Crypto Academy Season 4 | Advanced course - Week 7: Steem Blockchain: STU, Reputation, Author/Curator Ratio, etc

Background

From 2020 to date, ever since the start of the bull cycle in the broader crypto market, we have seen so many positive transformations. But it has its effect and ramifications on the demand/supply dynamic of STEEM. One of the major points to be considered-- SBD is producing more than 11 STEEM per SBD, but it is defined as pegged currency at the Blockchain level(1 SBD= 1 USD)

While higher SBD makes it lucrative for the users, it also attracts more authors to join the Steem ecosystem; it has its downsides in the context of "a greater percentage of the Reward Pool is being generated as liquid supply."

Reputation is another metric of Steem Blockchain to gauge the trustworthiness of a user in terms of Content, Engagement, and Activities. Any reputation earned must fulfill the objective of Proof-of-Brain. It should not turn into Power-of-Bot just for short-term gain; otherwise, PoB diminishes, and the trending page also loses its face value. Being a social platform, the Trending Page should mirror PoB and reflect a healthy state of the social affairs in Steem Blockchain.

Keeping these contemporary issues in mind, having a course/topic covering the subjects: Post Payout, Reputation is timely. Different rewards that we generate from a post payout in Steem Blockchain, Reputation, and how does the Reputation work, How does the recent rise of SBD has shifted the dynamics of supply(STEEM) and how it has also favored more to an author(than a curator), etc. will take center stage of today's session.

Post Payout: STU: SP, SBD, etc

First off, STU is not a generic term for the protocol layer in Steem Blockchain. However, it has been coined by a few developers to describe the post payout in Steem.

The post payout in Steem is neither in USD(despite having a $ symbol in the post-payout) nor in SBD. It's a combination of both, and based on that, the break-up of the rewards in terms of SP, SBD, STEEM follows. That is the reason why the developers call it STEEM TOKEN UNIT( aka STU).

PoB is always a task-based reward-- creating content, curating content; the post payout in Steem matures at seven days; then the Reward is available to claim for both authors and curators. The reward split is 50%/50% between the authors and curators. In other words, 50% of the post payout goes to the Author, and the remaining 50% goes to the Curator(s).

Author Reward:-

There are three types of Reward settings:-

• 50% SBD/50% SP
• 100% Power Up
• Decline Payout

The default setting is 50% SBD/50% SP.

In 50% SBD/50% SP, the rewards can be SBD+SP or SBD+STEEM+SP subject to the Debt ratio.

In 100% Power Up, the Reward is always in SP.

Decline Payout means the Author refuses to take any reward from the pool.

Curator Reward

The curator reward is always in SP, which means the curators will receive up to 50% of the post payout as curator reward, which will be distributed among the curators.

STU- Breaking it down to SBD, STEEM

Both Author and Curators are the beneficiaries of a post-payout(or STU). So let's break it down into SBD, SP, etc.

Assuming the Author has chosen 50%SBD/50%SP setting, the Author is entitled to 50% of STU as author reward in SBD+SP. (Assuming the SBD print rate is 100% or the debt ratio is below 10%)

Similarly, the curators are entitled to 50% of the STU, receiving in SP only.

Author Reward
The author reward is further split into 50/50-- 50% in SBD and 50% in SP.

Please note that the first half(50% of the author reward or 25% of the STU) has nothing to do with the USD, that is, straightaway SBD denomination, the second half is USD worth of STEEM expressed as SP.

Curator Reward

50% of the post-payout(or STU) is given to the Curator. And it is USD worth of STEEM, expressed as SP.

Example,

Refer to this POST:-

Post payout: $99.2
Author Payout: $49.69
Curator Payout: $49.51

Now let's calculate how much SBD and SP the author has generated from the author payout and how much SP curators have generated from the Curator Payout.

SBD print rate is 100%. You can always check it from the Global parameters of Steem Blockchain using Steemdb.io.

Since the SBD print rate is 100%, the Reward split in the case of Author Payout will be SBD+SP.

Author Payout: $49.69

The Author directly gets 50% of the Author payout as SBD, so SBD= 49.69/2= 24.845

The remaining 50% of the Author Payout is USD worth of STEEM expressed as SP, 50% of 49.69= 24.845 USD. The feed price of STEEM at the time of Payout is considered, and accordingly, the Payout is given as SP.

The feed price at the time of Payout was 0.625, so SP= 24.845/0.625= 39.75 SP.

To check the feed price, visit-- https://steemscan.com/witnesses

Curator Payout: $49.51

This figure is in USD, and again the feed price of STEEM is taken into account to calculate the SP payout for the Curator(s).

Curator Payout in SP= 49.51/0.625= 79.216 SP

Observation:-
(1) Steem Blockchain defines the reward split between Author and Curator as 50/50. For Steem Blockchain, 1 SBD= 1 USD. In the external market, the price of SBD may be different, maybe more or less than 1 USD.

