How Does Steemit Reward System Work? Complete Research Paper on Steemit Economy and Reward System!

in #steemit5 years ago

Steemit has some learning curve for its new users. Many people who join Steemit are not even aware of the cryptocurrency. With Steemit becoming popular globally, it is now becoming a gateway into the crypto world. This serves as a complete research paper on how Steemit reward system works, so that the learning curve can be significantly reduced and important information can be immediately passed to people joining the network.

Newbies have many questions related to reward system of Steemit and there's a lot that needs to be clarified. Here are some common questions.

  • How does Steemit reward its users?
  • Where does the money for the rewards come from? 
  • How do I earn a share of that money? 
  • What are Steem, Steem Dollar and Steem Power? 
  • My posts show a $ sign. What does the amount with $ sign mean? 
  • How much money will I get?

There are many confusions regarding Steemit and with this post, I am trying to remove majority of them. I am sure this post will help current Steemians, and future generations of Steemit users to understand Steemit better and benefit from that understanding. 

Currencies of Steemit 

There are three currencies in your Steemit wallet; Steem, Steem Power and Steem Dollars.  Let's see what they are.

  1. STEEM: It is a cryptocurrency token, similar to Bitcoin. Steemit is based on Steem blockchain (like Bitcoin has its own blockchain). Steem token is the cryptocurrency of Steem blockchain. On Steemit, it can be powered up into Steem Power, traded for Steem Dollars, and transferred to other accounts. On exchanges like Bittrex and Poloniex, it can be traded just like any other coin. 
  2. STEEM POWER (SP): Abbreviated SP, Steem Power is basically, what I prefer to call it, frozen Steem. It is Steem that is vested into the platform and does not remain liquid (immediately trade-able) once vested. It is the standard measurement of how much influence a user has in the Steem network. The more Steem Power a user holds, the more they can influence the value of posts and comments they upvote. The more value their upvote has, the more curation rewards are also earned.
  3. STEEM DOLLAR (SBD): Steem Dollars is abbreviated SBD (Steem Blockchain Dollar). It isl liquid, stable-value currency tokens designed to be pegged to $1 USD. SBD is basically a token value of which is deigned to remain equal to one USD of Steem value (explained later). Steem Dollars can be traded with Steem, and transferred to other accounts for commerce or exchange.   

 If you want to know more about these currencies, this video by @andrarchy will help you. 

To study the role of Steem Dollars, this post by @dragosroua will definitely help. Some accounting knowledge may be prerequisite to understand the whole concept. I did not fully understand initially but now I get it.

Why Does Steemit Reward Its Users?

Let's talk about Bitcoin. Bitcoin is created and stored by its blockchain. It is created when powerful computers solve complex mathematical problems. The process is called mining and the concept of  earning Bitcoin through mining is called Proof of Work.

Image Source: Pixabay 

So, mining is work. When this work is done, Bitcoin is earned. Let's come to Steem now. Steem is earned through Proof of Brain. Although the whole process is explained in detail later, there are two ways of earning Steem using your brain, which are briefly mentioned below.

  1. Author Rewards: When you publish a post or a comment and other users upvote it, you earn author rewards.
  2. Curation Rewards: When another author publishes a post or comment and you determine it to be valuable enough to upvote it, you get rewarded a share of the value of your upvote as curation reward.

Creating content and upvoting content based on its quality both are activities done using the brain, hence Proof of Brain. So, Steemit rewards the use of brain (and I personally love the concept!). So, Steemit rewards use of brain!


Contrary to Bitcoin and other blockchains, which store only the currency they produce, Steem blockchain stores content too. All the content published on Steemit is permanently stored on the blockchain. It is immutable, meaning you cannot delete it. Whenever you create or upvote content, you actually are doing a transaction on the Steem blockchain and that transaction is permanently stored.

  • The immutability means total freedom from censorship.
  • The upvote system means decentralization and power in your hands.
  • Proof of Brain means you can mine Steem with your brain.

Due to the unique reward system and censorship proof social media platform characteristics, Steemit Inc. holds an edge to become the world's most attractive social media / micro blogging website. Despite having been around for more than a year, the website is still in beta and improvements are being made frequently.

To answer the "why" question in the heading, let me give conclusive answers and move forward to the next part.

