The Mystery of Steemit Rewards Solved Even for a 9 Year Old. See What You Actually Get from Steemit!!!

in #steemit7 years ago (edited)

Steemit rewards are a mystery to many. Newcomers have a hard time figuring out what all these reward mean before they finally study the three digital currencies of Steemit network.  But then, there comes a new challenge when they start earning rewards on their posts.

  • How does the reward system work? 
  • What does the amount with the $ sign mean? 
  • How much will I get?  

These are some of the questions which confuse new Steemians. Well, wait no more because the simplest explanation is here.

Digtal Currencies of Steemit Network 

There are three currencies in your Steemit wallet; Steem, Steem Power and Steem Dollars.  Let's see what the official FAQ says about each of them.  

Steem

It is a cryptocurrency token, similar to bitcoin. It can be powered up into Steem Power, traded for Steem Dollars, and transferred to other accounts. 

Steem Power

Steem Power (abbreviated SP) is a measurement of how much influence a user has in the Steem network. The more Steem Power a user holds, the more they can influence the value of posts and comments.   

Steem Dollars 

Steem Dollars (commonly abbreviated SBD) are liquid stable-value currency tokens designed to be pegged to $1 USD. Steem Dollars can be traded with Steem, and transferred to other accounts for commerce or exchange.  

If you want to know more about these currencies, this video by @andrarchy will help you.  

Steemit Rewards Decoded, Finally!  

Let's decode these confusing little buggers. There are three things you should know about rewards.  

1. Rewards are Shown in One Currency Only  

This is simple. All the rewards on your posts and comments are shown with an amount preceded by $ sign. This $ does not mean  US dollars (USD) and is mentioned only for the sake of ease, probably because the whole globe recognizes the $ symbol (and loves it?). The amount mentioned with $ sign is actually Steem Dollars (SBD), not US dollars.

You will not be paid out in just SBD though. Your rewards will be converted to Steem Power (SP) and Steem Dollars (SBD) depending on whether you want both or just the SP.

2. Rewards are Paid in Two Currencies  

This is where things get a little complicated for innocent minnows and new fishes. The rewards, which are shown in Steem Dollars, are paid  (sent to your wallet) in two currencies; Steem dollars (SBD) and Steem Power (SP). How this division is done will be explained a little later in this post.  

3. Rewards Can be Converted to All Three Currencies  

Things get way complicated here but it's basically pretty simple. You get SBD and SP as reward from posts, comments and curation (the upvotes you). The only currency that remains is Steem. 

  • Well, you can buy Steem directly from the internal market against SBD. You pay in SBD and get Steem in your wallet.  
  • To convert SP into SBD or Steem, you'll have to go through a process called Powering Down. It is so named because powering down decreases the influence of your upvotes.  
  • When you start power down, SP is converted to Steem in 13 installments over a period of 13 weeks, starting one week from the time the operation starts. It can be cancelled any time.  
  • To convert SP into SBD, first you'll have to power down to Steem and then sell Steem for SBD in the market. 

How Rewards are Distributed?  

If you think you had enough twisting already, think again. You're in for another round of clarifying your doubts about rewards. Let's get over with this reward thing once and for all.  

Rewards are Shared Between Authors and Curators  

The amount in $ that you seen on your posts and comments is divided as follows.  

  • 75 % of the amount goes to the author i.e. you. 
  • 25 % of the amount is distributed among the curators; the people who upvoted on it. 

Update: Someone mentioned in comments that the ratio is 80:20 instead of  75:25. As of now, the ratio is 75:25. You can see the final distribution on one of my posts below. You can clearly see that rewards are divided in 75:25 ratio because 75 % of $225 is $169.

Seems simple and straight forward? Ok. Let's see. You'll probably need to awake the sleeping mathematician in you from this point onward.

Clearing the Fuss over US Dollars ($) and Steem Dollars (SBD)

There has been some serious discussion in the comments to this post regarding the $ sign in post payouts and its meaning (which means this part is an update). My initial stance on $ sign was that it is SBD and not USD. Then I had a discussion with a fellow Steemian and she said it was USD not SBD.

I had a quick look (my bad) at payouts in wallet and agreed with her. I updated the post accordingly. However, I needed to research more and in time, a senior Steemian clarified in clear words that the $ sign was SBD and not USD. 

Final Verdict? The $ sign does not mean USD. The amount is the number of SBD that you will earn. I thought it necessary to include an example here. See the image below.

You can see that the the final payout is $169 (SBD) for the author. 50 % of it is 84.5 SBD. Now look at the final payout that I received in my wallet (distribution system explained in the post just a few lines later).

  

That's it. The fuss is clear. We will not confuse ourselves with the $ sign's meanings anymore.

How The Share of Authors is Paid?  

There are two important facts that we established till now about rewards.   

  1. Steemit rewards are paid in two currencies; SBD and SP. 
  2. 75 % reward from the posts or comments goes to the author.

Keep these in mind.  

How Author's Share Tranlates to SBD and SP?  

When you write a post, you may have noticed a small option with the name of Rewards. After it is a box normally saying 'Default (50 %/50 %). Look at the image below.  