(2) The monetary value in USD equivalent generated by the post payout in this Example:-

If 1 SBD= 1 USD, then the 50/50 reward split holds good between Author and Curator (s). But if SBD breaks the peg and trades significantly above 1 USD, the post-payout favors an Author than a curator, and the 50/50 split also gets changed in reality, in terms of USD equivalent.

In this Example, a $99.2 payout yields a total value of 222.858 USD(81.82%) for the Author and 49.51 USD(18.18%) for the Curator (s). So the Reward split monetarily is no more 50/50 in this case, rather 81.82%:18.18%.

(3) If the SBD breaks the peg of 1SBD=1 USD and trades higher than 1 USD, the Author with a setting of "50%SBD/50%SP" generates more. If the SBD breaks the peg of 1SBD= 1USD and trades less than 1 USD, the Author with a "100% Power up" setting generates more.

(4) With the current price of SBD trading more than 7 USD per SBD, the Author is generating a much better Reward than a curator in terms of USD equivalent. The tangible share is no more 50:50, rather more than 80:20 between Author and Curator(s).

(5) As per the Blockchain protocol, PoB constitutes 65% of the Reward pool, of which 50% goes to the Author(s) and the remaining 50% goes to the Curator(s). If all the Authors chose "50%SBD/50%SP" reward setting, only 25% of the PoB reward pool would be generated as liquid rewards, and the rest will be distributed as staked Rewards.

But if we consider the given Example (the real one) in which the post payout is $99.2 and with SBD price as 7.77 USD per SBD, the liquid Reward (SBD) that has been generated is 24.845 SBD or 198.015 USD, the USD equivalent of the total post payout is 272.368.

The percentage of liquid reward= 1(198.015/272.368) * 100= 72.70%

That's huge; the Blockchain defines that 25% of the PoB reward pool should be distributed as liquid rewards. But, due to SBD breaking out of the pegged value and staying higher at 7.77 USD per SBD, the dynamics have completely changed, and now more than 70% of each post payout is being generated as liquid Reward.

Therefore, it's indirectly contributing to an unprecedented supply. An initiative like #club5050(by Steemit) in which the authors are encouraged to power up 50% of the liquid Reward could help check this trend, and if more users power up their liquid Reward, it will start correcting from 70% towards 25% again. That will ultimately adjust the demand/supply dynamic in favor of STEEM.

Reputaion

Reputation means "trustworthiness" of a user in Steem Blockchain in terms of his activities in the context of Proof-of-Brain. But it sounds good only when the Reputation is earned organically.

The Reputation is a net aggregate of upvotes and downvotes a user has received. Further, it is also proportional to "the size of SP" & "Voting weight" behind each Upvote or Downvote.

You find two buttons in every Post when you exercise the stake-weighted influence power(aka SP): Upvote & Downvote.

Upvote- If you hit the upvote button, it will distribute the Reward, and a certain amount will appear in the post payout subject to the stake weight(SP) and voting weight. So the Reward will flow from the reward pool to the Post being upvoted.

Downvote- If you hit the downvote button, the Reward will go back to the pool; how much Reward from the post payout will go back to the bool depends upon the influence power of the downvoter(stake weight(SP) & voting weight).

Upvote not just earns Rewards for you but also Reputation. With each Upvote you will earn reward+reputation.

Similarly, Downvote removes the Reward (subject to SP size) and also degrades your Reputation.

However, there are certain limitations:-

• The Upvote from a user with a reputation lower than the recipient will generate Reward (subject to SP size & voting weight) and upgrades the Reputation.

• The Downvote from a user with a reputation lower than the recipient will remove the Reward (subject to SP size & voting weight) but won't affect the Reputation.

• A user with a negative reputation can neither upgrade nor downgrade the Reputation of the recipient.

_Source

The mathematical formula that Steem Blockchain uses is a log function with base 10. But the actual Reputation or the raw score at the Blockchain level is a huge number, in trillions. Therefore it further simplifies it using a formula:-

Reputation= (Log₁₀(Raw Reputation Score)-9) * 9)+25

When Raw Rep Score= 0, Reputation=25. Every new user starts his journey from a default Rep of 25.

Now, let's consider (Log10(Raw Reputation Score)=10

=> Raw Reputation Score= 10¹⁰

So if the raw rep score becomes 10¹⁰

Reputation= Log10(10¹⁰)-9)*9)+25= 34

Similarly, if the Raw Rep score becomes 10¹¹

Reputation= Log10(10¹¹)-9)*9)+25= 43

So every time the raw reputation score increased by ten times, the Reputation increased by nine times.

In other words, if we consider the Reputation, 25, 34, 43, 52, 61, etc. as milestones, then each milestone is 10x harder than the previous milestone, that is also the reason why a user can quickly reach up to a reputation fo 50 or so, but after that, it gets harder and harder as log function gradually saturate and hardened later.

