Vault Dividends: Clarification and Conclusion

in steem •  27 days ago  (edited)

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It's been 3 days since I've powered up to 23k exactly.

I've made 4 Steem that can't be downvoted in that time.
Cool beans.

(days/year) * interest rate * 23000 = 4
(3/365) * x * 23000 = 4
x = 0.02116

So Steemit Inc. says the interest rate should be about 2.19%.

The number I've calculated (2.12%) is very close to that considering how liberal I'm being with the numbers. Truth be told I don't understand why it's that's high. 15% of Steem's inflation is supposed to go into this, and Steem has less than 10% inflation, so I would expect the APR to be less than 1.5%.

Oh... never mind.

Okay so I'm assuming that 100% of all coins are powered up. The less people power up coins, the higher our vote power is and the higher our dividend APR is. Liquid coins still generate inflation that are then controlled by users who hold non-liquid coins (and witnesses). Therefore, because only 62% of Steem is actually powered up, we get a bit of a bonus there. This is where the variability comes into play.

The higher our dividend APR...

This is why my idea is such a good one. Say we transfer that 15% inflation to the bank accounts, how much would the APR be then? Instead of calculating the interest using the 62% of all Steem powered up, we'd be using the percentage of coins being stored in the bank account. This number would be a lot lot lower.

Speculation

Say there were only 10 million coins stored in the bank accounts. That would be 3% our total supply in these accounts. Assuming Steem's inflation rate was something like 8% we could legitimately make the claim that our APR was much much higher.

0.15 * 0.08 / 0.03 = 40%

See that? If only 10 million coins were stored in the bank accounts after implementing this solution we'd be offering 40% passive APR. That's insane.

And also not sustainable.

Obviously, if the APR was this high many more people would be motivated to transfer funds to the bank accounts, diluting the APR rate. However, even if there were 40 million coins transferred to these accounts we'd still be able to say we were providing a 10% return, which is still pretty damn amazing. It's a marketing dream, truly. We can 'magically' turn that 2% into a much higher number.

What happens if those 40 million coins were taken directly out of our powered up supply? All of a sudden, everyone who still has powered up coins has a lot more vests per coin. Our upvote power would go up without the price of Steem going up. Pretty bad ass. On paper, it looks like everyone wins, even if there are some drawbacks behind the scenes. (like no longer getting the APR for powering up)


However, I hardly think that matters... because people don't really notice the APR as it stands now. They sure as hell would if they were getting a 10% return instead of 2%.

I don't give two shits about those 4 coins I just generated passively. Do you? I'd much rather have that inflation allocated to the bank accounts where they belong to increase the total value of the platform using a model that normal folks understand: bank accounts that pay dividends.


What happens if that 40 million got taken out of the liquid supply instead of the powered up supply? Well, that would be even better, because as @penguinpablo reports on a weekly basis, there are currently only 95 million coins on the exchanges. This reduction in supply of Steem would greatly increase the base value of all coins, which is far more important than our measly inflation rates and dividend payouts.


We all know that Steem can go x100. It's literally already happened. Mechanics like this will make it happen again.


Obviously what would happen in reality would be a combination of the two. Liquid coins would be transferred to the bank accounts, and powered up coins would be powered down and transferred to the bank accounts. I have no idea what those percentages would look like, but I imagine a lot of liquid coins would get locked into the bank, because the commitment is 3 days vs 13 weeks. This is the main reason why someone wouldn't want to power up in the first place.


In addition, some users just prefer passive income.

It's passive. It's easy. People understand it. It fits in perfectly with the current UX. We need to be thinking about what the average person wants sometimes, not what all us fringe people are used to. Simplification is king.


Very fun but impossible speculation.

Let's say 104 million coins gets powered down and then pumped into the bank accounts using this incentive. We'd still be offering around 5% APR on the bank accounts, yet everyone's upvote would be straight up doubled in value.

Think this speculation is actually ridiculous? Because it's totally not. If 50 million of those coins instead came from powerups and 50 million coins came from the liquid supply, our upvotes would likely more than double due to the USD value of Steem going up.

dumb money.jpg

Conclusion

Steem bank accounts have already been implemented (since inception) and we are foolishly allocating our interest rates to people who are powering up rather than people who want passive dividends. It's hard to fathom why no one is talking about this issue. I find it very frustrating.

Everyone understands that a bank account should have dividends, and Steem can prove that we can offer a deal that is magnitudes greater than any conventional bank. In the face of negative interest rates, the time to fix this problem is now.

I can all but guarantee that this diversion of inflation would be good for literally every single person on the platform. The likelihood that it creates a scenario where more money is allocated to the bank accounts than there should be is very very high. Users will pay a premium for the convenience of passive income, and all we have to do is take away a measly 2% APR from active community members, while simultaneously increasing the overall value of the platform by much more than that.

