Steem can't 'print' SBDs, it's a fixed supply.

That is not the case. The Steem blockchain prints SBD at a rate proportional to the value of STEEM. As we have just seem a massive rise in the value of STEEM, the rate at which SBD is generated has gone up a lot too.

I have kept up to date with other articles, including those. I agree that the main reason for the rise in SBD value is the scarcity - that scarcity is now dropping. The only way SBD value can rise unchecked is if the STEEM value stays very low in relative terms.

One of the primary jobs of the Steem witnesses is setting the SBD-STEEM price correlation, and they can also implement a bias there to reduce or increase SBD production. For now, SBD is treated as $1 in rewards, so my analysis holds.

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