The Impact of Unused SteemPower on the Rewards Pool - Blockchain Business Intelligence
Almost two weeks ago I received a comment on a post from @freebornangel. The comment was lengthily and ended with
Yeah, thanks for making it even harder for the newbs to make a buck on their content
Ouch…I don’t want to hurt minnows…I’m still a minnow myself.
This was part of a response to the post https://steemit.com/steemit/@paulag/steemit-inc-and-misterdelegation-distributing-power-and-delegatee-ranking where I gave a shout out to @ned and @steemit to delegate more and not let their SP go unused.
I recommend you read the post and the comments left, but to summarize the discussion between @freebornangle and myself went a bit like this.
If the 75% of sp that doesn't vote did vote our votes would be worth even less than they are now.
Me: You are wrong!
@freebornangel: do the math and see
Me: Ok…I would love to prove you wrong.
The Aim of this Analysis
- To see what impact if any would a daily 100% vote from @steemit would have on my vote value
- To see what impact if any would 10 daily 100% votes from @steemit would have on my vote value
- To establish how much SP is unused
Calculating the value of a vote
I previously wrote an explanation of how to calculate the worth of a vote on steemit, which you can read here:
https://steemit.com/bisteemit/@paulag/how-to-calculate-the-worth-of-any-steemit-vote-steemit-business-intelligence
This posts covers the steps on where you can find all of the data along with the formula. To recap the formula is
a = (reward_balance/recent_claims)
b = (base/quote) // it is Steem/SBD Feed price
c = (total_vesting_fund_steem/total_vesting_shares)
d = steempower/c
e = power*weight // weight of vote for ex. 10000
f = (e+49)/50
G = f to inter
Vote amount in SBD = dG100ab
From this we can calculate the worth of a vote from @steemit
And we can also use the template to calculate the worth of my own vote
These values can be further verified at https://steemworld.org/@steemit
Calculations
So if a vote from @steemit is worth SBD $10,044.62 and they voted 1 time per day, what impact would this have?
Well there was a little math involved here
First I needed to convert SBD to vests. Using http://www.steemdollar.com/ 1 SBD = 1.0926 STEEM
And using http://www.steemdollar.com/vests.php 1.0926 STEEM = 2232.4950 vests
We can use these values to now calculate the Vests used per vote and multiple of votes for @steemit
And we also need to calculate the Rshares on a vote ( which I got the information from this post by @jfollas)
(there is probably a much easier way to work this out – I do tend to find the hard solution!)
The table below shows how much 1 vote, 10 votes and 90 days of 10 votes is worth in terms of SBD, STEEM and Vests. We can also see how much RShares are used at the same voting levels
Using this data, we can now amend the Vote worth calculation to include the change in a = (reward_balance/recent_claims). If we update this to include 1 vote from @steemit the change in my daily vote worth can be seen below
So with only 1 full 100% vote a day from @steemit would reduce my vote worth by 1.54%
If we update this to include 10 votes from @steemit the change in my daily vote worth can be seen below.
15% is a substantial and noticeable different on a vote value. However this is assuming that @steemit only started voting now.
In the original discussion with @freebornangle I made a counter claim that if the price of STEEM increases then we can offset this difference in vote value.
To offset 10 votes a day from @steem at 100% power the price of STEEM would need to increase to 3.94. That’s an 18% increase and very doable.
(EDIT - THIS SECTION IS UNDER QUERY AS THERE IS A POSSIBLE ERROR IN MY CALCULATION)
However this does not address the issue of the rewards pool. At the end of the day, the reward pool is only filled by so much. If the payouts are greater than the refill then the pool will eventually dry out.
So if we backdate the data, so that the reward balance and recent_claims include 10 votes a day at 100% for 90 days look what happens to my vote worth…
@freebornangel you were so right…..I take back what I said.
90 days of voting 10 votes a day at 100% weighted Power would have drained 9,825,747.73. Sure the rewards pools doesn’t have that much…lol….we’d be fucked!