When you click the box, some options come up. See the image below.  

  

The default option is most common as it distributes the whole reward into SBD and SP.  Let's start doing maths now. 

  1. Suppose (just like in all those math books), one of your post shows $100 reward. Now, if you're using default option, the distribution will be as follows.  
  2. Reward gets divided into authors and curators in 75 % / 25 % ratio. You have $75 left. This $75 will be paid out as Steem Dollars and Steem Power. The process is explained later.

Now, if you're using default option, your $75 will be divided in to two equal parts; in SBD and SP. Let's study each of them. 

SBD  

Default option means you'll get 37.5 SBD (50 % of $75) in your wallet.

So, your payout will be 37.5 SBD, other than the SP. Let's look at SP now.

SP 

The other $37.5 will be converted into SP. SP isn't equal in value to SBD so you won't get 37.5 SBD straight away. As per the current price on BlockTrades, 1 SBD = 0.81 SP 

  • We know that the other 50 % (37.5 SBD) will be converted into SP. 
  • Therefore, 37.5 SBD = 37.52 x 0.81  SP = 30.375 SP 

Note: The price of SP keeps fluctuating.  If you use 'Power Up 100 %' option, all your Steem Dollars will be paid out as Steem Power as per the formula given above. Rewards will however be distributed between author and curators. 

Additional Note: If you see that the value of SBD and SP is more than 75 % of final payout, it is because you must have received a portion of curation reward as well. Your share, however, will never be less than 75 % until policies are changed (which will only increase the share, I perceive).

How is Curation Reward Paid?  

There needs to be a detailed post about how curation works but here are some points pertaining to this blog post.  

  • Curation reward is paid in SP only. 
  • If a post is upvoted immediately after posting, 100 % curation reward goes to the author; you. 
  • If it is upvoted 30 minutes after publishing, 100 % curation reward goes to the curator.  

Note: You can earn curation reward from others' posts as others can earn it from your posts. I haven't touched curation much due to lack of deep clarity. You can also earn a share of curation reward from your own posts as mentioned in bullet points. 

Reminder: This post is not focused on curation rewards. The tilt is towards what authors earn from their posts.

Is One SBD Equal to One USD?  

No. And let the math begin again. The value of one SBD remains close to one US Dollar but doesn't have to be equal or constant. 

To find the current value of one SBD in USD, go to CryptoCurrency Market Capitalizations website and search SBD there. Click SBD and you'll see its current value and other stats. See the image below.  

As you can see, 1 SBD = $1.74 at the moment (and it can change). Now, when you go to your wallet and see the estimated account value in USD, you will understand how the amount was calculated and why it keeps fluctuating.  

Important Information 

Once posted, payouts against a post are finalized within 7 days. After payout, that post earns nothing! So your outreach or marketing efforts must be focused accordingly.

Mystery = Solved  

I've put a lot of effort and brain into this post to solve the mystery of rewards for rge community. If you have any question, do share it in the coIt would be kind of you to support this post through your valuable upvotes and resteems. 

Sort:  

Since the last hardfork the relation between author reward and curation reward is not 75:25, but 80:20. Look at https://steemd.com/ .
The data can be found in the box "streems reward fund".

Thats probably b/c during the first 30 minutes of a post the author/curator reward it different. If you vote as soon as the post comes out then the author gets all of your curation rewards but if you wait until 30 minutes after the post you would get the whole portion based on the weight of your vote. And for example at 15 minutes you would only get half of earned curation. That is my quess to why its 80/20 . If the 30 minute rule didnt apply it would be 75/25 if i understand correctly.

Edit: I didnt see your additional information stating what i wrote above. :)

I would disagree. It is 75:25, and I am updating my post to clear this doubt as well. Thank you.

You can see the evidence in the post as well.

This post received a 3.7% upvote from @randowhale thanks to @steemit.nemesis! For more information, click here!

Good post man, iv read a lot of similar post but i think you nailed it man! thank you..

Welcome and thank you for your appreciation

Just know that I started following you. Thanks

This post was made some time ago, but it's still very relevant and very helpful. Thanks.

Thank you for your feedback.

One thing I'm confused about though.

Default option means you'll get 37.5 SBD (50 % of $75) in your wallet.

So, your payout will be 37.5 SBD, other than the SP. Let's look at SP now.

SP
The other $37.5 will be converted into SP. SP isn't equal in value to SBD so you won't get 37.5 SBD straight away. As per the current price on BlockTrades, 1 SBD = 0.81 SP

We know that the other 50 % (37.5 SBD) will be converted into SP.
Therefore, 37.5 SBD = 37.52 x 0.81 SP = 30.375 SP

This seems to be correct from what I can see.

The current rate is about 1sbd=0.37SP

Now steem to so converts 1/1 doesn't it?

Because if I take 1sbd and sell it on the market it will get me around 3.7 steem, which I can then power up.

So why does the reward calculation take the inverse, and give you the smaller sp, which isn't really worth 50% of the total reward at all?