This is a no-brainer.

I will die on this hill.

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Truth be told I don't understand why it's that's high. 15% of Steem's inflation is supposed to go into this, and Steem has less than 10% inflation, so I would expect the APR to be less than 1.5%.

Yeah, this is far from obvious. Took me a long time to noodle it but it did eventually make sense:
https://www.palnet.io/steemleo/@preparedwombat/3vs4h1-the-steem-power-you-earn-for-holding-steem-power-revised

Make a proposal!
Tell all them witnesses!

Looking at the upcoming negative interest rates. This is one of our chances!
We'd be fools not to use it!

It will not only give all those circle jerks an option to invest and generate roi without leeching off the reward pool (cuz in the 50/50 hf circle jerks werent addressed), but also incentivises outside investors or even normal people, due to the upcoming worldwide negative interest rates, to invest.

Meanwhile we're going to change the powerdown from 13 weeks to 4.

We need to make up our mind whether we want (or are expecting) people to lock their crypto up, or whether we want to let them remain liquid.

No point fighting against the tide if it's going against you.....

This idea is totally in sync with the idea that we need more stake-lock options that allow users to take advantage of the platform without over-committing. Not sure why youre claiming the opposite.

I'm not claiming anything. I'm just pointing out that there is a change very likely to happen that is related and then hinting that we should figure out holistically what we're really trying to achieve before pushing through multiple (related) changes.

very likely to happen

Why do you think so?
It's essentially Steemit Inc's decision. No one else has the expertise to push a hard-fork and have it approved by the witnesses.


It's a very inconsequential change IMO. It still takes a week to get a chunk of coins. They are making that chunk much bigger? Shouldn't matter to a lot of stake holders. Often the 1/13th of the total coins is more than they wanted to take out in the first place. The slow payout promotes making more informed decisions not based on tilted in-the-moment FUD/FOMO plays.

Why do you think so?

It is currently the top voted Worker Proposal that you can see on the list HERE

I was of the impression that the proposal system and steem.dao was intended to decentralise the development dependency away from steemit. From memory I also thought the last HF had significant development resources provided from the Build Team rather than steemit.

I admit, I may be wrong on this and up until recently the only ones with expertise to push a HF through is steemit but I didn't think this was the way the blockchain was heading.

I would love to see sp inflation go to 0% - we can still make bank from crearive Author and curation rewards.

Then I would like to see the steem bank get it or some portion of it.

The idea would be to have the sp to steem powerdown stay at 13 weeks and then given people the inflation who want more liquidity ~ bank withdrawl time can be set from 1 day to whatever (or keep at 3 days), but interest starts from midnight utc and is paid once a day at 235959utc.

Its basically exactly what you describe....
I think it is a good compromise instead of that top '
proposal' right now. Which seeks to turn steempower into a short term investmemt and seems to favor scammers, account resetting, people reaping quick rewards, etc.

Good thinking.
!BEER

Good luck getting it past the not my idea crowd.

touche

Damn
I don’t know where you find out these things and shape them into this essay, but it’s very convincing!
You have my vote.

I love to have the actual 2%.

Posted using Partiko Android

You forgot to say that you don't want the 10%,
and all the other gains that come with it.

Two parts to this story.

It should be two parts of the story.
Cuz I think only circle jerks wanna change the power-down time from 13 to 4 weeks, which is now being pushed..

If it was two parts, we wouldnt need to change that. Right the opposite, it incentivites more to build up a stake.. which then makes the 13 weeks better again, cuz it makes the whole ecosystem more secure against price manipulation.

Circle jerks are a big problem here, only a game of power and influence.

Yea. But you could fix it easily if the devs spend some time learning game theory. :)

@tipu curate

  ·  27 days ago Reveal Comment


Hey @edicted, here is a little bit of BEER from @freebornangel for you. Enjoy it!

Well, most of these are technical stuff I don't understand. But I believe earning from Author and Curation rewards is better than earning by the interest rate.

Hmmmm
So by looking at your dividend and knowIng the official dividend rate you can calculate the dividend reward per 1000 SP which is the earnings return on our investment?’

How do you know when your rewarded a dividend? Does the Steem come from the Dteem Inc wallet?

If not all the Steem is powered up, that increases our actual dividend?

So the dividends come from the inflation pool in proportion to how much Steem you have Powered up?

So could you use the actual dividend percent versus the stated dividend percent to reverse calculate the total amount of Steem powered up Yes?!

Hmmm
Just playing with proportions
2.9% is to 23k Steem
What 2.5% is to total powered up Steem

So Steem held by others on exchanges increases my dividend right?

Thanks

Make a proposal man, that's the only way majority will be able to see it and discuss it as well..It's an awesome initiative as far as I'm concerned