What's up Bluffers? I said I'd be back with a few blogs about simplifying some concepts of STEEM didn't I?
One of the many things that newcomers (and perhaps, more experienced users) struggle with is this whole rewards pool thing. Now, I've already covered the basics of the whole rewards pool, upvote and downvote tools elsewhere so I'd suggest reading through that as these "reward distribution" buttons are definitely NOT the same as what you see on Twitter ❤️ or Facebook 👍
This is because there's financial implications of using these upvote and downvote tools and they come in the form of STEEM, SBD, SP, STU, VP... wtf? 🤔
Don't worry, we'll cover all of those in today's guide but before we do, it's time for everyone's favourite part of a crypto related blog, the disclaimer. Cue fanfare please!
Before I begin, I want to emphasise that this is a highly simplified version of what I have learnt from my own research and I'm sharing my learning with you. If you do know this topic inside out, be nice to those who are still learning about this (myself included) and we can grow together.
Furthermore, this is not financial advice and I am not a financial advisor. I am a crypto/STEEM enthusiast and wanted to create a guide to help total beginners understand what this is all about. Please seek financial advice from a qualified professional if you have any doubt about how to spend your money.
So with that said, brace yourselves, you might learn something! Shall we begin?
7 Day Payout Period
Let's start off with the fundamentals of how posting any content on the STEEM platform works. It can be summarised very simply as follows:
- You make a blog or a comment
- Someone upvotes your blog or comment
- 7 days later you will get a payout for that blog or comment
OK, a very simplified version but let's roll with it for now. So what's going on? Why 7 days? (🎵 Monday... took her for a drink on Tuesdayyy... 🎵 Gotta get a bit of Craig David in)
One of the initial concepts of STEEM was built around a phenomenon known as "Internet Virality" or "going viral", where content that's posted is most likely to get a lot of views, responses or interactions or "hits" in it's first couple of days before fading away and out of the lime light.
This is pretty common.
So 7 days seems like a decent amount of time to give freshly posted content a chance to go viral and get voted on by a lot of people, which may in turn end up on the trending page, before the late comers see it a few days later. All the while, upvotes or downvotes are given depending on how the value of that post is perceived by individual accounts in the community.
That's kinda how the STEEM platform works at a very high level but what about all these other things associated with it? There's tokens left, right and centre and it can be daunting, confusing and I dare say, a little overwhelming as to what is what. Let's have a little look at these tokens.
STEEM is pretty much the primary token associated with the STEEM platform/blockchain - it is what posts get rewarded in at the end of the 7 day payout period. In other words, it's the currency of the blockchain. What you do with the STEEM you have is of course up to you BUT these are some of the things you can do:
- Keep it in your wallet so you can transfer it at any given moment (also called Liquid STEEM as it has more movement capability like liquid)
- Put it in to your wallet Savings Account for a bit of safe keeping (there's a 3 day waiting period before you can get it back out again)
- Send it to an exchange and convert it to a different currency (please do your own research on doing this to make sure you don't send it to the wrong place and lose it!)
- Send it to another STEEM account
- Power it up to STEEM Power (SP)
STEEM Power (SP)
"Wait, what? The hell is STEEM Power?!" Here's a clue - STEEM Power is a little more advanced than our "choo choo trains" OK? (Steam power... steem power... Gosh, I really crack myself up sometimes) 🚋
You see, another cool feature of this platform is the ability to use the liquid STEEM you have and give your account a little bit of muscle by "powering up" or "staking". What this means is that after "powering up", the liquid STEEM is now a lot more solid and won't go anywhere for a long time as it's now secured in your account 💪
"Why would I want to "Power Up"?"
There are many reasons why one would power up their liquid STEEM but here are the most common:
It keeps all of your previously liquid STEEM safe as if the worst case happens and your account gets hacked and the perpetrator tries to steal your powered up STEEM, it will take them 13 weeks to do that. I'd like to think you'd notice after a day or two that your account had been sabotaged but if you're on holiday, away, offline etc, then there's still time to cancel the "Power Down" and reach out to Account Recovery.
Having your liquid STEEM locked up as STEEM Power (SP) (also known as "vesting") is a good way to keep yourself invested in the growth and success of the platform. Seeing as it takes 13 weeks to fully power down (convert your STEEM Power back in to liquid STEEM in 13 weekly installments), you're also making the token that little bit harder to get. For example, if you have 100SP that's 100 less STEEM available on the market, working on the whole "scarcity" philosophy - nice!
Voting On Things 🔼🔽
Due to the way this platform works, a lot of vested STEEM (SP) means you have a bigger say when you upvote or downvote things such as witnesses, project proposals and content.
There are hundreds of witnesses who are responsible for maintaining the STEEM blockchain, ensuring things are running smoothly and every post, comment and interaction are accounted for. However, it's the top 20 witnesses (and one other back-up witness outside the top 20) that have a say in the future direction of the platform but only if they have received enough votes based on the amount of SP those accounts that voted have.
