I've been operating auto-curation bots on Steemit since October 2016, and in the days leading up to HF19, things were looking good. After HF19 hit, payouts appeared to go through the roof for a short time and curation rewards seemed equally promising. Sadly, it was not to continue. I'm not losing money yet, but things are still drifting downward.
What's going on?
A bit of background: when you vote on a post, your voting power, steem power, and slider weight are multiplied together to give a number called your rshares, which are credited towards the post you voted for (the r stands for "reward"). The more rshares a post has, the higher its payout. The whole "linear rewards" thing with HF19 means that when each post pays out, each rshare counts towards a certain number of STEEM in rewards. I'll call this reward_per_rshare.
How reward_per_rshare is calculated
There are two numbers you can look up on steemd.com: they are on the right side, a page or so down, and they are recent_claims and reward_balance. The first, recent_claims, is sort of a running average of the recent rshares that have been redeemed for STEEM [note: strictly, it is not a running average; it's a discounted infinite sum.]. The second, reward_balance, is the amount of STEEM that's sitting in the reward pool waiting to be handed out. There is a steady, constant drip of STEEM into reward_balance, but the amount that comes out changes over time.
When a post pays out, the network chooses how much STEEM to award it by setting reward_per_rshare by the this formula:
reward_per_rshare = reward_balance / recent_claims.
So the more STEEM are in the reward pool, the more gets paid out. Conversely, the more rshares that have been redeemed recently, the less STEEM gets paid out.
reward_per_rshare has been shrinking since HF19.
Basically, HF19 blasted the system with a huge number of rshares. The devs saw this coming and adjusted the recent_claims decay parameters to help soften the blow, but there's only so much you can do. These new rshares came from the voting power increase and the end of the whale-voting-ban (or "the experiment," as many call it). What this means is that recent_claims has been steadily increasing since HF19.
Because of that, reward_balance has been steadily shrinking since the hard fork, and because of that, the reward_per_rshare has been shrinking as well. Here is a plot of all three since HF19 (the third plot is reward_per_rshare):
I got the data from @jesta's delightful steemdb.com website at the funds API.
So looking at that last plot, when HF19 hit, reward_per_rshare was 1.2 (normalizing by 10-11), but today, less than 3 weeks later, it's only about 0.47. So that means if your vote allocated 100 STEEM to a post on June 20, today it only allocates about 39.2.
When will we hit equilibrium?
This could be estimated by someone with more computer patience than me. To do it, you'd have to estimate the rate at which rshares are being allocated, and that would let you know where recent_claims will equilibrate. If someone wants to do this, here's some really basic sloppy math that should get you close if I've properly sketched it on my napkin:
recent_claims_equilibrium = rshares_allocated_per_day * 15.
I don't exactly know if the number is right, but @jesta has this page which has a big number that says "total reward shares." If that number is the exact number of rshares that were redeemed on that day (or allocated on that day?), then that number * 15 is 1.325e16 * 15 = 1.987e17. That means we're very very close to equilibrium on recent_claims, because the current value of recent claims is about 1.833e17.
Someone else will have to work out exactly what that means for the equilibrium point of reward_per_rshare; that number will depend on the rate at which STEEM drips into the reward pool, which I don't have on hand at the moment. Though I'm sure it's not hard to get.
TL;DR
I hadn't meant to make this post so technical, but there you have it. We're not at equilibrium yet; payouts will continue to decrease in the short term, but it looks like we might be getting to equilibrium on recent_claims fairly soon. And that's likely a good thing.
I like technicality of this post! Please, make post like this!
Hi @biophil, thanks for this post. Very helpful for my little noob brain to get to grips a little more with the inner workings of steemit.
What will be the impact of the ever greater number of new accounts being created at the moment? Will that further decrease payouts?
The only thing I can say for sure is almost a tautology, it's so obvious: more accounts means lower average payouts. What happens to payouts of established authors is unclear, and depends on how voting patterns change.
Thanks! I'd like to include this article in the next Math Magazine - hope that's OK. It's just about the right amount of math that people should become comfortable with.
!-=o0o=-!
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Please do!
Definitely a lot of questions and talk going on these days about this topic.
