As you probably know STEEM is an inflationary cryptocurrency. This means that, unlike Bitcoin, STEEM doesn't have a fixed supply. New STEEM is continually being created to reward authors, curators, witnesses and Steem Power holders. In order to calculate how much STEEM is added to the reward pool per day we must first understand how the inflation rate works. So let me explain...
STEEM inflation
When Steem forked to version 0.16.0 in december 2016, an instantaneous 9.5% inflation rate was set at block 7,000,000. It started at 9.5%, but even the inflation rate itself is not fixed. It decreases at a rate of 0.01% every 250,000 blocks. This narrowing contineous until it reaches a floor inflation rate of 0.95%. This happens on block 220,750,000 and I hope we are all still alive by that time. It will take approximately 20.5 years.
Blocks? How does that work?
As you know, STEEM is a blockchain: A chain of blocks. Each block contains data. On the Bitcoin blockchain, for example, each 10 minutes a new block is added to the blockchain. This new block contains the latest Bitcoin transactions. The STEEM blockchain processes all data much faster than Bitcoin does. Instead of a 10 minute 'block time', STEEM has only a 3 second 'block time'. Every 3 seconds a new block is added to the chain which contains everything that happened on the network in that short period of time. Posts, comments, votes, transactions and so on and so forth.
What is the current STEEM inflation rate?
Now that you understand what blocks are, let's calculate the current STEEM inflation. Here is the formula:
current_inflation_rate = (978 - (head_block_number / 250000)) / 100
'head_block_number' is the number of the latest block on the chain. You can find the current value of 'head_block_number' on https://steemd.com. Let's fill in it.
current_inflation_rate = (978 - (13,387,926 / 250,000)) / 100 = 9.24
The current inflation rate is 9.24%. As said, this decreases at a rate of 0.01% every 250,000 blocks (every 8.68 days).
How much STEEM is added to the reward pool per day?
Now that we know the inflation rate we can go back to our main question. Here is the formula to calculate the number of STEEM that is added to the reward pool each time a new block is produced (every 3 seconds):
new_steem = ( ( virtual_supply * current_inflation_rate ) / ( 10000 * BLOCKS_PER_YEAR ) ) * CONTENT_REWARD_PERCENT;
- virtual_supply: The virtual supply is the supply of all STEEM + all SBD if all SBD would be converted to STEEM at the current price. Go to https://steemd.com again to find the current value.
- current_inflation_rate: The value we just calculated.
- BLOCKS_PER_YEAR: A fixed value of 10,512,000. 1 new block every 3 seconds, makes 10,512,000 new blocks annually
- CONTENT_REWARD_PERCENT: 75% goes to authors and curators. 15% goes to witnesses and 10% goes to SP holders.
new_steem = ( ( 252,970,254 * 924 ) / ( 10000 * 10,512,000 ) ) * 0.75 = 1.66769773613 STEEM;
So each time a new block has been produced, 1.668 STEEM is added to the reward pool.
- Every 3 seconds: 1.668 STEEM
- Every minute: 33.354 STEEM
- Every hour: 2,001.237 STEEM
- Every day: 48,029.695 STEEM
Answer to our question:
About 48,029 fresh STEEM will be added to the reward pool today, but because it depends on multiple factors it might be slightly higher or lower tomorrow.
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I have always found your posts very informative and useful.... thanks for your valuable sharings..
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Thank you @penguinpablo, that was very useful information
This is real good data thag I came across and I do hope that on next hard fork things will be even better and all steemit will grow even more.
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I'm confused. If the inflation will decrease from 9.5% to 0.95% and there will be much more users and posts published to that time, people will earn almost nothing, right?
The supply of STEEM grows exponential instead of linear. For example:
Besides, the price of STEEM will be much higher 10 years from now :)
Can one sum this up as: "there's about 24 000 000 new STEEM being produced each year" ?
Thank you @penguinpablo for the information
Out of 48,029 the users with the most SteemPower have the biggest say how those STEEM are distributed - that's why earning and holding on to your STEEM and SteemPower is such a desired thing. Thanks again for sharing your blogs @penguinpablo
Very good, thank you for explaining the numbers behind the scene.