  • Steemit rewards its users to incentivize content creation and curation. 
  • The use of Steem as the incentive currency and token of influence on the website increases its value; thus making multi-million dollars for the founders and share holders of Steemit. 
  • Rewarding users attracts more users to the website, thus making Steemit popular.
  • Steemit has the potential to cross Reddit and Facebook in popularity and become the face of internet. By incentivizing use of brain and intellectual activity, Steemit is helping itself become great.    

These are some of the main reasons I wrote from my perspective. I know you can be a lot more creative so do suggest more uses in the comments. Meanwhile, we move ahead.

It would be useful for you to read Steem's bluepaper.

Where Does The Money Come From?

This is one of the most frequently asked questions. I hope to clarify this matter once and for all. As we know that the cryptocurrency of Steem blockchain is Steem. Where does Steem come from?

Steem is not mined. It was mine-able initially but the mining was stopped. All the Steem in circulation or supply is premined except a small percentage which is created through inflation. I know you may be struggling to understand it so far but let me briefly explain where Steem comes from.

  •  The Steem that is already available on exchanges and Steemit is premined. It means that it was created by Steem blockchain and exists already. Total supply of Steem right now is 263,382,513 tokens of Steem. These Steem tokens can be bought from popular exchanges like Bittrex and Poloniex. Steem is traded on these crypto exchanges just like other altcoins.
  • However, the already existing Steem are not given to Steemit authors and curators. Steemit users are rewarded tokens from Reward Pool which is a result annual inflation. Starting from December 2016, every year a percentage of Steem tokens are created (a process called inflation) and allotted to the reward pool. Current inflation rate is 9.5 % and an annual decrease of approx 0.5 % is planned annually until the inflation rate drops to just 0.95 % in about 20 years time.

We can deduce two things from the above information. One is that the rewards we get from the reward pool are result of annual inflation. The second thing, and the more prominent one, is that there always will be a reward pool, no matter how small.

We Get Steem From Inflation But Where Does the SBD Come From?

Steem Dollars are part, and not the whole, of the author payouts for the posts and comments (content). However, curation rewards are paid only in SP. The system is explained later. But author payouts is where SBD comes into play and also in the wallet where it is stored after the payout is finalized.

  • Why is Steem Dollar even on Steemit? 
  • Why not only Steem? 
  • What is the purpose and use of Steem Dollars?
  • Where does it come from?

Steem's blue paper on website pretty much sums up why Steem Dollars were needed on Steemit. Why was SBD needed as a currency on Steemit? Here's the answer.

 In order to help bridge the gap between more traditional fiat money systems which mainstream users are used to, and the cryptocurrency tokens which they are awarded through the platform, a new currency called Steem Blockchain Dollars (SBD) was created. 

And this part explains the purpose of Steem Dollars.

 SBD tokens are designed to be pegged closely to one USD, so that users who receive them can know approximately how much they are worth in “real dollar” terms. SBD tokens also offer a relatively stable currency for users to hold if they are looking to preserve their account value relative to USD. 

Steem's technical whitepaper speaks at length about the purpose of introducing SBD on Steemit.

 Because stability is an important feature of successful economies, Steem Dollars were designed as an attempt to bring stability to the world of cryptocurrency and to the individuals who use the Steem network. Steem Dollars are created by a mechanism similar to convertible notes, which are often used to fund startups. In the startup world, convertible notes are short-term debt instruments that can be converted to ownership at a rate determined in the future, typically during a future funding round. A blockchain based token can be viewed as ownership in the community whereas a convertible note can be viewed as a debt denominated in any other commodity or currency. 

And about creation of Steem Dollars, the Steem whitepapers maintains anonymity.  

 The blockchain decides how and when to create SBD and who should get it. This keeps the rate of SBD creation stable and removes most avenues of abuse. 

We can say that the SBD was created to bring stability to the platform, alongwith giving its users a sense of what USD (due to its popularity) value their content is earning for them because SBD is pegged to 1 USD.

For detailed study, read the Steem technical whitepaper.

How Are Steemit Rewards Distributed?

Before going into the details of the actual distribution, there are three things about the rewards that you need to know. All of them are briefly discussed below.

1. Rewards are Shown in One Currency Only  

This is simple. All the rewards on your posts and comments are shown with an amount preceded by $ sign. This $ does not mean  US dollars (USD) and is mentioned only for the sake of ease, probably because of the reason mentioned in SBDs explanation above. 

The amount mentioned with $ sign is actually Steem Dollars (SBD), not US dollars. You will not be paid out in just SBD though. Your rewards will be converted to Steem Power (SP) and Steem Dollars (SBD) depending on whether you want both or just the SP.