Source

Let's calculate the Reputation using the Raw Reputation Score

Go to steemd.com/@username. You can replace the username with a valid username. e.g., sapwood.

Now scroll it down, towards the left-bottom, you can see Reputation, the Raw Reputation Score.

Raw Reputation Score= 429,439,051,944,577

It's the Raw score; that is why you can see such a vast number. We will simplify it as per the defined formula.

Reputation= (Log10(Raw Reputation Score)-9)*9)+25

=> Reputation= (Log10(429,439,051,944,577)-9)*9)+25

=> Reputation= (14.6329-9)*9)+25= 75.696

Now let's verify it with Steemworld.org/@sapwood

Conclusion

• With the rise of SBD (breaking out the peg of 1SBD= 1 USD) has shifted the 50/50 split of Author:Curator significantly to the extent of 80:20 or even more with a further rise of SBD. On top of that, a higher SBD value also generates more liquid Rewards than staked Rewards. The Blockchain mechanism with 50:50 ratio has been so designed that only 25% of the PoB reward pool is generated as liquid Reward. With the rise of SBD, this proportion dwindles, and the percentage of liquid rewards has gone above 70%, indirectly causing more supply in the open market. That is why an initiative like #club5050 looks viable to check the unprecedented supply due to SBD breaking out of the pegged value.

• There is a misconception among the users that with a certain Payout (Reward in $), the Reputation rises, but that is not true. The Reputation depends on the Voting weight and size of SP behind each Upvote or Downvote. In 2020 when STEEM was $0.20, more SP and voting weight were needed to generate a certain payout(say $10), but the same $10 in 2021 will require lesser resources like SP and voting weight because of the rise in STEEM value($0.6 per STEEM now). So in 2020, with the same Payout, you gained more Reputation than in 2021. Put simply, Rep is linked to the SP size and voting weight.

• The Reputation would look fair and genuinely trustworthy only when it is gained organically. Using a bot makes it more synthetic with no value addition and almost zero engagement, which also diminishes the essence of a social platform. That is why Steemit Crypto Academy and Steemit related initiatives strongly advocate for organic curation and engagement.

Homework Task (Season 4/ Week-7)

(1) What is STU? What is the break-up of STU? Take a real example to indicate the STU and calculate the different rewards that Author and Curators generated from your last Post Payout? (Screenshot required)
(2) Indicate the Raw reputation score of your Steem Account and calculate your Reputation? Cross-check it with the Reputation score displayed in Steemworld.org?
(3) What percentage(of the Post Payout) was generated as liquid rewards(SBD) from your last Post in terms of USD equivalent? Explain how the rise of SBD has shifted the supply dynamics? As per your last post payout calculate the ratio of Author:Curator Reward in terms of USD equivalent?
(4) Explain how & why an initiative like #club5050 can shift the demand/supply dynamics in favor of STEEM?
(5) Consider a user having a reputation lower than you, upvotes your Post-- Does it affect the Payout and increase the Rep? If the same user goes for a downvote, does that affect your Payout and Reputation both? Explain Why & How; with Examples?

Guidelines

• Your article should be at least 500 words.
• It is always better to gain sufficient user experience before submitting your article.
• Refrain from spam/plagiarism. This Task requires screenshot(s) of your own experience. Use images from copyright-free sources and showcase the source, if any.
• This homework task will run until 23rd Oct'2021, Time- 11:59 PM UTC.
  Users with a reputation of 65 or above and a minimum SP of 600(excluding any delegated-in SP, delegating to vote-buying services is viewed negatively) are eligible to partake in this Task. (Must not be powering it down).
• Add tag #sapwood-s4week7 #cryptoacademy in your Post and should be among the first five tags. You can also use relevant tags like #blockchain #steem #stu #reputation or any other relevant tag. And also make sure you post in the Steemit Crypto Academy community.
• Do not reproduce the information that I have provided in my course article. Expand your knowledge by extensive research & analysis with proper reasoning to chainlink your understanding.
• Your homework title should be Steem Blockchain: STU, Reputation, Author/Curator Ratio, etc.- Steemit Crypto Academy- S4W7- Homework Post for @sapwood

(Please feel free to join the comment section if you have any doubt on Homework-Task)

Thank you.

Disclaimer

_{This article & analyses are for education purposes only and should not be viewed as investment advice. This does not guarantee or promise any result that may be obtained from using the above content. The information provided here is for educational purposes in Steemit Crypto Academy. No person should make any financial decision without first consulting their financial adviser and/or conducting their research and due diligence.}

Cc:-
@steemitblog
@steemcurator01
@steemcurator02

Unless otherwise stated, all the images, infographics, charts, tables, etc(if any) are my original works.