2026/Q2 inflation review: After the end of the burn proposal

ok. I got out of the rhythm of writing quarterly inflation posts as a result of proposal 117, which is now completed. But now it's time for a mid-year/Q2 summary, so let's take a look at where things stand.

0. Overview

The blockchain's expected inflation rate for the quarter was somewhere around 5.52%, and the observed rate was 5.82%. As with previous quarters, the elevation above the blockchain's base rate was almost certainly due to SBD conversions.

During the quarter, we expected to see 5.5 million new STEEM and 60K new SBDs. Instead, we saw 5.8 million new STEEM and a decrease of ¹/₂ million SBDS.

Daily STEEM production at this time was projected at about 92,050 in my December post and it's currently at 92,070. Meanwhile, the blockchain's haircut price dropped from $0.1353 on Jan 1 to $0.1197 in early April and $0.1047 today. Now that proposal #117 has ended, the haircut price will likely slow or stop its decline (unless large amounts of SBD burning/conversion take place from some other source).

1. Here's what would be expected for the next few months, based on current values (subject to change from known and unknown factors):

Date	Block #	Inflation Rate	Supply	New Steem Per Day	haircut Supply	haircut Steem Per Day	lower bound supply	lower bound Steem Per Day
2026-07-04 02:29:23.394061	107500000	0.054800	613,198,917	92,063	613,198,921	92,063	551,879,029	82,857
2026-07-12 18:49:23.394061	107750000	0.054700	613,997,873	92,015	613,997,877	92,015	552,598,089	82,814
2026-07-21 11:09:23.394061	108000000	0.054600	614,796,408	91,966	614,796,412	91,966	553,316,771	82,770
2026-07-30 03:29:23.394061	108250000	0.054500	615,594,517	91,917	615,594,522	91,917	554,035,069	82,725
2026-08-07 19:49:23.394061	108500000	0.054400	616,392,197	91,867	616,392,201	91,867	554,752,981	82,680
2026-08-16 12:09:23.394061	108750000	0.054300	617,189,443	91,817	617,189,447	91,817	555,470,502	82,635
2026-08-25 04:29:23.394061	109000000	0.054200	617,986,249	91,766	617,986,254	91,766	556,187,628	82,590
2026-09-02 20:49:23.394061	109250000	0.054100	618,782,613	91,715	618,782,618	91,715	556,904,356	82,543
2026-09-11 13:09:23.394061	109500000	0.054000	619,578,530	91,663	619,578,534	91,663	557,620,681	82,497

Overall, we expect to see the New STEEM per day decline from 92,070 to about 91,663 during the quarter. This is a reduction of 407 STEEM per day, or not quite half a percent.

2. And here's what the full visualizations of expected new STEEM per day look like (also subject to change from known and unknown factors):

As mentioned previously, we've now entered into the fourth phase of Steem inflation where daily STEEM production is expected to decrease at an accelerating rate for the next 11 years or so. We began this inflation curve in 2016 at around 61K STEEM per day and it took almost 10 years to get to 93K. That increase came as a result of the blockchain's inflation rate, the falling price of STEEM, a massive wave of SBD conversions in 2025, and maybe other factors. Even with all that extra padding, this projection puts us back to the 2016 level in about 6 or 7 years. If the price of STEEM climbs above the haircut price, it could happen even faster.

This visual shows the current projection, based upon today's virtual supply number.

3. Here's a forward looking visual with projections for daily new STEEM, expected virtual supply, and the blockchain inflation rate with upper and lower values, depending upon the price of STEEM in comparison to the haircut ratio.

Same numbers as above. Different view.

4. Now, let's take a look backwards

Unfortunately, there seem to be continuing issues with the sources I was using from steemdb.io, so I can't reproduce the PowerBI graphs that I used in the past, but fortunately we have the charts from Google Sheets that were created for proposal #117.

Here is an overview of STEEM and SBD supply, updated daily and recorded in Google Sheets.

4.1 Observed supplies and new STEEM per day

Basically, the right-hand visual shows that the new STEEM per day declined from 92,936 to 92,080 from November until now. It was 92,468 at the end of Q1 - just a little bit lower than the EOY 2025 projection for that date, here.

The left-hand visual shows that STEEM supplies grew gently, more or less as expected. In contrast, instead of growing, the SBD supply dropped sharply during the course of proposal #117.

4.2 And here are details of observed vs. expected inflation before, during, and after proposal #117

The large swings are the inflation spikes from SBD conversions. The SBD conversion activity increased heavily during proposal 117. It remains to be seen whether it settles back down again. My guess is that it probably will, but I've been wrong before.

4.3 New for this report, here's the SBD conversion activity during the first half of the year.

The orange shading on top is when the conversions are initiated, and the blue shading on the bottom is when it completes, so the bottom spikes happen 3.5 days after the top ones. I haven't done the comparison, but the blue spikes on the bottom should line up with the inflation spikes from section 6. It's that STEEM creation activity that actually causes the inflation.

Also worth noting is that the SBD value, in terms of STEEM, increased from 7.4 to 9.6 (almost 30%) during the first half of the year.

5. Cautionary note (repeated from previous posts)

It's important to remember that these projections can all change, depending upon known and unknown factors. Known factors:

1. Burning STEEM and/or SBD can reduce inflation
2. If the STEEM price goes above the SBD print threshold, that will reduce inflation
3. Witnesses can decide to start paying interest on SBDs, which could increase or decrease inflation - depending on the price of STEEM relative to the haircut threshold and on how/if interest payments influence SBD conversion behavior.
4. If the STEEM price goes above the SBD print threshold, additional price movements can either increase or decrease inflation - depending upon direction of change.
5. Missed blocks by witnesses can reduce inflation
6. Witnesses can change any settings they choose in a hard fork, which could have any conceivable result.
7. SBD conversions increase inflation when the price of STEEM is below the haircut threshold.
8. There may be mistakes in these reports or other factors that I'm presently forgetting or not yet aware of.

6. Conclusion

With proposal #117 concluded, we're back into a more regular inflation regime now. The most influential factors that can drive future inflation away from the projections above seem to be: i. SBD conversions, which raise inflation; and ii. if the STEEM price rises above the haircut price and stays there, it will lower the virtual supply, which also lowers inflation (in terms of daily STEEM production, not as a percentage).

Accordingly, it's almost surprising to see how well the December projection held up, despite such a high volume of SBD conversions. In the end, the SBD conversions basically just balanced out all of the STEEM burning that took place.

Thank you for your time and attention!!!