2. Rewards are Paid in Two Currencies  

This is where things get a little complicated for innocent minnows and new fishes. The rewards, which are shown in Steem Dollars, are paid  (sent to your wallet) in two currencies; Steem dollars (SBD) and Steem Power (SP). How this division is done will be explained a little later in this post.  

3. Rewards Can be Converted to All Three Currencies  

Things get way complicated here but it's basically pretty simple. You get SBD and SP as reward from posts, comments and curation (the upvotes you do on others' posts). The only currency that remains is Steem. 

  • Well, you can buy Steem directly from the internal market against SBD. You pay in SBD and get Steem in your wallet.  
  • To convert SP into SBD or Steem, you'll have to go through a process called Powering Down. It is so named because powering down decreases your influence and value of your upvotes.  
  • When you start power down, SP is converted to Steem in 13 equal installments over a period of 13 weeks, starting one week from the time the operation starts. It can be cancelled any time.  
  • To convert SP into SBD, first you'll have to power down to Steem and then sell Steem for SBD in the market. 

This broader understanding of Steem, Steem Dollar and Steem Power will help you understand the next part where exact distribution of these rewards is explained.

The Actual Distribution - Amounts & Percentages

 If you think you had enough twisting already, think again. You're in for another round of clarifying your doubts about rewards. Let's get over with this reward thing once and for all.   

Rewards are Shared Between Authors and Curators  

The amount in $ that you seen on your posts and comments is divided as follows.  

  • At least 75 % of the amount goes to the author i.e. you. 
  • At most 25 % of the amount is distributed among the curators; the people who upvoted on it. 

To exemplify the above distribution, let me show you the final payout distribution on one of my recent posts. In the screenshot below, the final payout on this post is shown.

You can clearly see how the reward has been distributed between author and curators. Let's do some math to verify the percentages.

  • Total Amount = $11.79 (Amount is the Total No of SBD the post would have earned if 100 % reward was paid in SBD)
  • Author Share = $8.74 (Doing the math, 8.74 is almost 75 % of 11.79)
  • Curators Share = $3.05 (Which is about 25 % of the payout amount) 

Clear till here? The final thing you need is the final disbursement of author and curators rewards to the respective wallets. The process needs some serious mathematics and may not be as simple as getting 75 % of the post payout.

But after enhancing your knowledge about the final disbursement of rewards into your wallet, you will be able to decide what options you want to choose for you and it will help you calculate your profits from the popular voting bots like @minnowbooster, @buildawhale, @bellyrub, @discordia, @booster, @appreciator and a lot more of them.

PS: I will do a detailed post on voting bots soon and will give you deep analysis on their uses and benefits, other than describing how they work and earn. 

How The Share of Authors is Paid?  

There are two important facts that we established till now about rewards.   

  1. Steemit rewards are paid in two currencies; SBD and SP
  2. 75 % reward from the posts or comments goes to the author.

Keep these in mind. They are useful for further discussion. 

How Author's Share Translates to SBD and SP?  

When you write a post, you may have noticed a small option with the name of Rewards. After it is a box normally saying 'Default (50 %/50 %).  When you click the box, some options come up. See the image below. 

The default option is most common as it distributes the whole reward into SBD and SP.  Let's start doing maths now. 

  1. Suppose (just like in all those math books), one of your post shows $100 reward. Now, if you're using default option, the distribution will be as follows.  
  2. Reward gets divided into authors and curators in 75 % / 25 % ratio. You have $75 left as author reward. This $75 will be paid out as Steem Dollars and Steem Power. The process is explained later.

Now, if you're using default option, your $75 will be divided in to two equal parts; in SBD and SP. Let's study each of them.  

  •  SBD: Default option means you'll get 37.5 SBD (50 % of $75) in your wallet. So, your payout will be 37.5 SBD, other than the SP. Let's look at SP now.
  •  SP: The other $37.5 will be converted into SP. SP isn't equal in value to SBD so you won't get 37.5 SP straight away. As per the current price on the Steemit currency market (prone to frequent volatility), 1 SBD =  0.928503 Steem. 

  • We know that the other 50 % (37.5 SBD) will be converted into SP. We also know that SP is basically vested Steem. Therefore, 37.5 SBD = 37.5 x 0.928503 = 34.819 SP.
  • So, your final wallet earnings from a $100 post payout will be 37.5 SBD and 34.819 SP as per above calculations.