Calculations are based on SBD's price pegged to $1 but at the moment it is trading over $7 in thr market. For each SBD, we should be getting 3.7 SP as you mentioned. Here's why it is not happening.

  1. Numbe of Steem available in the reward pool daily is fixed and limited. It simply is not possible for Steemit Inc. to reward people with More SP (Steem) due to scarcity.

  2. SBD was designed to stay around $1, which means that $1 worth of Steem was rewarded for every SBD in the payout. However, the price has risen so much but even now, Steemit is rewarding $1 worth of SP for every SBD.

  3. Even if more Steem is given to authors in payouts, there will be a flood of Steem in the market and the heavy inflation will crash Steem's price.

I hope I have answered your question.

Great article and great answer. Because of this, do you think it is better to take the payout at 50-50 so that you get some SBD, then sell the SBD on market, buy STEEM with it (which has been trading for less), then power up the STEEM to get the SP? It seems one might come out much ahead of directly getting SBD valued at $1 when it is trading at about $5 right now. Your thoughts?

And btw, thanks for all your great articles. I'm still reading through them and plan to share a number of them with folks in a crypto beginners group I have. Great stuff and you're very generous with your time as well.

Nice post. Clearly explains it with some nice examples.

Thank you. Please consider resteeming if it's useful.

I resteemed it immediately AND shared it on Facebook to continue my marketing of steemit to my people over there. Thanks for this excellent resource again!

@ilyastarar excellent post, and understand most of it.

I have one question, what happen if you choose 100% instead of 50/50?
Resteemed it as well.

Follow me @Yehey

Following you. I mentioned that in the post. If Power Up 100 % option is selected, all reward is converted to SP and distributed between authors and curator on payout (exactly 7 days after posting date).

Using 100% options , the distribution still the same 75% and 25% but only SP?

Followed you and thank you.
@Yehey

Yeah. That's the split.

Cheers and thank you.

Hi @ilyastarar. I know the posts old but it has been very helpful. I have a question though not fully regarding this post but I think you would be able to assist. Can comments be upvoted by voting bots?

Most bots have a policy of not upvoting comments. It would be risky to send money to bots for comment votes.

Ok thanks for the reply.

Great read with a lot of explanation. I actually started thinking of a few new questions that were then answered later, proof of a great article.
Awesome read, resteeming this to make sure it gets around.
And following, because I look forward to your next post.

Thanks a ton for the appreciation. It means a lot to me. Thank you for the support as well. I've followed you already and hope to stay connected regularly. It's evening here and my next post will be live tonight. It would be a tutorial/guide about writing blog posts.

I'm brand new at the whole blogging thing so I will definitely be staying tuned for your next posts. I always feel that the more the community pulls together the better quality we'll all get.

Hope you checked out my tutorial on how to create blog posts.

I'm going to have to.

Thank you for this, @ilyastarar!
Very helpful!
I just have doubts about one thing: the $ rewards shown under the articles are US Dollars, I believe, not SBD. Could you verify that? If I look at my past payouts I think it's USD.

Update: @connecteconomy I have updated the post and I am thankful to you for pointing that out. Can you please review the post now, after I have updated every subsequent calculation and wording. Thanks for guidind.

👍🏻 Thanks for double checking and updating!

Welcome. A triple check has brought me back to SBD because the rewards are mentioned in fact in terms of SBD. I'll update the post and share an example.

I read your post again and actually we agree. Rewards are shown in USD (under each post) but paid out in SBD/STEEM. Your calculation is correct.

I just got the payout for a post that shows "Author reward $25" and I received 12.587 SBD for it. Which equals $25 USD.

Thanks for getting back and confirming from your personal experience. Finally! ✋
It was a good discussion which lead to more research and ascertained truth so thanks.

I'll have a look at it by verifying one of my payouts according to highlighting this. I'll share an update.

Thank you for bringing this up. The information you provided is accurate. Thanks! I'll update the post.

Hi, I updated the final version. You may want to have a look. I added a separate heading for $ sign SBD vs USD debate to make things clearer.

Thank you so much for the tutorial. I've just signed up to Steemit a week or two ago & I still find it very difficult to learn but with post like yours I am slowly but surely learning. I will most definitely be back to this post in the near future, thanks again!

I hope you be back soon with a calculator to see how much you $762 on that post become in terms of SBD and SP. I'm here for two weeks and loving the learning phase.

I feel like a noob.... $762 post? Now I'm confused.... smh

Possible in 10 days or less if you do things right. If you keep doing good stuff, it will happen soon.

Ohhh ok, I now see where you was going with that... We'll see, I'll be on it...

after one year almost on here I finally get it. Clear and concise. Thank you. Keep posting

Welcome. I'm pleased to read this that I have cleared a year long confusion. It feels good. Thank you!

Holy cow. THANK you for this! I keep watching Andrarchy's videos and reading, but I just can't make what I see happening match what these informational sources tell me. This helped a lot. I hadn't seen this particular video yet, only some others Andrarchy did that were old.

Haha! Thank you! It took me a few days to get the whole thing sorted out. I hope this removes a lot of confusions. Please help it spread by resteeming. Thanks

Already did, right away after reading it.