UPDATE JUNE 30, 2017
It appears that a majority of my hypothesis was correct but one part may not have been. As I do not ethically believe I should edit the original post to reflect new knowledge, I will present it here above my original post instead.
What are the new findings that contradict my earlier claims?
- STEEM Rewards have declined recently. What I will do instead of going through a lengthy explanation of why our rewards have declined is to link you to a post by @penguinpablo who does a superb job of going over it. @penguinpablo/here-s-why-your-potential-payouts-are-going-down
What remains intact based on my own findings below? Everything else:
- STEEM price fluctuations do impact estimated payouts
- STEEM DOLLARS are considered to be (incorrectly) pegged to $1 USD which is not reflected in the estimated payouts
- The Formula I show to calculate your current USD earnings remain unchanged
Additional Thoughts:
- After you read the post by @penguinpablo the other suspicion I have is if the Reward Pool (which is the total pool of STEEM allocated to users in a given period) does not increase as the community size increases, then it makes sense that our STEEM rewards may continue to decline since there is only so much STEEM to go around in a given payout period. Just have a look at the huge growth in the number of votes delivered over the last week alone below. Of course the one thing this graph doesn't show us is the total weight of the votes. What are the ramifications? Well, if the amount of STEEM paid out declines as our community size grows, we should actually see the USD value of STEEM increase to offset this. This is as per a discussion I had with @penguinpablo and it makes sense.
After HF19 many of us were so happy to see that our voting power had increased significantly. I know mine went up almost 10x!
With that said, recently there have been so many posts and questions about WHY the overall STEEM payouts have been on the decline. Mine, specifically has gone down by nearly 1/3 since the incredible boost post HF19.
We are paid in terms of STEEM POWER and STEEM DOLLARS, NOT $USD.
First, our payouts have actually NOT changed (i.e. declined) over the past week since HF19. We EARN in terms of STEEM POWER and STEEM DOLLARS, not USD. Hence, we are all still earning the same.
Second, Steemit estimates the value you see on your Post in terms of USD. However its estimates are not very good at it, whatsoever. I'll explain why.
Why has the USD value of my Posts dropped?
The reason for why the value of your posts may have dropped (as of today) in terms of USD is because the value of STEEM fluctuates. The lower the value of STEEM, the lower the USD value of our posts. And over the past few days STEEM has taken a real hit.
But that isn't the whole story.
There are two problems to crack here and I'll try my best to explain it.
1 - STEEM Price is at the Mercy of Market Price Fluctuations in terms of USD. The question you've all been wondering about.
The USD value of your payout is dynamic and based on the current price of STEEM.
Recently the entire cryptocurrency market suffered a 20% haircut.
STEEM, itself, dropped 40% (over $1 USD) from its recent all-time high of around $2.70 to around $1.50.
Since the USD value of STEEM dropped, our payouts appear to be smaller
2- STEEM DOLLAR is NOT actually worth $1 USD. The question you didn't know you should ask.
The other problem with the $ value shown on your post, that you may not even realize, is that it assumes the STEEM DOLLAR is worth $1 USD at all times. However, the STEEM DOLLAR price fluctuates just like the price of STEEM. Because of this, the true value of your post may be higher or lower depending on where the STEEM DOLLAR sits.
Example: My post is worth $1.77 in USD right? Nope, it isn't!
The image above shows my earlier post is valued at $1.77. However, shortly after HF19 it was sitting at well above $3. And then it dropped to this value. What the hell, right?
So what is my post actually worth?
First let's look at how much we were actually paid out for the post.
Looking at the image above you can see we were actually paid out 1.447 STEEM DOLLARS. That's the true value. In terms of USD it gets a little more complicated.
Payout is based on half of the 1.447 STEEM DOLLARS being converted into STEEM POWER and the other half remaining STEEM DOLLARS.
So,
1.447 STEEM DOLLARS = 0.7235 STEEM DOLLARS and 0.7235 STEEM DOLLARS converted into STEEM POWER.
How does this relate to the $1.77 displayed? Follow along.
The STEEM Dollar portion is shown in terms of STEEM DOLLARS, NOT USD
The $1.77 is comprised of 0.7235 STEEM DOLLARS, not USD.
Again, STEEMIT considers the STEEM DOLLAR to be valued at and pegged to USD $1 (even though it's not). So, it values the 0.7235 STEEM DOLLARS to be equal to USD $0.7235 of the $1.77 estimated payout.
That means the left over is
$1.77 - $0.7234 STEEM DOLLARS = USD $1.0465 for STEEM POWER which is covered in the next section.
The STEEM POWER portion is shown in terms of USD value
As mentioned the remaining 0.7235 STEEM DOLLARS are converted to STEEM POWER.
STEEMIT assumes that the STEEM POWER value of the displayed $1.77 is worth
$1.77 - $0.7235 STEEM DOLLARS (As calculated above) = USD $1.0465 in terms of current USD Prices.
The internal price for STEEM today would be calculated by taking the USD $1.0465 value it calculated for the value of my post's STEEM POWER and dividing it by the equivalent STEEM DOLLAR price.
1.0465/0.7235 = USD $1.4464 per 1 STEEM.
So STEEMIT is valuing STEEM at $1.4464 today, whereas the market rate is $1.87. This is because STEEMIT uses a moving average to calculate the value of our STEEM POWER so it will always lag behind current prices.
And this is exactly why all of our Posts fluctuate in value over time.
Calculation Time. The TRUE USD value of your Post.
Today's true value of the 1.77 post is broken down as follows
- Post is worth 1.447 STEEM DOLLARS
- Half the reward is delivered in STEEM DOLLARS = 0.7235 STEEM DOLLARS
- Half the reward is delivered in STEEM POWER = 0.7235 STEEM DOLLARS of STEEM POWER
USD Value of STEEM DOLLAR Reward = 0.7235 * USD $1.85 per STEEM DOLLAR (today's rate) = USD $1.3385
USD Value of STEEM POWER Reward = 0.7235 * USD $1.87 per STEEM (today's rate) = USD $1.3529
TOTAL USD Value of 1.77 Post = 1.3385 + 1.3529 = $2.69
That is an USD $0.92 difference from the $1.77 value shown!
Key Takeaways for why Steemit's Post Value is Not Accurate
- Payments made to your account are in STEEM POWER and STEEM DOLLARS, not in USD.
- The USD value of STEEM POWER fluctuate which is why the $ USD displayed value of your post fluctuates
- Steemit assumes that STEEM POWER is the average price of STEEM over a select number of days. Hence, it can be higher or lower than today's actual price.
- Steemit assumes that STEEM DOLLARS are always worth USD $1, which it is NOT. Hence the displayed value of your post is never accurate.
Calculate your own post's USD value
Now you can use this formula to calculate the true value of your own posts. Just look up
- STEEM DOLLARS Paid out for your Post. I used https://steemd.com to find the payout for my post.
- Current STEEM Price. Go to http://coinmarketcap.com for the latest price
- Current STEEM DOLLAR Price. Go to http://coinmarketcap.com for the latest price
USD VALUE OF POST =
(USD PRICE OF 1 STEEM DOLLAR * # of STEEM DOLLARS EARNED) / 2
+ (USD PRICE OF 1 STEEM * # of STEEM DOLLARS EARNED) / 2
I realize the above was a little math heavy, but hopefully it clears up some misconceptions. Of course if you find any mistake in my assumptions and calculations please point them out. Happy to discuss it and ensure this guide is accurate