Let me now show you the author reward I finally got from the post I showed in the screenhot above. Out of the $8.74 author share, I got 50 % SBD (4.37) and the other 50 % was converted to SP at market rate and paid in my wallet.

Choosing Payout Options

If you use 'Power Up 100 %' option, all your post payout will be paid out as Steem Power as per the formula given above (in this example, 75 x 0.928503 = 69.638 SP) . Payout will still be distributed between author and curators (75/25 % ratio).

If you choose Decline Payout option, your post will not receive any payout. Nothing will be added to your wallet. The amount corresponding to upvotes will still be shown in payouts but with a strike. Steemit official accounts and witnesses often use this option to keep the reward pool for their users and not take money out of it.

See the screenshot of a recent post by @ned for example. When I took the screenshot from his blog, I found an active post by @steemitblog which has declined payout. It shows a strike. Ned's post payout has been finalized therefore its shows $0.00 despite 332 upvotes. I remember this post having more than $800 showing.

I hope that you can decide what's best for you to use. I prefer 50/50 payout because SBD gives me flexibility to trade it with Steem in the internal market, making profit in the process. Read this post for example and see what I am talking about. I sold Steem at 1.35 and bought back at 1.10 in the internal market. It was 22.7 % profit for me. 

Getting More than 75 % Share in Author Rewards? 

If you see that the value of SBD and SP is more than 75 % of final payout, it is because you must have received a portion of curation reward as well. Curation rewards are discussed right below. Your share, however, will never be less than 75 % until policies are changed. 

How is Curation Reward Paid?  

There needs to be a detailed post about how curation works (and there is) but here are some points pertaining to this blog post.  

  • Curation reward is paid in SP only. 25 % of payout amount goes to curators. But there are algorithms monitoring curation reward and they are more complex than author payout algorithm. 
  • If a post receives upvotes immediately after posting, nearly 100 % curation reward goes to the author; you. 
  • If it is upvoted 30 minutes after publishing, 100 % curation reward goes to the curator.  

You can earn curation reward from others' posts as others can earn it from your posts. I haven't touched curation much due to the fact that @calamus056 has explained curation rewards in great detail. You must go through the post as it is one of the best resources on curation reward system.

With the major portion of this research paper on Steemit reward system, I will share some useful information about reward system before concluding.

Additional But Important Information About Steemit Reward System

There are some things you should know and understand to make the best out of Steemit. Some of them are crucial.

Post Payout is Finalized in 7 Days

Every post or comment has exactly 6 days and 12 hours to get upvoted. It can be upvoted after that too but you won't get anything. After this period, post payout is calculated and then finalized upon completion of 7 days and rewards are sent to your wallet. Put your marketing efforts during these 7 days only.

Value of Upvotes Comes from Steem Power

No matter how much Steem or SBD you have in your wallet, it will not have any effect on the value of your upvote. The value of your upvote is determined by your stake in the platform, for which you have to power up (convert Steem to Steem Power or earn SP from author/curation rewards).

Value of Upvote Depends on Voting Power

If you have not voted for a single time, you have 100 % voting power left. With each full vote (100 % vote), your voting power reduces by 2 %. It means if you give 10 full votes per day, your end balance would be 80 % voting power. But at 80 % VP, the value of your upvote in terms of $ would also be 80 % of what it was when you had 100 % VP.

Note:-  Voting Power keeps regenerating and it will go from 0 % to 100 % in 5 complete days (if not consumed through voting). So, as you vote the VP goes down but at the same time your VP also regenerates daily (20 % per day) so there's nothing to worry about unless you are voting too many times.

Use to See Your and Others' Vote Value & VP

SteemNow is a wonderful tool designed by @penguinpablo. I primarily used it to know my Reputation score but it is very useful for viewing yours and others' voting power and vote value. Here's my screenshot at the moment. I had delegated 100 SP to @minnowbooster to see what I gain but undelegated yesterday and will have it back in 6 days. My SP and vote value will increase accordingly.

Relation Between Reward System and Reputation Score

This is extremely important to know. Your reputation score tells you and others where you stand on  Steemit. It is a good indicator of how hard you have worked, how much success you got and how much you have earned.

Your reputation score increases only when you receive an upvote having some value the increase in the reputation, which happens immediately, is directly proportional to the value of the upvote your post or comment receives.

