How Steemit Payouts Work - A Beginners Guide

in #steemit5 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.

Content Credit:



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 !

Hi ~ I'm a robot of imranmujaddi.I just upvoted your post!
Please also help upvote my post here:
Thanks so much~!!

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.

Very useful and clear information. Thank you.

Hi, thanks for this - I have an issue on past payouts as I can't see them on my wallet as neither SBD nor SP. Can you help on this pls?

Nice post! I follow you =)

That is a well detailed explanation ..that you...@dutch.

Thanks for clarifying some points for me! The thing I´m not really getting though is, is the "STEEM into SP 1:1 ratio conversion. As I see it, it´s not 1:1 as in for 1 STEEM you get 1 SP, but for 1 Steem you get 1/current price in SP, right? So when you power down, you will get your SP * current price again? But since the power down works over 3 month, you can´t really calculate, how much Steem you will get over this extreme long time. Let´s say that one day the Steem price is dropping at a very high rate near 0, you will over these 3 months sit on your STEEM that is by the time it gets converted maybe worth nothing at all? I know this is most likely not to happen, but if it does, the "danger" of total disvaluation is always there.... Ok, I´m just not that good in math in the end, but trying to get the whole picture... ;)

STEEM:SP really is 1:1. Every STEEM you 'power up' gives you 1 SP, and every SP you 'power down' gives you 1 STEEM.

Of course, the 3 month power down period does mean your STEEM may change in value significantly as you power down.

Yes, sorry for the confusion! I bought STEEM for 1500€ 2 weeks ago and powered up - of course I got about 500 STEEM back then and this is also 500 SP - I thought I had got 1500 STEEM, which is of course not true. Ok... now everything is clearer and "easier" then I thought.... Nevertheless you can never say, how much your account is really worth - you could only say, how much you think your account will be worth 13 weeks from now, which makes this a little bit like fortunetelling ;)

Thank you for the inforamtaion . I was in dilemma where to use 100% or 50/50%

Just started here, so thanks for the information Dutch.

You're welcome man - sing out if you have any questions!

That says it all, I ll pass it to my friends new in the platform! Good work!

I am new to this community and this whole STEEM thing, but according to this article, I thought SBD is pegged with $1 worth of STEEM at any given time. So in theory, if STEEM value drops, the pegging system should reduce the circulation of SBD if SBD<$1 worth of STEEM (meaning I could exchange more STEEM for a single SBD)... Am I missing something here?

SBD is always worth USD$1 - but it may get traded for a higher or lesser value. If STEEM were to drop to, say, USD$0.10, you would get 10 STEEM for every SBD.

I think you've an error in your comment. $1, not one Steem.

You are 100% correct! Fixing it.

yeah, this is what i read, but it seems SBD is not a strong pegged to STEEM (from what i see in the comments).. know if there is an exchange i could look them up?

There is also the option to convert SBD to Steem. When doing so the SBD is destroyed and taken out from the market. When performing this action DVD is valued at 1$ of Steem.

So if SBD would value 1$ on markets to this would be the way to convert it into Steem. But because of higher prices the system is currently broken to some point.

are you talking about STEEM/USD has gone up or SBD/STEEM has gone up (which i thought SBD/STEEM should be close to 1)

SBD/USD went up.
SBD/Steem should equal USD/STEEM, but that is not the case.

Great explanation, very clear :-)

I need to read this more than once ! merci !

super useful info - Thanks @dutch🎁

Thank you @dutch! This post helped clear up a lot of confusion going on in my newbie brain.. I'm grateful for you taking the time to write it :D
So I'm paid when I up-vote a post which has been tipped?

Yes - but it is more complex than that. In this post, I did not want to dig into curation rewards fully, but here is the gist:

  • When you upvote someone, you become a curator of that post.

  • Curators get 25% of the total post payout. Each curator gets a different portion of that payout.

  • Curators earn more if:

  1. they vote earlier than other curators

  2. they have a higher vote weight

  3. they vote as late as possible, with this bonus capping at 30 minutes. The earlier you vote, the more of the reward goes to the author instead of you.

Given the above, curation is effectively a reverse action system. You want to vote on a post 30 minutes or more after it was posted, but you ALSO want to vote before everyone else. It's a balancing act.

Thank you @dutch that really helped me wrap my head around this better.
Much love and light,

Thank you for the simple yet clear explanation. Will tryto understand how itworks. This is quite complex yet interesting. Thanks to people like you who create these posts for newbies. 😊

This is awesome - thanks

I always rush to read "how steem works" Its still learning span for me thanks for sharing!

Truth be told, I didn't really understand the difference between the three up until this post. Nice work on writing in a clear, concise way.

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