RE: The Price of Steem Will Always Go Down... It's Supposed To : The Magic of Steem Power

[xeldal]

Not exactly. The rewards are based on the market-cap and because there are constantly new Steem created each day, the market-cap can remain the same while the price is falling.

Comments

[snowflake]

If the price goes down the market cap goes down too, the 2 are inextricably linked, the fact that there are new steem doesn't change that, it would if the number of steem was actually decreasing but that's not the case for any currency.
The pool where rewards are being sent from is a constant number of steem, this number stay the same regardless of price so if price goes down people will be rewarded less $ but the same umber of steem hence the demand for steem will have to increase to sustain the payouts.

[xeldal]

Each and every year 10% of the market capitalization of Steem is distributed
to users submitting, voting on, and discussing content.

Here's an example:
supply_of_steem x price_per_steem = market_cap
1st year: 100,000 x 1.0 = 100,000
2nd year: 200,000 x 0.5 = 100,000
In both cases 10% of new steem are payed as rewards. the $$ market-cap is the same, the $$ rewards are the same, and yet the price is 50% lower, because the supply has doubled. The amount of steem paid out in rewards is always increasing.

the nominal rate will rise from 800 STEEM per minute to the (time-varying,
supply-dependent) value needed to maintain a constant annualized growth rate of 10% for
the Contribution Incentives, and a constant annualized growth rate of 100% for the
combined effect of the Contribution Incentives and the Power Incentives. The overall effect
is a doubling of the STEEM supply each year

Quotes: White Paper

[xeldal]

Like we've seen in the last couple weeks, the market-cap goes down, and so too the $$ rewards.

[snowflake]

What if the price drops much more rapidly than the creation of new steem?