It is pretty technical to most of us of course and we do not understand it all, but I know you, like many others here really know your stuff and do a good job questioning things and then boiling it down for regular folks like me.
Thanks for that.
No problem at all!
Great
Thanks for bringing this up ! I was wondering why and when the reward pool will stop decreasing. It's a bit complex but I still understand it somewhat now.
I’ve been waiting almost 2mo for this info. Thank you!
Great insight to what is happening with the decrease of pending payout. Most of us see the $ counter going down over time, however today is a good day: I actually saw the $ counter going up, or at least I think I saw it going up. Doesn't the Steem value have anything to do with the variations we see in the $ count at our posts and comments? I would think it has an influence and lately Steem lost quite a lot of value on the exchanges and must therefore also be reflected in the internal Steem and SBD prices we show at the posts and comments.
That's true; the Steem price does affect it. So we've had a double reason for decreasing payouts.
Thanks man! :)
Upvoted for the amount of work you put in this post. Very interesting information. Gives me a clearer picture of the system in place.
I just saw more and more people upvoting their own comments and not my posts and comments anymore... but the bigger picture must be what you've described.
Thanks for the efforts. And indeed... hopefully we'll reach equilibrium rather sooner than later.
Uhm , math is not my thing , just wanted to ask you something . How do you make a bot ?
I use Python. There is a good python library for steem; I think it's called steem-python. Googling around a little should get you what you want. I just tinkered with it till it did what I want!
great , thank you .
I have been looking at payout data, the SBD value of payouts still seem to be higher than you would expect based on the daily Steem being created and distributed to authors and curators, but is is trending down to a more appropriate level, combined with the drop in Steem price in the last few weeks the downward trend in payouts and rewards may continue a little longer.
Thanks for the math. Scientific notation and everything! I am unclear on where the * 15 value is from? Maybe I missed something. Is it from your napkin sketch?
The 15 is a constant in the Steem source code. I didn't reference it because I was rushing at that point, but in a little while I may be able to dig it up.
good to know... thanks again
Thanks for sharing your knowledge, Newbies like me need more of this to better understand steemit
Cool to know more about how payouts are calculated as well as that we may be approaching equilibrium. Thanks for the detailed post!
Thank you for this. I couldn't understand why the rewards decreased so much. I knew some of it had to do with the decreasing value of Steen, but that wouldn't explain why the change was so drastic.
Right. Almost none of it was due to the decreasing value of STEEM.
Two weeks ago steemit was all a buzz after HF19. We still are but for different reasons. Thanks for the explanation.
Seems like the only solution is STEEM price go up or else everyone will suffer.
Nice explanation. Thanks.
Thanks for explaining this. There's much conversation about this.
I'm amazed how much work and effort is behind the scene of this platform. On the surface everything looks simple. Post, upvote, comment... But many of us don't realize how complex this system is and how small changes can trigger big things both for worse and good.
I was wondering this exact thing today, this article was perfect timing! I'll be watching the reward pool to see when we finally hit equilibrium. Thanks so much for the info!
Great post, @biophil! I'm really impressed by how easily you were able to present pretty difficult data :) It will be great to see the equilibrium soon, because I don't think the constant reward fall is good for spirits around here.
Great post, thanks for going to the effort of explaining some of this.
Would you then support rolling back to HF 18 or some other change or for you is it just buckling up?
No, I wouldn't support rolling back to HF18. I would easily support rolling back the whale-power moratorium! I believe that's a bigger root of the problem. Also I think we need to establish some kind of consensus on what constitutes abusive self-voting and police that better.
Actually, I'd support suppressing abusive self-voting before reinstating the whale ban.
Then you may be interested in some work I am doing. 🙂
Hi @biophil, I posted some ideas about possible solutions in this article . Para 13 is the most relevant, but would appreciate your thoughts on the whole philosophy.
Interesting. I am not to into the technical stuff especially coding stuff. Yet what u are saying seems to be backed up by my experience and also logic.
Also the big drop in the value of steam is significant in the pay out values. When steam was at $2.15 compared to this morning at 1.13 essentially payout were double just because of that.