Also know that going from number n to n+1 (i.e 35 to 36 for example) is more difficult than going from n-1 to n (34 to 36). To the point that going from 56 to 57 was more difficult for me to than going from 25 to 49 (which happened in less than a week for me).

How is Your Account Value in USD Calculated?

If you look at your wallet, there's an amount called Estimated Account Value. It is calculated based on what you own in the wallet. Whatever amount of Steem, SP and SBD you have in the account adds towards the total value. However, SP delegated to you or delegated by you is not added or subtracted. 

The value is not based on current price of Steem and SBD but the average price of last 7 days. So, the actual value of your holdings can be more or less than what is shown. 

Things You Can Do with Steemit Rewards

I compiled a list of 9 things you can do with Steemit rewards. People found it useful when I published it and I am sure you will find it useful too. I have since gained more insight and will publish an updated version of the things that can be done with Steemit rewards.

Steemit Rewards FAQ

I am including the Rewards FAQ post by @dragosroua, who simply answered the most frequently asked questions. Newbies should definitely read it up.

Where Do The 25 % Inflation Tokens Go?

We know that 75 % of inflation tokens come to reward pool. But where do the other 25 % go? Let's see.

  • 15 % tokens (of the remaining 25 %) are distributed to SP holders as an incentive to hold Steem in form of SP, which keeps the Steem supply limited and helps keep the token price up (demand and supply dynamics).
  • 10 % tokens are distributed among Witnesses (people chosen by Steemians' vote to produce blocks of Steem blockchain, process Steem data and make important decisions pertaining to the blockchain).

Note:- I genuinely support @ausbitbank, @steemgigs (@surpassinggoogle), @good-karma, @aggroed, @dragosroua and @sircork for Steem witness votes. I already voted for them. You can too if you want.


That's all about Steemit rewards. I hope this research paper helps you understand the reward system better and use the information to your maximum benefit. This detailed analysis is part of my mission to leverage my brain to make Steemit the platform we all want it to be. Proof of brain, remember?

I've put a lot of effort and brain into this research paper to solve the mystery of rewards for the community. If you have any question, do share it in the comments. It would be kind of you to support this post through your valuable upvotes and resteems. Helping this post with upvotes will not only benefit the community at large, but also will encourage me to put more effort into educating Steemians to create a better ecosystem on Steemit.

![ilyastarar steemit banner]()


That's a great post, congrats for putting this together and thank you for including references to my posts. Also your support for my witness is highly appreciated.

Steem on! :)

Thank you very much for your appreciation. Much of my knowledge about SBD has been throuh you. Most welcome.

I have an observation. Do I still have to rely on voting bots even after putting so much effort? Thank you for support. This post is a test of how much Steemit rewards efforts such as this one.

All I have to say is that attention economy is a very delicate thing. Also, it's very young and we're just scratching the surface with it. Sometimes you get votes from voting bots, sometimes you get huge upvotes from big whales. What's surprising is that your idea of worth is never equal to their idea of worth. In other words, it's completely unpredictable. All you can do is do your best.

I guess it's pretty much like in real life.

Thank you for this. There's unpredictability and I have seen it. I have received whale votes out of nowhere at times. Sometimes, expectations don't get fulfilled. There's an element of surprise.

It also depends who is seeing the post. May be the influential people are not online when the post is published and it gets skipped.

Overall, I think you have clarified it for me. It is like the real life. It doesn't have to be the way we want it to be but there always is something to cherish.

Thank you so much sir! I'm a newbie and somehow things are clear for me. I will save and read this for some time hehe

Thanks. Welcome to Steemit. I saw your blog. I can suggest you what to do to get rewarded more. Catch me on fb: Ilyas Tarar.

Wow! That's some amazing post. How come this be only valued at $24.49? You deserve at least 10 times. Thank you for the info.

unfortunately this is because of the 7-day payout-system on the steem-blockchain. Only the upvotes from people seeing this post in the first 7 days after publishing actually contribute to the valued amount of $34.16.
People like me who see this great post after that 7-day period can still upvote it but won't actually pay the author with our upvotes.

You can upvote some newer posts/comments from the author instead. That's what I do.

Couldn't agree more, this post should deserve at least 10 times more!

Wow, you really made a great post, with a big proof of brain invested in it and I am sure it will help a lot of people. What I want to ask you is about the "15 % tokens (of the remaining 25 %) are distributed to SP holders". How are these tokens distributed (are they distributed as SP also), and at what rate to each SP holder? Again, good job for the great article and for the hard work you have invested in it!

