Unlike some of the other cryptocurrencies, like Bitcoin, steem does not have a cap on the amount that there can be. This means that there will be new steem created infinitely but how much is being created everyday?
Steemit’s History
Before I answer the question directly we need to look at the history of steemit, more specifically the history of steemit’s inflation rate. Prior to the 0.16.0 hard fork, which was put into place in December of last year, the inflation rate was 100%. This is a very high inflation rate and actually is what contributed to the steem price drop from over $4 to as low as $0.07. So why aren’t people scared of this happening again? This is because the 0.16.0 hard fork substantially lowered the inflation rate of steem.
Steemit’s New Inflation Rate
As I’ve mentioned the inflation rate was changed with the 0.16.0 hard fork and lowered substantially. This new inflation rate was 9.5% but even this is not a fixed number. The inflation rate started with block 7,000,000 and decreases by 0.01% every time 250,000 blocks are passed. Obviously this has a cap and will not go down all the way to 0 and this cap is 0.95% which will be reached on block 220,750,000. Now 220,750,000 seems like a huge number but it may not actually be as far off as you think.
When Will the Inflation Rate Reach 0.95%?
Block 220,750,000 would seem a long way off if we were talking about another cryptocurrency but steem’s blockchain is much faster. Bitcoin’s blockchain has one block about every 10 minutes, burst’s has one about every 4 minutes but steem is much faster than this. On the steem blockchain, one block happens about every 3 seconds which translates to about 28,800 a day. If we times this by 365.25 to get the amount of blocks per year, plus taking 0.25 as addition for a leap year, then we get 10,512,000 blocks being passed per year, meaning that it will take 21 years for the 0.95% inflation rate to be reached, and we are already 7 months on from that date.
What Does a Decreasing Inflation Rate Mean for the Future of Steemit?
The decreasing inflation rate is actually both beneficial and not depending on who you are. If you are already signed up on steemit and have gathered some steem, then it will be beneficial for you, if you’re not then it will be much less beneficial. This is because a decrease in inflation rate means that steem becomes more scarce to acquire and will inevitably lead to the price of steem rising, which is great if you already have a lot. However, it becomes much harder to get more steem as less will be made, in fact it will be around 10% of what was being created when the hard fork 0.16.0 was first implemented.
The Distribution of Steem
So far I’ve been focusing on the inflation rate of steem which does not directly answer the question of how much steem is created everyday but it does help to explain how steem is distributed to the users, which does tie in to how much is created. Many users don’t know that the amount that can be paid out each day is actually limited because of something known as the reward pool. The reward pool is also another factor that affects the weight of our voting power, as well as the amount of steem power that we have and the current price of steem.
How Much Steem is Put Into the Reward Pool Everyday?
So the question of how much steem is created each day is actually the same as how much is put into the reward pool everyday. Now this does not stay the same as there are variable factors that come into play when calculating how much is added to the reward pool, particularly the inflation rate and the amount of steem that is already existing. There is actually a formula for working this out which I am going to use to work out how much steem had been added to the reward pool today (which is two days before I am posting this on steemit). Shown below is the formula and the meaning of each variable.
new_steem = ( ( virtual_supply * current_inflation_rate ) / ( 10000 * blocks_per_year) ) * content_reward_percent;
new_steem: This is simply the value that we are looking for. Once all the values are placed into the formula this will reveal how much new steem is being added to the reward pool.
virtual_supply: The virtual supply is the amount of total steem, including steem dollars if these are converted back to steem. The virtual supply can be found on https://steemd.com/ and as of writing is 252,997,685.842 .
current_inflation_rate: We’ve spoken a lot about inflation rate already and how this is calculated. As of block 13,398,032 the inflation rate is 9.24% but this does change about every 8-9 days. Take the value of the inflation rate times 100 so you are given 924.
blocks_per_year: This is how many blocks are added to the blockchain every year which I previously calculated as being 10,512,000.
content_reward_percent: When you make a post the payouts are split into 3. 75% goes to the author of the post and the curators, 15% is given to the witnesses, and the last 10% is distributed among holders of steem power, this is why you will see your steem power increase over time once you have locked it away. The content reward percent is the 75% that is distributed amongst the authors and the curators. However, this will only calculate the amount of steem added to the reward pool and not the total created. Use a value of 0.75 to calculate how much is added to the reward pool and a value of 1 to calculate how much steem is created in total.
First I’m going to calculate how much is added into the reward pool each day.
new_steem = ( ( 252,997,685.842 * 9.24 ) / ( 10000 * 10,512,000) ) * 0.75;
new_steem = 1.668 (rounded to 3 decimal places since this is usually what steem works in)
Now 1.668 may seem like a very small amount but this is in fact the amount of steem that is produced with every block, or every 3 seconds. This means that today, 48,038.4 steem has been added to the reward pool in total. Remember that this is not an exact number as the speed of the blockchain can be slightly off and I rounded the price of steem.
How much new steem is created everyday?
So finally we get to calculate how much new steem is created everyday. The answer may not be as straight forward as you first thought since this value is constantly changing; but again I am going to calculate this for the time of writing this post. So the value that we calculated for the reward pool was 48,038.4 which accounts for 75% of the new steem. So to work out the total we need to divide this value by 75 and then times it by 100. This means that today 64,051.2 steem was created; by using the current price of steem which is $1.81 we can calculate that $115,932.67 worth of steem has been created today. Now obviously the answer for this will not be the same from day to day as the virtual supply increases every day and the inflation rate decreases every 8 to 9 days making the answer a little more complicated, and an answer that needs to be calculated.
Hopefully you found this post useful and it gave you a deeper understanding into the workings of steem and steemit, it certainly gave me a deeper understanding by researching it. Any upvotes are greatly appreciated and follow me for more. Also be sure to leave a comment, I try to respond to every comment that I receive and try to answer as best I can.
Very good post, - I have always thought that Steem had a fixed supply, and SBD had infinite supply. It struck me that I had never looked into it. your post made it clear. I think I will try to put your equations into some charts, so it makes more sense..
wow.. great information... thank you for sharing
Thank you for reading
Thanks for the hard work.
No problem
Thank you. You have provided a lot of information. I have saved this post for future reference.
You wrote: "75% goes to the author of the post and the curators"
Do you know or could you give us more detail on the breakdown of payouts to the authors and curators?
I know that 75% of the upvote total goes to them. I just don't completely understand the minute by minute formula of it all. I know that the time involved means something for each minute that goes by.
Thank you again@fatboyjames
Francis
In all honesty I don't know myself but my best guess is that the 75% is split up again into 75% author, 25% curators.
this question is a good indicator that Steemit is just getting more and more complicated on the surface. People start to use Steemit with the promise they can make money. I am worried about the patience of normal people willing to deal with all of that after all
I had no idea about this. Thank you :D
great post ...:)
"75% goes to the author of the post and the curators"
The amount which is displayed under the post: Is it the 75% ( which you still have to share with curators) or is it the total 100%?
I think what you view is the 75% but I'm not entirely sure on that one.
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Great insight and explanation of the inner workings of steem production. Much t hanks!