I’m sure most on this platform are aware that a significant change to the reward structure will come into effect very shortly (in a few hours!). I wanted to describe how one of the changes under HF 19 is likely to affect reward distribution, both for whales and minnows using a very simple example.
The change I want to explore is the move to linear from a quadratic payout formula. For those who don’t know what I am referring to the current reward structure allocates the total reward fund in proportion to the quantity of Vshares that is allocated to their upvote. The number of Vshares is directly related to the number of RShares (which is based on voter’s Steem Power effectively). The existing relationship between Vshares and Rshares is:
Vshares = Rshares × Rshares (or Rshares squared)
So if your upvote accounts for 10 Rshares, your corresponding Vshares will be 100.
In a few hours, this relationship will change significantly such that Vshares will equal Rshares i.e.
Vhares = Rshares
So what does this mean for the distribution of rewards. Will minnows get more or less of the reward bucket post HF 19? This depends on a lot of factors but assuming the voting behaviour of whales and minnows remains unchanged (which is the million dollar question right now) it would seem the rewards will shift more towards minnows. But will the shift be significant or immaterial?
Let’s have a look at this using a very simplistic Steemit world. So, for illustration purposes, I am going to analyse the reward distribution over a single day and make a number of very simplistic assumptions:
- Imagine Steemit has only 10 users - 9 minnows and a single whale. The 9 minnows each hold 2% of the voting power and the Whale holds the rest – 82%.
- There are only 2 posts in the day I’m analysing
- Each post received 5 upvotes but only one post receives an upvote from the whale
- The Total Author Reward fund is $100
- The payout window is 1 day
- Each account only votes once i.e. 10 votes in the day
- The Rshare pool for the day is 100 units
The results are shown below:
The first table shows the allocation of rshares, vshares and the rewards across the 10 votes both PRE and POST-Hard Fork 19.
The second table shows the allocation of the rewards across the 2 posts both PRE and POST-Hard Fork 19.
The two pie charts just depict the allocation of rewards across the two posts pre and post hard fork 19.
So, what does all of this tell us?
From this very simplistic scenario, the rewards for posts voted for exclusively by minnows will get relatively more of the reward pot than before. I think we all knew this but I’m more interested in the materiality of the change which will depend on many factors such as how voting behaviour changes across minnows and whales.
My personal feeling is that, all else being equal, the change will result in a bigger shift in the reward distribution than a lot of people seem to think.
All will be revealed shortly.
Thank you for reading.
Thank you!
So curious to see what those first few 100% posts will do now. Would be nice to finally see the post you vote on actually change in value!! Much more motivating to people just starting out on Steemit! Have fun out there and good luck with your future posts!
No doubt this is the best analysis I've come across for HF19. Thanks!
i Agree!
It will be interesting to see this play out and how the payouts for the top posts change. Some are getting huge payouts and the rewards seem to be driven by whale voting.
You explained it marvelously
Thank you
Thanks for analysis dude :) lets wait and see what happens over the next couple of days ;)
Wow.
A lot of time went into that post, thanks so much for making HF 19 easier to understand.
Upvoted and resteemed.
Thanks, I finally understand what's happening. At least to some degree...
I'm still learning everyday here. Thank you for detailed information though I'm still confuse. I will catch up.
Please follow me @Yehey
Very good explanation, thank you!
Wow it's much easier to understand once you have broken it down into small numbers. After reading your analysis I can't wait for the HF19 to pull through, I believe these are going to be good changes.
Very helpful post, thanks!
Good explanation @bitgeek!! Thank you!!
Thanks mate for HF19 update
Great content
Thanks for sharing
well explained ,having a better understanding now.
RESTEEMED
This is a very useful article, thanks. As a beginning, but ambitious minnow, this may help me in my early days on the platform! Cheers.
wow you discuss very clearly
This is very good news, whales shouldn't miss much, and the little fish can grow faster.
Life is Good in the steemit sea 😁
Thanks for this explanation, from a newbie of steem, that has a lot to learn more about this platform.
It's going to be very interesting to see this play out
Thank you for this great analysis! There are lots of people talking about this stuff recently, but I didn't understand how it exactly works together. Now I know :)
RESTEEMED! THANKS !
an absolutely brilliant explanation of HF19, it made total sense, thank you :-)
I understand this. thanks for sharing
Great analysis - thanks for sharing.
So, did they already released it?
By the way, I really loved your analysis so much that I've included a link in my post about Fork 19. Mine is analyzing the expected change in the quality of the content.
Great post so all can understand. ☺
Very useful post. Thanks for sharing. The best time to be a minnow is now. :D
Loved this post, thank you for explaining this so clearly. It was very easy to understand.
What changes does everyone here think will occur in the voting behaviour?
Very Helpful and well put together. You made it easy for me. Thank you!
Have a great day and Cross your fingers Toes!
Excellent post! Thanks for keeping it simple and easy to understand.
I heard this HF19 being mentioned but i never really knew what it was about until i run into your post, so thanks for throwing some light on this issue.
great article. how do you figure out what your Vshares and Rshares are?
Thanks for the explaination. I'm excited to see how this turns out... I think it could be a huge motivation for more minnows to contribute more to the community.
I'm worried that minnows will keep stacking votes on the trending whale posts and all if the rewards continue to go to that 1%
Thank you for the information!
Great statistical information also graphs.
This post has been ranked within the top 25 most undervalued posts in the second half of Jun 20. We estimate that this post is undervalued by $167.01 as compared to a scenario in which every voter had an equal say.
See the full rankings and details in The Daily Tribune: Jun 20 - Part II. You can also read about some of our methodology, data analysis and technical details in our initial post.
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Wow. You made understanding this HF19 easier. The charts! Hats off to you. Thanks for the post.