VESTS - the true power of steem and why I personally put 100 BTC into steemit ecosystem

in #steemit4 years ago (edited)

The trinity of STEEM, SBD and SP is not so easy to understand, especially since SP doesnt really exist!
Well it of course exists, but it is derived from what is called VESTS.

There are a lot of them so Mv (megavests) is the convenient units to use and as a VERY rough approx. each Mv is worth about 1 BTC. At least for now. Of course over time the value of Mv is changing, and it has definitely grown since steemit was launched.

Now when you look in your wallet, it displays STEEM Power. How does it determine that? The answer is on steemd.com

steem_per_mvests
251.534

You will see that in the upper right corner and it is compounding like crazy rabbits.

The above number was what was there at 8:49 am, by 9:26 am

steem_per_mvests
251.577

So what? You might think gaining .043 is no big deal, but the big deal is that it is doing this all the time, 24hrs per day. Now 0.017% is a small gain, but it happened in less than an hour. And this number is what multiplies your Mv to come up with the amount of STEEM Power you have.

A key thing to note is that if you are powering down and if the steem_per_mvests goes up faster than the powerdown dilution, you will actually gain in STEEM Power while you are powering down! Of course, the source of all this, the Mv, you have is going down but if you need some liquid cash, powering down is a good way.

Just make sure you never put more money into Mv than you can afford as it is still in the risky stage. However, if steemit achieves any level of real world traction, then once you have 100x your weekly expenses in Steem power, well it means you can live indefinitely off of the power downs.

So, people can complain about whale this, unfair, that, etc. but if you view steem as a place to park funds long term that has a decent chance to keep growing, it is pretty good. Also, steemit is still very young and constantly being updated and as long as it keeps improving, it is a matter of time before reddit is challenged and after that...

another half hour:
steem_per_mvests
251.602

And remember each MV you have is multiplied by steem_per_mvests

James

P.S. If you want to support me, just upvote my crypto777 witness account #44 on https://steemit.com/~witnesses

https://steemit.com/steemit/@jl777/want-to-see-the-top-posts-in-last-24-hours-rank-calculated-by-minnow-1-dolphin-2-whale-3-megawhale-4

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There is something magnetizing in the way James writes, I was always amazed by his posts on NXT forum.
Thank you, James, for joining our community, that fact alone brought a lot of value!

I was recruited by the whales everyone complains about. They seem to have realized I might be a key contributor and when I got $20K for a simple intro post, it make the power of steemit very personalized. What everybody that hasnt gotten a whalevoted post doesnt realize is that they can do many such recruitments, everyday.

Right now they are concentrating on the marketing types for the most part, but also deep content writers. Its almost as if they really know what they are doing :)

I think the incentives are already in place for good content writers to come onboard - there shouldn't be any difficulty in recruiting. Actually, if rewarding quality goes as intended, steemit won't need any recruitment (as far as content goes). It will work all by itself in the intended manner.

yes, so far, so good. https://steemit.com/steemit/@jl777/want-to-see-the-top-posts-in-last-24-hours-rank-calculated-by-minnow-1-dolphin-2-whale-3-megawhale-4 shows that all the complains about whales having too much influence does not have much validity. if anything minnows are not voting enough, maybe they feel their votes wont matter, but due to the sheer number of them, combined it would be quite significant.

Nice data gathering, thanks for pointing the article out otherwise I wouldn't see it.

Haha! That was funny!

So, people can complain about whale this, unfair, that, etc.

It is a proven fact that I have no sense of humor

Not sure why but I thought that was hilarious :D

I remember getting almost 18 Steem Power curation reward for that intro post which was easily 4X anything I had seen before. :)

Question for you: why did you create so many accounts/bots? I saw so many, almost like a dictionary was used to create accounts with random nouns, all originating from your jl777. I hope they will be nice bots.

they are category placeholders, not for bots,but all my bots are nice bots anyway

Cool! Thanks for that explanation. Greatly appreciated.

Hurray for the nice bots. :)

I thought that the reason why steem_per_mvests is increasing, is because every day new STEEM is created for:

  • rewards pool for content creators (today that is 44,825 STEEM)
  • witness/mining rewards
  • liquidity rewards (currently disabled)

To counter all this inflation, 90% of the inflation is offset by growing steem-mvest ratio. So the dilution to the stakeholders is only 10% of whatever yearly inflation rate for Steem is (upto max 50%).

Thus, you could not live off your SP while powering down. You would have to put that SP to work via curation to offset for dilution.

Please anyone correct me if I'm wrong.

whatever the reason it is increasing, if it is increasing faster than the powerdown 1/104, then you will accumulate more STEEM power (while your Mv is dropping), but it does seem that if the powerdown is liquidating everything after 104 weeks it wont work. so to achieve the stated effect, I think you would need to powerdown for 8 days, cancel it and powerdown again to recalibrate the 1/104 to the new total

At the moment the inflation rate for steem is about 300% from what I understand. I think it's supposed to be like that for around 1 year and will decrease slowly after that. I think this will affect how much you get when powering down compared to how much it increases.

