The current (actual) inflation rate of STEEM is quite different from the design.

in utopian-io •  5 months ago

Repository

https://github.com/steemit/steem

According to the STEEM blockchain design, the current inflation rate of STEEM is about 8.6% per annum and about 2.1% per quarter.

Of course, (although inflation volume itself can increase) the inflation rate itself is designed to steadily decline. (0.01% decrease for every 250,000 blocks generated, and finally fixed at 0.95%)

However, the actual inflation rate is now much higher than the design.

After estimating STEEM's actual annual, semi-annual and quarterly inflation rates in 2018, we will look at its characteristics and consider the implications.


Aim of Analysis


  1. Estimates of actual annual, semi-annual and quarterly inflation rates of STEEM in 2018

  2. Its features and implications

  3. Conclusion


1. Estimates of actual annual, semi-annual and quarterly inflation rates of STEEM in 2018


(1) Estimation method (may be omitted)

2017.12.31~2018.12.17

① Calculate SBD supply trend by date
② Calculate STEEM supply trend by date
③ Estimate STEEM Current Supply at major comparison points
④ Calculating inflation rate for the period
⑤ Compare the calculated inflation rate with the design level of the STEEM blockchain


(2) Estimated value

① quarterly / semi-annual / annual inflation rate table

1901.png


② STEEM / SBD supply balance and price of major points

1900.png

The SBD / STEEM price are based on coinmarketcap figures.


2. Its features and implications


① Quarterly inflation rate VS design

1902.png

SBD issuances soared in the first quarter of this year due to surging STEEM and SBD prices at the end of last year, while STEEM prices fell somewhat, so the inflation rate temporarily exceeded the design level in the first quarter. However, the inflation rate in the second quarter was lower than the design.

In the third quarter, STEEM prices fell below US $1 and new SBD issuances were discontinued. Instead, a liquid STEEM has been issued and the SBD supply balance has already increased considerably, so the inflation rate has significantly exceeded the design level.

The inflation rate in the fourth quarter, where the STEEM / SBD price plunged, was 5.78%, exceeding the design level of 2.1% by more than 2.5 times.


② Semi-annual inflation rate VS design

1903.png

Despite the high volatility of STEEM / SBD quotes and volumes, the first half inflation rate was 4.17%, similar to the design level of 4.2%. STEEM fundamentals were still in good shape.

However, in the second half of the year, STEEM fundamentals deteriorated sharply, and the inflation rate rose to 9.46%. This figure is as high as 19% per annum.


③ Annual inflation rate VS design

1904.png

YTD(Year to date) inflation rate in 2018 is about 14.0%, which has already exceeded the design level by more than 5%.

In general, the interest rates of countries that receive relief from the International Monetary Fund (IMF) tend to temporarily rise to 10-20%. Taking this into account, STEEM's high inflation rate in the second half shows that STEEM fundamentals are rather sluggish.

If the STEEM price is still the same, the amount of SBD supply balance converted to STEEM can be significantly increased due to the natural drop in the STEEM nominal feed_price (SBD supply balance of 12.5 million units, STEEM nominal feed_price is changed from 0.4 $ to 0.3 $ In the case of natural decline, the amount of STEEM converted will increase by more than 10 million STEEMs.) The actual inflation rate in 2019 may well exceed the design level of about 8%, which is likely to rise to more than 10%.

The worry is that if the STEEM price declines further, the inflation rate may be even higher next year.


3. Conclusion


As you can see above, the actual inflation rate of the current STEEM block chain is well above the originally designed inflation level, and if the current STEEM price is maintained or declining, the real inflation level after next year may be well above the design level.

Of course, since the blockchain industry to which STEEM belongs is a growth industry, the inflation rate of 20% is not necessarily high. Also, the current situation may be temporary. But the problem is that it is outside the originally designed ecosystem.

At present, STEEM can be considered to be virtually under slumpflation. The term "slumpflation" is used when the recession and inflation are more severe than the stagflation situation. It may be similar to the situation in which the recipient countries of the International Monetary Fund (IMF) have devalued their currencies.

After World War I, Germany was hyperinflationary so that it was able to barely stabilize the economy through so much stronger currency reforms.

If a country is not hyperinflationary, but close to the level of slumpflation or the relief of the International Monetary Fund (IMF), then it is difficult for that country to break out of the situation by improving external factors. Internal high-intensity restructuring and implementation of innovative measures should be accompanied.

Likewise, in addition to expecting improvements in external factors, such as the boom in the crptocurrency market, STEEM will need to follow high-intensity restructuring and innovative measures.

Recently I saw some of the major Dapps that raise the voting weight for loyal users.

It is time to try to harmonize with systematic big changes of STEEM ecosystem in small things like the above.


The Data and Queries


I did this analysis by connecting to the @steemsql db with MSSQL client(Microsoft SQL server management studio), Excel.