I'd like to include a link to your article in the next math-trail magazine - hope that's OK with you.
recent edition is here: Math-Trail Magazine N.4 - Best Recent Math Content on Steemit
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Click here for Mathematics forum on chainBB
Holy mathmatics batman!! lol... I'm gonna need to read that a couple more times but well done sir. Thank you for explaining this in such a detailed way.
Thanks for the information!
Wow, that's a lot of new Steem added every day. Good for those who are constantly on the trending feed.
That is good information...finally someone spent more then 30 min writing something usefull on steemit. Thanks!
Good article.
Just one thing, Bitcoin is also inflationary - current inflation rate is 3.91% per annum (http://www.bitcoinblockhalf.com/) - and will taper towards 0% in 2020. Bitcoin is called deflationary not because it has negative inflation but because its inflation rate is decreasing (yet positive). Steem's inflation rate is also programmed to decrease over time but (wisely) left to be constant just above zero.
Nobody really knows what the reaction will be to Bitcoin when there is nothing left to mine and the "miners"/processors are funded merely from transaction fees. Maybe that controlled experiment will be over and people will gratefully accept the new centralbankcoin.
Solid point on BTC also being inflationary, albeit decreasing at a very quick pace. The transition process for Bitcoin from mining fees to transactions fees should be gradual and organic, not like simply hitting a junction where a moment of decision is required on the spot... that is if we can survive through the upcoming forks of course ;-)
Im still a bit new here, only been here for exactly 7 days now... what exactly is the reward pool for?
is it something that is evenly divided amongst each steemit user after a certain period?
or is it somthing that is given out to certain people who create a certain amount of content?
thanks in advance for any answer :)
Thanks for your question. I actually should have explained that in my article as well ;)
The reward pool is a virtual pool that contains all STEEM available to be distributed as rewards. To put it short, the more STEEM in the pool, the higher the rewards.
Do please edit your post with this added info. Thank you.
OHHHHHH that makes sense !
and its no worries, your article was excellent, it was just something i was wondering about, thank you very much for the reply :)
Not that I really care how this is calculated, it's still a very good info to have. thanks for sharing.
Wow another wonderful article full of gold! Thank you.
Now one question. After reading your previous article on how the rshare claims work and now seeing how much STEEM is added to the pool, what determines how much of the total available STEEM Pool is actually delivered as rewards per day? Clearly the entire Pool is not emptied on a daily basis so there must be some limit attached to this which allows the pool to be drained without being emptied entirely.
Good question. In short: The reward pool itself.
The reward pool is used to calculate the value (number of rshares) that is added to a post when the post receives an upvote. The lower the reward pool, the lower the number of rshares that is added. So a lower reward pool eventually reduces the rewards being subtracted from the pool itself.
I hope you understand what I mean. It's quite complicated :S
As always, you were bringing us very useful and experienced information. I only have to say: Chapeau!
even a year old a great post!
Great post! Pretty much per day. Could you explain where the money comes from I'm still not sure about that? What I think is that it comes from ppl who buy STEEM and SBD with BTC.
Thanks :)
Your question is explained in the FAQ: https://steemit.com/faq.html#Where_does_the_value_come_from
Thank you!
Very clever maths. Thank you for sharing @penguinpablo. I am learning more and more about Steemit day by day. :)
Great pist. Thank u for the information . Have a nice day
Great info. Deep understanding. Resteemed.
Nice.
So the 10% is why we receive interest? over our SP?
Yes, that's right.
Great that Steem is faster than BTC, but what isn't faster than BTC?.. Not buying anymore BTC until the fees go down, just buying XRP and Steem. But if xrp doesn't do something soon . it will be all steem for me!
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great explanation! it is important that we all understand what is the main purpose of Steemit!
Thank You for that !
@kam.ila
@penguinpablo
Once again you've nailed it with explanation that is hard to be found, especially in a single post :)
Many thanks for this and for SteemNow.com
Cheers
Luci
Thanks for explaining, I am sure this queation has been asked by nearly every newbie.
If I follow all information properly then one day I will definitely a good future.