Thank you, Andrew!

Thanks for your wonderful comment. I hope to help a lot of people through this post for a long time. Here's your answer from the Steem whitepaper.

SP holders are also paid interest on the balance of SP that remains vested. 15% of the yearly inflation is
paid to SP holders as interest. The amount of the interest that they receive is directly proportional to the
amount of SP they hold relative to the total amount of vested SP across all users.

Please don't forget to resteem the post as a support.

Wow you describe the whole system gracefully but my concern is that how much steem tokens created daily is it a fixed amount or it fluctuates and how a minnow like me able to evaluate daily amount of the reward pool, second one is did newly created reward pool determine the vote worth or our vote worth is peg with steemprice and the third one is that we all know that like in bitcoin we can mine max only 21m bitcoin and then it's mining will be over, did steem has a fixed amount of supply as well or it is unlimited.

Thanks for asking.

  1. A fixed amount of Steem is available in the reward pool everyday. For exact amounts, please visit @dragosroua post that I mentioned in the post. It's an FAQ on Steemit rewards.

  2. The price of Steem on any given day determine the $ value of rewards distributed everyday. For example if Steem is $2 and total 50,000 Steem are available for reward pool, the total rewards distributed would be $100,000. However, if Steem is $0.80, rewards tumble to $40,000. Value of vote also fluctuates with Steem's price because the total amount is fixed so the value comes down or goes up proporionately with change in Steem's price.

  3. As mentioned in the post, annual inflation is at 9.5 % at the moment and it will decrease by roughly 0.5 % every year until the inflation rate remains just 0.95 % (a 10x decrease from the initial rate). From thereon, the inflation rate will be fixed and only 0.95 % of the total supply will be made available for reward pool and witnesses. So, there is no planned hard cap but the inflation is controlled.

I hope I have answered all your questions. I have to admit that your comment contained the most brilliant questions ever put up. Glad to find you and follow you. Please consider connecting. Thanks.

thanks for your kind response my friend, so in order to determine the daily reward pool we have to find 9.5% of total supply and then minus 25% from it for witnesses the remaining amount will be the next day reward pool for authors and curators am i right.

Here's what you are looking for.

Roughly, every day around 43,000 Steem are allocated to the authors. When Steem trades at $1, that meant a total of $43,00000 / day.

This is 75 % of all the Steem available everyday. The authors portion.

Okay i've got to be honest. This is THE most detailed steemit reward post i have ever come across to. I guess all the newbies should read this post, better yet, memorize it if they want to be successful on steemit...
Resteeming it and with your permission, m recommending this guide to all the newbies migrating from other platforms to steemit so that they know how does it work...

Thanks a ton! The support and appreciation means a lot and definitely I was thinking of helping newbies understand the underlying reward system of Steem economy.

I do hope that this post helps Steemians,

A very good summary of everything Steemit which is useful to newbies and oldbies alike!

Thanks to the wise old man @kus-knee for coming here and giving feedback and support.

Hello Dear Steemians and Influencers,

It is NOT nice to put so much effort to create something of highest quality and benefit to the community and still rely on voting bots for gaining some reward and promotions.

What this post contains is extremely useful to the platform and the people who are its users. It educates people the right way and promotes positive use of the Steemit.

Please support generously with upvotes and resteems.

Congratulations! This excellent post was manually selected for inclusion in today's edition of TheDaily Sneak.

Thank you for all your hard work to create quality content.

Thanks to @josephsavage for the hard work. Manual curation can be hectic and choosing the right posts can be a big challenge.

Thank you for selecting my detailed guide on Steemit reward system. It is a big appreciation. I resteemed the post to help @sneakyninja get more eyeballs.

Great summary. I read a lot of this when I started, but of course a lot of it didn't mean much to me at that point. As time went by, I picked up things here and there, the most useful point being the distinction between SBD and Steem.

Can't remember where I read it, but they said sonething like you can only "use" SBD on Steemit such as paying people eg bot upvotes or competition prizes, or transfer to others if you're feeling generous, or to buy Steem. Steem on the other hand can be powered up to SP, or converted to other crypto currencies and eventually to cash which is many's ulitimate aim.

Anyway, your post is a great summary to recap everything. Thanks.

Thanks a lot for your detailed comment. The fact that you found the required information from here and there made me realize how important it was to have all the required information at one place.

I am glad I was able to put in the effort and create this resource. I can see this helping people for a long time to come.