Same goes for project proposals where someone may want to have sponsorship to help fund a project but they need lots of votes from accounts with SP... you can be the difference.
And of course, there's content like posts and comments that can be voted on where an account with higher SP would have a bigger say over the rewards that are distributed to it. In other words, the more SP you have, the more reward you can distribute to a piece of content by voting on it. Plus, you will get some reward back by upvoting due to the way the system works in something called "curation" but we will look in to that another time.
STEEM Token Units (STU)
Whilst we are on the topic of voting things, we may as well mention what STUs are because it seems it has caused a headache with a few Steemians as there's "yet another acronym" to decipher. So let's try and decipher it - I may be wrong on this but this is my understanding of STU.
When you cast your vote with your account, you are effectively saying "At the end of the 7 day period, I want x amount of STEEM to be given to the author of this post based on my current SP".
But before that 7 day period is up, the post rewards are in this kind of limbo stage where there's still time for the rest of the community to cast their own vote on it with their accounts with varying amounts of SP. Some may agree with the pending rewards, some may disagree and use their votes accordingly.
STUs are the signal you've sent to the STEEM blockchain when you cast your vote about where you'd like STEEM rewards to be allocated at the end of the 7 day post period based on your SP.
Easy? Thought so...😀
Voting Power (VP)
Now if powering up lots of STEEM to make your votes have more value to support others has made you feel the urge to upvote everything in sight, you might want to consider this aspect of your account called Voting Power (VP).
Think of VP like an energy meter. If you vote on something, it will drain the energy of your meter every time you vote. For simplicity's sake, let's say that you're upvoting everything you like at 100% because you love everything you're reading and can't contain your enthusiasm.
What this will do is drain the energy of your voting meter by 2% of the total amount that's in there until the energy meter (VP) goes down to 0%. Not only does a decreasing VP reduce the value of your vote but if your VP does go to 0%, you won't be able to vote on anything... which is very sad.
If I remember correctly, having over 500SP allows you to vary the amount you want to upvote something from between 0.01%-100%, which will better enable you to control your VP. If you have less then 500SP, just be aware that you're voting at 100% every time but you'd have to seriously be voting yourself into a repetitive strain injury to drain Voting Power down to 0%!
The good news though? Your Voting Power recharges at a rate of 20% per day (assuming you don't vote anything in that time frame) so in 5 days, you'll be back to full power! Now doesn't that sound cool?! 😃
STEEM Backed Dollar (SBD)
We've not really seen SBD so much these days on post rewards, which is mainly due to the price of STEEM being below a certain threshold - by my estimate, the threshold is about $0.20 per STEEM. SBD is designed to be a "liquid, stable coin" with a value that is pegged to $1 USD so that there's at least some stability with this token's value on the STEEM blockchain. However, as STEEM prices drop below the $0.20 threshold, the ratio between SBD and STEEM becomes greater than 5:1 and so, SBD is no longer created in order to maintain it's $1 pegged value.
Obviously there's a lot more going on and if you're interested in diving in to the nitty gritty details then @tcpolymath did a pretty useful post explaining it all here. Effectively, all it means is that STEEM is paid out instead of SBD when the price of STEEM drops below $0.20.
You can exchange SBD for STEEM on the internal STEEM market, which takes 3.5 days to convert and then do as you want with it. Or you can keep SBD in your wallet, send it, whatever takes your fancy. It's rather like STEEM in that sense, except you can't power up SBD.
If you have made it through this far then my goodness, are you feeling OK you poor things? 🤣
To be honest, it was good to refresh my head about these base tokens that run on the STEEM blockchain but with changes on the horizon such as SMTs and all the Steem-Engine tokens already going on, there's no shortage of ways to earn... And probably no shortage of confusion either as we are at the forefront of Web 3.0 and tokenising the internet.
There's a bit more fun and games to be had yet!
Oh, just so you know, I don't work for Steem and I am definitely not in with "the cool kids". I'm just a guy who makes Drum & Bass music, writes travel blogs and these Bluffer's Guides from time to time, trying to make STEEM as prosperous as it can be for every one so we can all win.
Now, back to the music studio 😉
For those what wanted to see the body of work behind the Bluffer's Guide, these are most of the posts I did (some of the platforms I reviewed in Chapter 7 have since collapsed, under delivered or lost their way). Enjoy 😃
The history and technology of Bitcoin
2.1 How and why did Bitcoin come in to existence?
2.2 How does Bitcoin & blockchain actually work (Part 1)?
2.3 How does Bitcoin & Blockchain actually work (Part 2)?
8.1 The Rewards Pool, Upvotes & Downvotes
8.2 STEEM, SBD, STU, VP, SBD...WTF? (you are here)
Concluding Thoughts (never getting here)