All the data for above was collected 26 Feb at 22:30 GMT
How much SP has gone unused over 90 days
To find out how much SP was unused over 90 days I connected to the Steemsql database using Power BI
The query used was
select *
from Accounts NOLOCK
The data was collected on the 24th February and DAX was then used for analysis and calculations.
The table below shows data for ALL accounts on STEEMIT
The table below shows data for all accounts that have NOT voted in the last 90 days
39% of Total SP has gone unused in the last 90 days. Of this @steemit owns 60%. I’m not going to run all the figures again to adjust for the additional 40%, but if all the SP was used to vote 10 votes a day at 100% weighted power, at the current rate of refill then Steemit wouldn’t have much hope.
So my original shot out to @ned to delegate more power….well I retract that statement now
This does however leave me with some things to work out in my head.
How can we ensure that the rewards pool is not drained? And I’m not talking about spam and plagiarism, but what if we grow so big that there are many many good posts and many good curators finding these posts, could we be paying out faster than refilling? And if this scenario is possible, what can be done to improve the rate the rewards pool is filled at? Would love to hear your thoughts and comments on this.
Conclusion
@freebornangel is right (which makes me wrong) and I am delighted to now have a more solid understanding of the STEEM blockchain workings. This analysis also highlights the importance of the ‘Reward Pool’ and work done by those to ensure Steemit is free from spam and people are not raping the rewards pool.
Steemit needs ‘dead fish’ and unused SP. Imagine if all the STEEM on the exchanges was sent back into steemit and used for voting… I wonder how that would affect the price? – If there is no STEEM on the market, would people be willing to pay more even though the vote would be worth very little ? How can we find a happy balance?
I love when math proves me wrong, but I have concerns now about the future of the rewards pool and its ability to sustain massive growth on the platform.
I am part of a Blockchain Business Intelligence community. We all post under the tag #blockchainbi. If you have an analysis you would like carried out on Steemit data, please do contact me or any of the #blockchainbi team and we will do our best to help you...
You can find #blockchainbi on discord https://discordapp.com/invite/JN7Yv7j
Posted on Utopian.io - Rewarding Open Source Contributors
Hmm... This is something I don't often think about. I suppose the reasoning is that as more users upvote demand for Steem will increase exponentially, bolstering the price exponentially. Your calculations rely on Steem increasing in price either not at all or substantially slower than it fries in popularity.
can the price of steem increase faster than the popularity of steemit.... I dont know but I do hope so
price of steem should be a prediction of steem's potential, so theoretically it should increase faster...
I see that the way to succeed here is to fulfil the original intent set out by the white paper, to ensure that the community subjectively rewards the best posts (as determined by the community and not just by one person or a small group). As long as posts reach the top due to buying votes (aka having the biggest wallet to begin with), people will reject the system and will view it as a kind of pyramid scheme. On the other hand, if posts are reaching the top due to their quality, then the system works and people will invest in the system for it's long term functional value, rather than for it's short term 'ROI'.
Increased investment means increased token value, which means increased value of rewards, which means more posts can be supported with a decent payout rate. The only way to make the distribution of slices of a cake more fair is to ensure that those cutting and distributing the slices are numerous enough that they can deal with the precision involved in a manageable way. Having 10 people voting with massive SP (delegated or not) can never be as effective as having 10,000 people voting with smaller portions of the SP.
I really want to note your integrity, on full display in this post.
I am deeply moved. I kid you not. I admire honesty, and honesty is impossible for many people that seem to find any opportunity to learn something they didn't know a personal slight instead. Without the ability to admit we were wrong, we can never become right.
I did not realize that were all the SP extant to be actively voting the rewards pool would completely drain, and that changes my views on things. Thanks for that too!
Kudos!
I like people that challenge the way I think and point me in the right direction....
Also there might be an error in my calculation above, I have added an edit as it is under query at the moment
Totally agree with @valued-customer. This is what drives great discussions and learning. Every post that @paulag presents I learn from ... That often includes the great comments. Willingness to change one's mind, given the data, is the mark of a good scientist.
Great post @paulag, I was actually contemplating some of these quandaries as I delegated some SP around. Timely post... Is there a global conciseness ;-)
thank you @jasonbu
There are 3 billion people connected to the Internet and that number is expected to double in the next 3 years.