Awesome! Good to see you back in the game with this kind of post again @ilyastarar It was posts like this that caused us to meet in the first place and this is a gem! Well done. Upped and resteemed and it felt good to do it!

Thank you so much! I remember it was one of the earliest posts formatted quite like this one where we met.

Thank you for your appreciation and support. Always means a lot. 😊

Thank you for your appreciation and support. Always means a lot. 😊

Likewise 100%

This is so awesome @ilyastarar, I just posted a blog yesterday for the new folks coming over from YT to here so this just goes along with it (and yes I linked your other blogs to my blog). Please share this in the comments on that thread please!

Thank you @weetreebonsai for your appreciation and mention. I received notification of the newer post and

This is a fantastic post and very helpful for beginners!
Great overview about the most common questions.
Thank you for your effort.
Resteemed :)

Thanks a lot. I have done my part. I am sure this will help many many people for a long time. If the rules don't change, this post will serve as the standard guide for all the Steemians who search Steemit or Google for guidance on the reward system.

My only concern is; will this post be rewarded for what it delivers? Will it receive the rewards it deserves, without me sending SBD to multiple voting bots to get just the same amount back as upvotes.

I am pretty hopeful that it will not get ignored. Let's see.

Hello @ilyastarar, thank you a lot for such a complete proof of brain :)

I will read and study all the content and references you have included in it... of course after my vote and resteem.

A question regarding this comment from you: what do you mean about "sending SBD to multiple voting bots to get just the same amount back as upvotes"?

I'm a newbie and have just 1 week around steemit.

Thank you again!

Thank you, Fernando and welcome to Steemit. You are quite new and have a lot to learn. You will learn and love the platform all the way.

About the question, there are some upvote services run by automated accounts. These are called voting bots. @buildawhale, @bellyrub, @minnowbooster, @discordia etc. are voting bots. You send (transfer) them some SBD (each has a minimum limit) with your post's link and they upvote that post, giving you an upvote which is worth slightly more than the amount you transferred.

I will conver all the popular bots in detail soon so stay tuned.

Wishing you good luck,

Hi again Ilyas,

I'm trying to boost my second post and I'm considering the information you gave about voting bots. But, I have also found the Promote option, in which you spend certain amount and get your post included in the section Promoted.

Do you know if this option is also affective or is better to use voting bots?


Promote option is waste of money. I would encourage you not to rely on bots for now. It is very easy to have good interation, gain followers and get upvotes. Smaller upvotes will ensure your reputation growth as well.

Another question:

What do I need if I would like to buy some SBD or STEEM?

I have read in some posts that you can use exchanges like Bittrex and Poloniex, but when you choose buy or sell from your steemit wallet, BlockTrades is deployed.

Is it possible to buy SBD using BlockTrades instead of Bittrex/Poloniex? I suppose I would also need a wallet like Coinbase.

Any suggestions?

For all buying, you will first need to have BTC somewhere. A wallet or an exchange deposit address. Yes, you can send BTC to @blocktrades and receive Steem/SBD in your Steemit Acct. I have written a complete guide on how to buy Steem (two parts covering Steemit Market & External Exchanges).

Ok! I have just wasted 0.005 SBD :'(

But it was good to learn about how it works, I'm checking the results.

I'll take your suggestion regarding not to use bots for now.

Thank you for your help! :)

Thank you Ilyas!

First time I read about that, good to know it. Another way of making money here (for the bot maker hehe).

Now I'm following you :) See you around!

Hi Ilyas!

I have just published my first post (after my introduce yourself one week ago) and, in 45 minutes... 0 visits :(

I'm considering this information you gave me here, regarding voting bots. I'll read about the ones you mentioned here, and I'll let you know about the results.

Thank you again!

Hi there, congrats for this really good post. I think what you wrote about "Proof of Brain" is really nice, and should be understood as the heart and soul of Steemit platform. I believe this concept -if applied correctly- will bring certain long-term success to this platform.

I would like to know if you have any opinions or concerns about the "bots" pulling over this platform, which are destroying -completely- the very fundamental base of Steemit, Proof of Brain.

There is no Proof of Brain if users pay bots to use their accounts and upvote whale's contents(without even reading, neither curating it). Also, bots are being used to upvote over whale posts, simply because a huge amount of upvotes is "expected" to that post (again, killing real curation, and effective Proof of Brain).

