Thinking about wearing vests: vote, steem and payout

No, not like Patrick Jane from the Mentalist.

Last night I wrote a post about Balancing Distribution and mentioned vests and how important they are to think about and this is a kind of followup post of sorts that I hope will give a few people some things to think about and perhaps adjust their behaviors if they are looking long term. The reason is is that it is the vests that draw on the pool, not the price of Steem. While everyone worries about the price, they might be missing opportunity.

Vests are essentially the % of the pool an account has access to. If we image that there is a pool of 100 Steem and there are 10 accounts with even stake, they each have 10% ownership of the pool. If all vote completely, they all draw 10 Steem from it. If 2 accounts have 30% stake each and the other are even, they will have 5% each. When all vote completely, the 2 accounts draw 60 Steem, the other 8 pull 40 Steem from the pool.

It doesn't really matter how much Steem Power they have, it is the percentage of ownership that is important. If the 2 accounts have 300k Steem each, and the other 8 have 5000 Steem each, the pool is still only 100 Steem so, The 2 accounts will draw 60 Steem, the 8 will split 40 Steem.

At this moment, there are 771,661 STEEM in the pool and 523,516,345B drawing on the pool. This means that the payouts are that pool split across the percentages of all votes cast. This is also why when the very large voters like the bidbots cast a very large vote, you may literally see your payout decrease a cent or two as they have pulled a large percentage of the pool and it draws a fraction away from all other payouts. The bidbots actively vote their entire 20% stake per day and have access to ~30% of the pool. They vote on less than ~0.6% of the posts.

But, this isn't about that.

What people miss right now is that a voter is likely to increase their vote percentage when prices are down. I know that I do. I vote with more vests on less people. This is because content that I think is worth more should get more. However, once upon a time I had a 15 dollar vote but, much less steem power When it was at that price I would vote with lower percentages on more accounts and some highly rewarded posts, I wouldn't vote on at all.

People don't bat an eye lid these days at a post with 500 dollars on it but, that is a massive amount of vests at these prices. How much? That is 7 x 100% votes from a whale with 1,000,000 Steem Power. It is 3 x 100% votes from the largest active voter, @utopian-io which has 3.6 million Steem to vote with 3 of those type of posts and @Utopian-io's voting power is gone. But, if Steem was 10x higher, they could vote on 30 such posts and get them all to 500 dollars (they can't vote on a post 3 times though I know).

Their current 100% vote with 3.6 million is 170 dollars but at 10x Steem, that will be 1700 dollars. Do you think they will only vote 10 times or, will they drop their percentages and reward many more posts? Drop percentages. If they were rewarding only 20 people today at 85 each, as price increases they might want to reward them more but, they aren't going to give them 850 each because they will more accurately consider the value of the post. It might have been worth 170 dollars. What that means is while an author will be able to double their value, Utopian-io will be able to reward 5x as many authors with 170 dollars. In Fiat Terms at least.

What this means is that their voting stake at 100% VP currently to 20 posts would be a 50% vote to give 85 dollars to each, to do the same later, they will only need a 5% vote. If they want to double the author fiat value to 170 dollars, they will need to use only a 10% vote. Whereas before the post was getting a 50% draw on the pool with that stake, now they are only getting a 10% draw. What that means is, less Steem coming out of the pool on 20 posts, and instead the same amount will get spread across 100 posts. The fiat values could remain the same at 85 of course and they could give it to 200 posts instead.

What this means is that if a payout of 85 currently gets 85 Steem, when Steem is 10x up, the same value payout will get 8.5 Steem. Both will have the same fiat values though. Now, this is all things remaining equal. If we look at posting activity (thanks @penguinpablo), we can see what happens with price decreases. These are from April to now.

source

The reverse is true for price increases of course. Activity goes up. If price goes up 10x from here and considering the growing interest in crypto, we could expect post numbers to increase similarly. In the last 2 weeks there were 186696 posts and 629227 comments and we might see that go to 1.8 million posts and 6.2 million comments in a two week period. That is your new 10x competition.

So, not only will there be a lowering of voting percentages, there will be dramatically increased competition for eyes on posts. But, even though there will be many more users, most of those posters will not have vested interests to vote with. So essentially, there will still be the same 2163 accounts with more than 5000 SP, still only 8864 minnows but, there will 8 million posts or comments looking for votes. How are they going to find you?

This is why community interaction is going to be so vital here and why people should be seriously considering how they interact here because if they don't network well and choose to lone wolf it, without stake it is going to be near impossible to ever get seen. At least on Steem. This will be eased somewhat by the purpose-built applications and the fact that most large accounts will be somewhat forced to delegate to communities to burn their voting stake.

Now, if hypotheticallynone of the large accounts voted at all, the pool would be split between the smaller voters but this is highly unlikely considering they still want to earn, whether it be from curation or vote selling. To earn from curation, one still has to vote. It is unlikely all whales will stop voting (especially a couple we already know well) so again, the more the small fish collectively power up, the more they can draw from the pool.

But remember, even though the Steem might reduce, the value per steem earned can go up. A 10 cent vote now at 10x will be a 1 dollar vote. If voting at 100% (all things equal) it will draw the same amount of Steem from the pool. if it draws 0.1 Steem now, it will draw 0.1 later. The difference will be the fiat value of that 0.1 Steem. Remember though, there will be increased competition on the pool though which means lower chances of receiving that vote but if you have that vote yourself, it is yours to use as you choose. The system is set up to reward based on stake, not having stake means one has 0% claim on the pool, no matter the price.

While people aren't posting, they are increasing the chances that others have of claiming the Steem in the pool but, because voters will likely increase their percentages to reward higher, there are less votes going out. This is definitely a good time to be earning Steem if one has the ability to attract votes and generally, shitposts don't get much unless well, good network, track histoy, circlejerk or bidbot.

What people might not realise though is that price increases and people reduce their percentage, the 'more accurate' assessment of value comes into play. If people see memes with 500 dollars on them, they are likely going to get flagged. This is even more likely if they end up reducing the cost of flags. If people see photos with 2000 dollars on them, same thing. A large account could drop it down significantly. What ends up hapening is that shitposts might still get rewarded but the larger amounts are more likely to go on where people find value.

What this all comes together as though is if one is here now looking long term and wanting to grow, the higher the price goes, the harder that will be even though the fiat value of the payouts can increase a lot. The higher the price, the less new minnows, dolphins, orcas and whales there will be. To buy in as a dolhin with 5000 Steem now is ~4000 dollars. That might be doable but at 10x that same 4000 dollars buys 500 Steem, it makes a minnow.

You can make of this post what you will but I write these so that I can develop a better picture of the situation for myself. I think that the information is correct enough but of course, the dynamics change markedly with price movement, culture, onboarding, code changes as well as coming SMTs, Oracles, RC pools and many potential users who will have zero stake but still be looking to earn.

Taraz
[ a Steem original ]