Steem doesn't have a supply problem, it has a marketing problem.
Most certainly with more users, the price of steem has to go up. So in a sense it will level off if my vote is worth 1$ at full power so when Steem is 30$, my vote is 10$. As the value goes up more of that Steem can come into the pool and dilute it making our votes worth a bit less, and stalling the value from rising maybe.. I would like some sort of solution for rewarding good content without having to buy the votes since everyone with Steem power is delegating it to vote bots. its suck an intricate ecosystems its hard to see the unintended consequences of making changes to anything. Changes need to be made though
some sort of changes are needed, but I have yet to find a perfect solution...
One way is to somehow elevate the status of promoted posts again. People are prepared to pay for visibility (and ROI) via the upvote bots. We can at least take care of some of the visibility issues by including promoted posts in our regular feed. Why's that exactly? well, promoted posts burn steem in order to be promoted. That has a small effect on raising the price of steem for everyone while at the same time giving the poster the visibility they want. For sure it doesn't give ROI in the sense an upvote bot does but it reduces the "i need visibility and will pay for it" argument in favour of the upvote bots.
Would you accept a promoted post or two, clearly marked as such, in your feed?
How did you come up with those data of unused SP? Steemsql?
yes, I got all the accounts and totted the controlling sp (owned, less delegated + delegation rec.) and then I filtered the data for accounts that have not voted in the last 90 days
Seems to me like you're asking the wrong question with "How can we ensure that the rewards pool is not drained?". Sorry, this might be semantics, but the purpose of the rewards pool is to be "drained" in the first place. By that I mean that the entire pool of rewards is meant to be distributed, with the only difference being the proportion of rewards going to any user.
The question should instead be: "How can we ensure that we maintain the (fiat) monetary value of any single good post over time, despite more users joining and posting good posts?"
Solution 1: I read your very informative post on calculating vote value, and if we increase reward_balance with time, we can help to maintain the vote value. The white paper stipulates a yearly inflation rate of 9.5%, so that will help slightly, as long as the increase in supply is met by an increase in demand.
Solution 2: Except the above, it seems like the only solution is for the value of Steem to increase. As long as the monetary value of Steem increases to counteract the fall in my share of the rewards pool, the overall value to me can remain unchanged. There is no other solution unless we change the formula through which payouts to each user are calculated. At the current rate of increase in users, the value of Steem should increase as well, because the increase in supply of reward_balance is smaller than the number of users.
The problem for new users, though, is that reward payouts are not calculated after 3 decimal places, and any payout smaller than 0.001 is not paid out. This is a problem that actual new users face. That is something I don't understand at all - it is easy to increase the precision of payouts, it'll just at a small cost of making the numbers a bit harder to interpret. If we rely only on an increase in Steem value to maintain the monetary value of contributions to the platform, then this problem will only worsen and become a natural upper limit on how many new users join and stay on the platform.
The reward pool is the inflation rate.
Do you mean instead that the growth rate of the reward pool is the inflation rate?
None of the rewards are given away from someone who has them. They are, in a sense, mined. Every reward in the reward pool increases the amount of steem (and/or SBD) that are out there. Rewards are inflation.
I'm pretty sure you are misunderstanding the way the rewards pool works here, but alas, do not hold the knowledge to make an argument. Perhaps @biophil can confirm your suppositions or my suspicions.
you might be correct here.....there is an error in my calculation...
In the calculation on 90 days past, I have deducted 90 days of 10 100% upvotes from the rewards pool, which puts the value as negative, but shown as 0 above. However I did not adjust for the 15% decrease in all other payouts as a result of the higher rshare on a daily basis. I am just trying to confirm this now and will make an update
Hi Paula
Good to have this cleared up.
Hopefully in time, the rewards pool will grow as the price of STEEM rises and inflation falls - I'm assuming this will allow Steemit to release more SP 'onto the market'.
It seems that Steemit inc know what they are doing :)
yes steemit inc know what they are doing.....but I dont think its as easy as they to release more sp onto the market
There is a yearly inflation rate that determines the size of the rewards pool.