Steem power isnt a thing. Its an estimate of the steem value of the vests youre holding.

You're not powering down steem, you're powering down vests... and the value of the vests is increasing. Because of that, your weekly powerdown will increase... If i understand the way the growth works, your last payment should be approximately 3.5 times larger than your first one.

IE, if you have 104M vests, and start a power down, youll power down 1M vests a week. Assuming you make no additional vests, you will have zero vests at the end of 104 weeks.... The increasing exchange rate will just make your weekly steem payments increase.

If youre interested, here are a couple posts i wrote about how vests, steem, etc interrelate.

https://steemit.com/interest/@sigmajin/understanding-the-steem-economic-system-vests-sbd-steem-dilution-interest-and-all-those-crazy-things

https://steemit.com/economics/@chiefjay/where-does-the-money-come-from-part-2-of-my-steem-economic-model

yes, this is my understanding and what I wrote

In the long term this is correct. It is unlikely you will be able to live off of SP-generated income indefinitely. But as long as adoption and speculative demand is increasing, the value increase of SP should more than offset the inflation. Also, 10% is only the maximum and the actual rate depends on the liquid STEEM supply. Finally, as long as liquidity rewards are disabled (or reduced), the maximum is actually lower. Liquidity rewards account for about 25% of the total inflation rate.

@jt777 you realy input 100 BTC to steemit? :3

yes, between the STEEM and SBD I already purchased for my jl777 account and the taker market maker, plus a bunch still on polo that I transfer daily

Now I don't feel so good about how little SP I bought. Definitely agree about being bullish on SP, albeit for different reasons.

avoid fomo, you can just dollar cost average and accumulate STEEM -> SP
this is a marathon, not about this week or even month, the long term is what is needed

Thanks jl777 for the article and thanks furion for explaining the reason :)

That is my understanding. You get more SP over time to offset inflation, but that inflation also drives the price down (more supply = lower prices). Without new demand, I'd expect these to offset each other for the most part.

That means the only way to gain here is to curate or post (grow your SP above the inflation rate) or hope demand increases and drives the price of SP up so the SP you have gains in value.

inflation ...(more supply = lower prices) . not really ever, but especially in this case not really.

Because even if what you think you know about money supply and inflation was true (spoiler alert. its not), its only true all other things being equal.

Trying to explain a shift in price based on a delta in the money supply in this situation is like trying to use the Coriolis effect to explain why your toilet flushes a certain way. There are simply more proximate forcces driving the price.

Vests is constante?

If you dont curate or post or buy new STEEM and powerup it wont go up.
if you dont powerdown, it wont go down
I think those are the only possibilities, maybe some rare other way for it to change

No other way for your vests to change aside from earning rewards paid in SP. However, the total number of vests changes when other people power up, power down, or earn rewards paid in SP.

Thank you for this explanation of vests. I was (and still am) a little confused by all of it, but learning more everyday.

I'm tired of explaining to my friends about mV and SP. Now I can show them your article. Thanks

Even on a Sunday: steem_per_mvests 252.172 -> 0.22% gain since this post!
The VESTS are hard at work increasing in value.

Here is another article you might be interested in to help to introduce your friends to Steem/SP. How to invest in Steemit.com through the purchase of Steem or Steem Power - In 10 Easy Steps. I think one of the big untapped potentials right now as far as increasing the value of Steem/SP is to get more non-crypto-currency people to invest!

I heard about you from the nxt community. Glad you are putting your talents toward steemit.

I really enjoy your investment capacity
I hope you get it all very well companion 8]

Great explanation of vests. It's wonderful to have you on board!

I invest almost 1 btc into steem power with or without posting any post or upvoting i still easily get 1 steem per day it a good investment , they just like cloud mining too .

that's a good piece of info ! with this kind of posts i start to understand better and better all this amazing Steemit platform things.

There doesn't seem to be much of a penalty for continuously powering down if you're a trader to take advantage of market arbitrage opportunities. If no opportunities are available, then you simply direct your payout back into SP at almost no loss that week. Have you thought about doing this?

Thanks for this article, making me feel optimistic again. Shared the same thinking as you mentioned here when i joined Steemit a few weeks ago. Was hoping to get some curation rewards here and there, but found out it wasn't as easy as I thought it will be. Am looking forward to put some bigger money here for the long haul. Thanks !

Man, that's very encouraging to see for the minnows who can't swing 100 BTC. Are you gaining more steempower now that you have much?

I am daily transferring from poloniex the purchases, so that is boosting my Mv the old fashioned way
Everything is proportional, which means the smaller accounts benefit in the same proportion. however, the smaller accounts have a big advantage in that their posting awards have a disproportionate increase to your Mv

Thank you for this post and I applaud your tangible investment in the future of Steemit. We need to publicly recognize people like @jl777 who actively support their beliefs.

lol .. I checked your wallet after reading this.... thats the problem with saying you have 100 btc to invest... youre gonna get people asking you to pay their tuition

there are hundreds with more than me, some have a lot more: https://steemd.com/richlist
anyway i dont do charity via online for obvious reasons

yeah yeah... i just meant the note was funny. And also a cool way to send notes.