The bot's actions are draining Steemit rewards, and truly good content producers are getting no share of it. The Proof of Brain is under siege, many bloggers are talking about the bot-swarm that is taking over this platform, some are leaving Steemit, and yet, I see no strong position from devs in order to stop that.

If anybody knows any dev positioning about that, please, share it here. It will help to foment the debate.

I would like to hear your opinion about all that.

Thanks in advance!


Thank you for writing this clear and comprehensive explanation of steemit's economy and reward system. Steem on!

Thank you for your detailed analysis of steemit reward system which is very informative for newbies like myself. But to me still some aspects are quite vague such as the reward to the author. You described the author reward as "75 % reward from the posts or comments goes to the author". Does it mean that all the commentors will be also rewarded as well as an author of the original post? (Actually I did a bit of research on this, and other posts and some googled links suggest that all the commentors who are upvoted would be also rewarded, but I would like to confirm) If it is, then how the reward is distributed between the author for the original post and all the commentors? I have some other questions, but first thing first. Again, thank you for your efforts!

Now you provide us a sound picture of steemit, where you talk about its reward system, source of money, earning just by share and process to receive it.

Good informative thank you for sharing.

done, upvote me too

Done what? Your reputation is already below 25. You're damaging your account.

This wonderful post has received a bellyrub 3.70 % upvote from @bellyrub. Please make sure to vote for my pops as a witness @zeartul,Here

pls vote and follow me sir I also did it

I won't because you have to deserve it. Did you read the post?

This post has received gratitude of 2.86 % from @appreciator thanks to @ilyastarar.

I summon you, @originalworks, to see one of the most !originalworks on Steemit.

The @OriginalWorks bot has determined this post by @ilyastarar to be original material and upvoted(1.5%) it!

To call @OriginalWorks, simply reply to any post with @originalworks or !originalworks in your message!

This is a great post, this is very helpful for me,thank you.

This post has received a 3.73 % upvote from @buildawhale thanks to: @ilyastarar. Send at least 1 SBD to @buildawhale with a post link in the memo field for a portion of the next vote.

To support our daily curation initiative, please vote on my owner, @themarkymark, as a Steem Witness

Great research and solved my problem! It's the first post i upvote on steam1

Just to point out a minor mistake on "how the share of author is paid", should be:
"50%/50%: half Steem Power, and half liquid STEEM / Steem Dollars. The ratio of liquid STEEM to Steem Dollars rewarded is based on network conditions at the time of payout. "

  • as listed on official Q&A.

Do you know how the progress, the new STEEM is created and distributed to reward pool, vesting fund and witness, is recorded in the blockchain?

This post has received a 6.49 % upvote from @boomerang thanks to: @ilyastarar

@boomerang distributes 100% of the SBD and up to 80% of the Curation Rewards to STEEM POWER Delegators. If you want to bid for votes or want to delegate SP please read the @boomerang whitepaper.

Really good explanation! I'm new here, but now everything is clear, thank you! :)

This is a brilliant post @ilyastarar... Your thorough articulation skill is very impressive...

This is a great post! I now understand the whole distribution process and why the need for each token exists, however, I'm still confused as to how exactly Steemit (the company) is able to pay out all of these rewards. I read somewhere that they take an amount from everyones wallets to distribute. Could they also be leveraging the inflation or rise in value of Steem?

This post has received a 6.82 % upvote from @lovejuice thanks to: @ilyastarar. They love you, so does Aggroed. Please be sure to vote for Witnesses at

Thank you so much for taking the time and make some sense out of this complicated system!
HUGE step for humanity!

the above description is like soup for the newbies!
I really appreciate your contribution towards the Steemit community in such a clear and wonderful way.

Thanks for sharing great thoughts on Steemit token design. I would like to invite you to join our #Axonomy Token Design Campaign. If you have any interest, feel free to contact me

I'm so glad I found this post. Now I can just send people here when they ask me these questions. Great explanation. Bookmarked it for future use and I'm sure I'll link to this post in my future posts. Too late to upvote this but you have a new follower.

Steemit didn't remain the gift economy that I joined so I have remained inactive for the best part of this calender year. I'm glad you found my work useful. I did it because I was contributing to empower the Steemit community around the globe and maybe make a positive impact through this knowledge.

Steemit didn't remain the gift economy that I joined so I have remained inactive for the best part of this calendar year.

Interesting. It seems like it still is a gift economy to me.

How? I would like to think it still is a gift economy.

That's a great post and a very complete description of the reward System. You answered all my questions and plus.
Great work!

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