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RE: Diagram of STEEM along with helpful FAQs and Answers
So what exactly is the benefit of SP over SMD? It seems like they're both more stable currencies, but SMD has the bonus of offering more liquidity. Is the 10% annual interest exclusive to SP?
The 10% is not really an interest. If you add up all of the contributory awards over the whole year, they will equal 10% of the total STEEM + SP that exists. This will go in 50/50 form to the awards (SP and SMD format).
SP is much slower to change back into the more liquid assets but benefits from giving you much more power within the community. When the 10% is given in total to the award-earners, 9x that is given to the SP. This ensures that their value isn't that diluted. SMD does not have that, so it might suffer. The goal of the monetary policy is to keep the SMD equal to about 1 US Dollar. So if you have SP, and STEEM goes up in price relative to USD, you will benefit. You probably will not benefit as much holding SMD for a long time.
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Wonderful post by the way, answered a lot of my questions as a newbie here. Thanks for making it!
Ahh gotcha! Yes that clears things up perfectly. Thanks for clarifying!