Steemonomics: thoughts on interest and price

A few moments ago I was asking about the interest percentage and was directed to this chart in steemdb.com:

It is pretty interesting isn't it? It shows the breakdown of the rewards pool by percentage over the last 30 days so should be relatively accurate to use for the purpose of this post.

If we look at the current inflation pool size it has about 840,000 steem in it and where we are in the inflation cycle, that is ~25 million for the year.

that $338,000 is the estimated value of the pool at the current time based on the price feed which is at 41c (for some strange reason) but the actual value is 0.35 x 834,262 = ~291,991.70 at the real current price. Of course, that price wouldn't necessarily hold if 800k steem sold instantly.

It really isn't a lot of money though is it?

If there are 15,000 active accounts on Steem, that would equate to about $20 per account. It might be better to look at it from the entire year's supply though.

At current prices:

25,000,000 x 0.35 = $8,750,000 for the year.
8,750,000/ 15,000 = $583.33 per account in the year
583.33 / 52 = $11.20 per week per account

Well, not quite, because that is the total pool.

12.7% goes to witnesses: -1.42
19% to interest payments: -2.13

Obviously, only witnesses have access to the 12.7%. However, Everyone with Steem Power has access to the interest payments. If I remember correctly, about 19,000 Steem will attract 1 Steem per day. That might not sound like a lot but considering there is:

With 200+ million vested, that is about 10,526 Steem out of the pool per day on interest payments. Still, it is only about 3,600 dollars total a day at these prices.

You will notice though that the author rewards are about 50% of all of the pool. Did you think it was 75%? What that means is that if distributed equally across 15,000 active accounts on post rewards, it would be $5.60 per week. Not bad, depending on where you might live. In Finland where I am, that is 1.5 coffees in a cafe. Live off Steem. Of course, what each account gets does have other factors involved, it isn't evenly spread.

But, if you remember the high price of $7.30/Steem in January, that would be 17x more. That means the equivalent Steem (~16 Steem) would have a value of 116 dollars. Crazy right? That is what it was on January 4th. Will it ever get there again. I think so and quite a bit higher, but that is me.

Like I wrote in the post yesterday about the inflation pool, it is not a great idea to try to live off earnings from the pool themselves, well, at least not directly as that pool size doesn't change much and will shrink significantly over time. What is a decent way to earn from the pool in the future though would be having vested interest in it (Steem power) and working toward increasing the value it contains. At that all time high of $7.30, the same amount in the pool as now was worth over 6 million dollars, instead of $300,000. Quite a difference.

What is interesting to note is that the interest earnings on that of ~19% for this year is about 5 million Steem and at $7.30 would equal 36.5 million dollars worth. If 19,000 gets about 365 steem a year, it would have a value of $2600 dollars a year for just sitting there powered up. 1900 would therefore have a value of $260 and 190 Steem 26 dollars in a year. Of course, these numbers depend on the amount powered up and drawing on the pool so the more powering up, the lower the interest would be but, the less liquidity increases scarcity and should see a higher price. On a side note, the total pool would be worth 182.5 million, how much did you tube pay its contributors last year?

What this all means though is that while an author alone has access to 50% of the reward pool, a curator has access to another 16% + comments 3% and Steem power another 19%. That is together 88% of the reward pool. I know it doesn't quite work that way but the idea is that the more ways one is able to interact with the blockchain, the more revenue streams one has incoming. It also means that one of the best ways to add value is to also powerup and earn around 1.8-1.9% on the SP held.

That doesn't sound like a great deal but that alone is better than most banks offer on a savings account. Umm, what is the inflation rate in your country? Does your savings account interest beat it, does your currency have the chance of increasing astronomically? Banks are no risk though right?

There are many sides to all this to consider and like I have said and will keep saying, there are many games to play along the path. What is clear though is that regardless of what the coin is valued at, the pool is going to always be a limited resource and the lower prices are, the fewer people it can adequately support which means, the goal is to increase the value of the coin (and potentially SMTs) so that the ecosystem can continually expand and use the inflation pool to incentivize growth a little more.

This all seems quite obvious to everyone I guess but not when you consider what people are willing to sell at and, what people aren't willing to buy at. I know people who have to sell for various reasons who understand these numbers well and, each Steem let go of pains them, while I know others who let them all go like grains of sand through their fingers at the beach. People have different approaches to and of course, different lives to live.

I am not great with numbers but I do find them interesting to think over from time to time to get a different view of the platform, as it brings new things into focus and new thoughts to play around with. I do think that if Steem price does well there are going to be a great deal more people in at the next all time high than the last and the type of people will be quite different.

The last high saw a lot of people coming in for a money grab but with new apps, new games and new possibilities to earn and play with, I predict that there will be a higher quality of user and with each fall and new ATH, this will increase further. The group competing for that 50% of the inflation pool is going to get increasingly better and those who might earn today may not tomorrow, myself included. Of course, those who are able to power up will always have access to some portion of the pool from various angles, whether it be curation, interest, RC pools, delegation or funding mechanisms.

Of course, this experiment could fail and the pool is worth exactly zero.

Part of the game.

Taraz
[ a Steem original ]

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