Welcome to Steemit @jl777 I have a question. Do they let you talk about STEEMIT on Bitcointalk.org or NOT? Also, can you give my blog a look when you can. Thanks.
Full $TEEM Ahead!
@streetstyle

i dont use bitcointalk much at all anymore,but i am sure you are allowed to talk about steemit.

Hey @jl777 I blogged a few days ago that I went to 1000 STEEM POWER and EXPLAIN WHY? Read Here Check it out if you can, see if my reasoning makes sense to you. Big Thanks.
Full $teem Ahead
@streetstyle

I think the key is the price of Steem, I don't think it will survive long term if only speculators are buying it. That's basically how people are getting paid and the answer to "where does the money comes from" question. I'm not sure if ads or selling steem to companies is something that could happen in the near future but I think it would be the next step if the user base continues to grow.

You do realize that for most all crypto the money comes out of thin air, right? What is mining? It is a random process to allocate new coins. So the fact that steemit treats blogging as mining does not mean it lives or dies based on price any more than any other coin. Clearly if the price went to 0, then steemit becomes a reddit with a smaller userbase.

But have you analyzed the demand for powering up? Especially from new users? Have you realized that mining generates steem power? So 90%+ of the supply is very slow moving and even if people wanted to sell all of it, it would take 2 years. So we have a systemic restriction of supply, a strong motivation to shift funds to this restricted supply as it compounds in value as the liquid STEEM inflates.

So, yes, it is possible that STEEM drops in price by 90%, but even then people with STEEM POWER will have their value protected. Only if STEEM drops in price faster than the inflation and they are not curating or authoring will they lose value.

Also, your answer is incomplete. New STEEM comes from blogging, curating, mining and usually liquidity providing. A one dimensional answer usually wont fit when applied to steem

90%-10 is a theoretical number, the ideal ratio of free to captive steem (at least as the white paper authors reckoned it). its actually, if im reading the numbers correctly, somewhere around 97-3.

total vesting steem
114,502,296.013 STEEM

Total steem supply
118,370,886.624

That said, a 90% drop in the $ value of steem could break the system, or at least be the first step to it happening. Becasue the same steem that fuels vest value is also used to fund the redemption on SBD.

So if steem value decreased by 90%, and there was a run to convert SBD that were bought high, that would get your SP balance running the wrong way... Especially if there was a teddyKGB type figure involved buying up the debt and then attempting to sell it all at once.

It wouldnt break it for sure... but it would make it vulnerable, at least for a time.

It's a simple answer because it's a simple idea, the money comes from people buying Steem. I don't think the demand to get Steem to power up is enough to keep the system afloat but that's just my opinion. I think eventually the site should be monetized with ads or deals that require buying Steem constantly to power up or to display ads. Why a regular user would need to keep buying steem to power up? Most creators aren't even into cryptocurrencies or Bitcoin.

It's a simple answer because it's a simple idea, the money comes from people buying Steem.

No, it doesn't. You should go find the argument I had with complexring in the federal reserve math thread. Long story short, JL is right. Money comes from nowhere.

If you think anything is simple about the process of creating and distributing money, its because youve never had to do so.

TO be fair though, the creation of money is something that many people have trouble getting their heads around. Crypto types didnt help when they decided to call the creation proccess mining

no. steemit users don't need to buy more steem. but i will grant you that yeah, thats the current vehicle that brings fiat money in and out of the system but it not ultimately how its going to work.

Steem is a way to get fiat money in and out of the system at the beginning for early investors and adopters. But if this works the way I think they designed it to work, i don't think youll even need it at all except to fund a reserve.

I get that money comes from nowhere, these are just basic common knowledge, what are you trying to say? This is the same, except with fiat you have a complete system based on that debt generated. My opinion is that the demand to buy Steem will continue to decline as you are seeing now unless there's a constant influx from outside. Real fiat money enters and leaves the platform via Steem, that's it.

If you think Steemit users will continue to buy Steem so they can earn more in a infinite circle, well you are giving the Ponzi trollers some nice meat to chew on. That's why I'm mentioning that Steem needs constant outside influx besides speculators or casual investors. If you are a good content creator you don't really to buy Steem, you are already earning it. So who really needs Steem? Only speculators and long term investors but as inflation keeps growing and growing this can only go on for so long. There's no coin or project with more than 1 billion tokens worth above $1.


Fun starts:

After protracted whale bukkake, Veeprit converts STEEM back into fiat via Bitcoin.


(Veeprit. You gotta love this girl!)

James, any comments? Tips for Rich?

Welcome James and your known growth and success as well. Happy Steeming! :)

Thank you for the interesting article

jl777 didn't bring any good to NXT community, and I don't think he will here.

Wow devil number :D 1.666.66 $ wtf bro!:D

great post and following you now

Thats a lot of BTC

Hi! This post has a Flesch-Kincaid grade level of 6.9 and reading ease of 85%. This puts the writing level on par with Stephen King and Dan Brown.

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