Refer to My Github


(My recently analysis)

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Hi @lostmine27, very interesting topic! The results are a bit worrying, though... To my understanding, the inflation rate exceeds the design value as soon as SBD earned at a higher STEEM price is converted at a lower STEEM price, because we get more STEEM from the same SBD.
I must admit I haven't fully understood how you got to the numbers. Where did you get the supply states at the selected dates from? I see only author rewards queried in the SQL file - are curator and benefactor shares not also relevant here? What about the remaining 25% for vesting funds and witnesses? STEEM transfers to @null are probably negligible...
I'm not sure about the outlook - don't the 320M current virtual supply already contain the SBD supply with the current price? You're adding this again after extrapolating the virtual supply with the inflation rate - but I may be wrong?!
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Thank you for your detailed feedback.

Next time I will bring more intuitive and useful analysis. Have a good time.

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Thanks for the clarification, now I understand it much better! I'm not fully convinced on the forecast, but I have to carefully think about this again, you might be right. Thanks again!

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Hi, the inflation rate from the point of view of a user, that is, the amount of STEEM generated by an upvote, will always be higher than the STEEM-creation inflation rate as not all STEEM is vested and not all vested STEEM upvotes all the time.

It is not that more STEEM is being created, but that the created STEEM is distributed to fewer active holders of SP rather than to all STEEM holders.

That's been my analysis for the past year. When SBD was way above $1, then that period saw a huge increase in inflation rate - that was then stopped using the SBD Print Rate.

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Good feedback.

I estimated the (real) inflation rate in terms of the total value dilution of steem.

It is true that the value dilution of the liquid STEEM holder is larger than that of the SP holder.

Also, since users can not exhaust their maximum VP, it is not easy to keep up with the value dilution of STEEM.

I appreciate your feedback and got an insight. Have fun.

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Thank you for your review, @crokkon! Keep up the good work!

Hi, I've been saying this for months! Indeed, the inflation rate is even higher than your figures, standing currently at about 22% APR. I calculate this from the value of an upvote; this takes into account both market prices and the reward pool size.

It is always going to be above the headline inflation rate as not every user upvotes all their maximum possible; this means some of the reward pool is not used, thereby increasing the upvote value.

Addendum. Thinking about it, I ignore the STEEM that goes to witnesses and the small interest rate that goes to SP holders. I also look at it as an interest rate rather than an inflation rate. Our figures may not, therefore, be inconsistent with each other.

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Good feedback. Happy holiday.

I've given you an upvote and left you this amazing automated comment (since spamming the blockchain is now acceptable)!!


Vote for witness nextgencrypto!!

짱짱맨 호출에 응답하여 보팅하였습니다.

Thank you so much for your great analysis on the matter that I've been always wondering.

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Thank you. I often miss St. James Park. Have fun.

What do you think high-intensity restructuring and innovative measures includes in detail?

What should Steem Inc, and steemians do for high-intensity restructuring and innovative measures?

Posted using Partiko Android

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There will be various opinions. Steemit, Inc and witnesses should accept many users' opinions and improve the STEEM blockchain. Unfortunately, listing all the details is beyond the scope of this article. :)
Thank you. Have a good time.

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I see. Thanks a lot.

Posted using Partiko Android

Hi @lostmine27!

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Your UA account score is currently 4.337 which ranks you at #2410 across all Steem accounts.
Your rank has dropped 3 places in the last three days (old rank 2407).

In our last Algorithmic Curation Round, consisting of 224 contributions, your post is ranked at #81.

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Greetings from Serbia :D

Macro economy is very, very important and something is wrong with the current state of Steemit as its value is in constant decline vs BTC

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Nice to meet you. I agree with your view.

Serbia has recently completed a successful IMF program.

I hope that the STEEM blockchain will also solve many of the problems raised during these difficult times and restore the collapsed PoB-based ecosystem. It seems to be a way to save the macro economy.

Of course it does not seem easy.

Have fun.

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IMO to "save the macro economy" of STEEM requires serious changes to the underlying economic code. This is something Steemit Inc refused to do in the past - perhaps now is an opportune time to reopen that debate. However, a proper discussion requires people who understand economics or game theory or complex systems - not thinking that the Keynesian economics propagated on mainstream news is valid. (I see this all the time: there is enough history of STEEM and SBD to show that supply and demand and prices have not followed a simple model.)

Nobody, afaics, has a deep understanding of a crypto micro-economic system - at least, I havent found much published online. To create such a system, with adequate feedback mechanisms, so that it can run without converging to an attractor, is a hard problem.

IMO whoever solves that will create the next gen crypto economic system.

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곰돌이가 @lostmine27님의 소중한 댓글에 $0.014을 보팅해서 $0.009을 살려드리고 가요. 곰돌이가 지금까지 총 2167번 $27.597을 보팅해서 $26.927을 구했습니다. @gomdory 곰도뤼~

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