Thanks for the post. Eventually I have to assume the sheer amount of steem would push the price down, but its actually gone up in the short term, which I was not expecting
Actually, the price shouldn't drop simply because of the inflationary rate. That would assume a static environment. The userbase is growing faster than STEEM can inflate, hence demand for STEEM is also increasing. As a result it'll push the price upwards. Additionally payouts in USD should ideally stabilize to a certain acceptable level forcing the value of STEEM to appreciate to maintain that level as the amount of STEEM payouts declines with the rise of users making claims on it for authoring and curating. All theoretical but it's typically what we see in economies like this.
Thanks for the interesting and informative article. It clarified many things for me!
Ok wow. This was very interesting. I never understood the difference in block chain and how slow Bitcoin was to steem. I'm not saying I grasp all the figures and can't for the life of me understand how you do but wow. That's overwhelming. I'm still trying to understand all of this being a new user but it sure is interesting and very fascinating how all this works. Thanks for the informative post!
Thank you great post.
Good information. Wasn't aware of how low the inflation will be in the end.
Thanks for explaining what is thought to be really complicated and difficult to understand so beautifully. Now I know steemit has a 3 second block and everyone is fighting for the daily rewards pool of 48,029 steem ;)
Pablo, you are The Don.
:)
Thanks for info and Succes!
Thanks for breaking this down. I appreciate the simple and straightforward look!
Nice post. Great info and easy to understand
Thank you so much for explaining this so clearly. I had no idea about any of this.
I m kind of new here and I didn t learn a lot about the Steem distribution ... I m just happy when I get some reward for my posts . In your post you wrote that 10% go to the holders of SP , I already have some Steempower (around 8) and i didn t see any rewards for that so far . So how and when are that 10% distributed ?
It is added to all accounts continuously, but there's no place were you can see those rewards. If you're not a big holder of SP it's a very small amount though.
is it added to Steem , Steemdollar or SteemPower balance ?
To your Steem Power balance.
It's a bit technical to explain. Actually, SP holders are holders of VESTS. Your SP is calculated by multiplying the amount of VESTS by 483.452 (Current value of 'steem_per_mvests' on steemd.com). By slightly increasing this value overtime all VESTS holders see their amount of SP increasing.
thank you , so I think with my low amount of SP I just didn t see the change.
48.000 STEEM created daily.. %10 SP holdings.. 4800 STEEM
so. the question is how much whole SP is there in the system?
If whole system has 100 Milion SP and I have 1 Million SP;
I will get 48 STEEM every day. Isnt it?
To clarify, each day, some of it gets paid out to people simply holding SP?
The reward pool is only used to pay authors and curators. Besides, 10% of the annual inflation will be used as a form of dividend for holders of Steem Power.
In the calculation, you said:
CONTENT_REWARD_PERCENT: 75% goes to authors and curators. 15% goes to witnesses and 10% goes to SP holders.
So does that get directly paid to SP holders, or put back in some sort of pool causing an inflationary effect?
Technically, SP holders are holders of VESTS. Your SP is calculated by multiplying the amount of VESTS by 483.452 (Current value of 'steem_per_mvests' on steemd.com). By slightly increasing this value overtime all VESTS holders see their amount of SP increasing.
Interesting... So steem_per_mvests is what increases, which increases the value of held VESTS... Thakn you so much for your insight!
so how is it that those with higher influence numbers earn more money ? is it only based on how much SP they have? i would like to see how to earn significant money besides finding a whale curation trial to follow me> anyway i don't mind too much about the money as long as my audience grows in time
It is actually the other way around. Users who earn more money are likely to have a higher reputation number and more SP. Having a higher reputation number doesn't automaticly make you earn more money. It depends more on 'building a following' like on other social networks.
thanks for your advice -- i am working on better blogs and hope to attract some higher worth votes, in time i hope to help a few less fortunate and newbies get through this minefield
Thanks for sharing. But if Steem coins are added just like that in pool the price could decrease drastically
Resteemit to share for others to understand how this works! Thank You for sharing this!
Thank you for your good explanation!
@penguinpablo
It takes a little time, but when we follow through with your explanation. It can be understood. In our excitement of Steemit, we blindly have joined without understanding and knowing what all the excitement is about.
Well, I have learned this much. It takes time and work. No exceptions. And that is where the value comes in. Without good content value, it all comes to a screeching halt. My take at least.
And with your good information, which I will study and save your post.
It makes even more sense.
Thank you
Francis
Thanks for taking the time to break this down so thoroughly.
That is amazing...Thank you for explaining that!