How Many USD Authors Really Get per Article – Steem Dollars Explained
Some articles on Steemit have impressive USD figures shown below them. But what does this amount really mean?
In order to answer this question we need to distinguish between USD and Steem Dollars (also called Steem-Backed Dollars (SBD)). You will only receive Steem Dollars for your article and you can then convert those into USD using an exchange. We will explore how many Steem Dollars Authors receive per article and what value Steem Dollars have.
Amount of Steem Dollars per Article
The figure displayed below each post is not the amount of steem dollars that you will actually receive. The following shows how the shown amount is split.
Pay Your Curation Reward
As @dantheman Dan Larime CTO of Steemit puts it:
The amount displayed is the dollar value of the combined rewards split between curators and the author. Author only gets 50%. Starting July 4th, authors get 75%.
While authors get a 75% guaranteed reward the rest goes to the curators. Curators are users which up-vote your article. However, due to a recent change in the curation reward algorithm authors will also get some of the curation reward. The amount of that an author receives from the curation reward is shown on steemd in the value author_curate_reward.
50:50 - Steem Dollars and Steem Power
After you deducted the curation reward the amount that you will receive is:
- 50% as Steem Dollars: Steem Dollar are supposed to have a 1:1 exchange rate to the USD. However, the actual exchange rate depends on various factors as outlined in the next section.
- 50% as Steem Power: Steem Power are like RSUs in the Steem platform and can over time be converted to STEEM
Value of Steem Dollars in USD
If an exchange were offering a Steem Dollar to Dollar conversion than this would likely be near 1 USD. Unfortunately, there exists no exchange for Steem Dollar to USD conversion. As a result the only way to liquidate Steem Dollar at the moment is to convert them to STEEM on the blockchain. STEEM is traded on exchanges and can eventually be converted to USD.
Steem Dollar -> STEEM
You can convert Steem Dollar to STEEM in two ways: Internal Market or BlockChain Conversion.
Internal Market
The internal market is the fairest solution if there is Steem Dollar/USD parity. The advantage is that there in not waiting period of 7 days and you know the price at which you convert. According to @dantheman the internal market has existed since launch and connects to the real blockchain.
Blockchain Conversion
A list of trusted witnesses publishes a feed of price information for STEEM to USD converions multiple times a day. If you want to convert Steem Dollar to STEEM then you will have to wait one week. At the end of this waiting period your Steem Dollars are converted to Steem based upon the average price.
Holding Steem Dollars
Holding Steem Dollars gives interest is advantageuos as it is higher than the USD interest rate. The current interest rate is specified on steemd in the value sbd_interest_rate which is 10% sbd_interest_rate/10.
STEEM -> BitCoin -> USD
The process to convert STEEM to USD is outlined in various articles. The key part in terms of value depreciation is that you will need to pay commission and withdrawal fees to the exchange.
Example Calculation (July 7th and forward)
My first article on Steemit shows the pay-out 114.69$.
Steem Power : Steem Dollar
I receive 86 Steem Dollars (75%) for being author, This splits into 43 Steem Dollars and 43$ worth of Steem Power.
Curation Fee
Steemd shows that my part in curation reward is 24.79%. This is $7.10 worth of Steem Power. The rest goes to the curators.
Steem Power
Steem Power can only be converted to STEEM (and thus USD) over a longer period of time. They are similar to RSUs.
Steem Dollar to Steem Conversion
Option A) Blockchain Conversion Volatility
If I were to convert 43 Steem Dollars to USD then I would have to wait for 7 days according to the average of the price feed.
- Price rises (Average $0.35 / Final $0.40): I convert my steem to USD at $0.35 while the actual price is $0.40. I would receive about
$49.14. - Price falls (Average $0.25 / Final $0.20): I convert my steem to USD at $0.25 while the actual price is $0.20. I would receive about
$34.40. - Price is stagnant then I receive
$43.00.
Option B) Internal Market
When trading on the internal market than your conversion depends on the market price. If we assume a price STEEM/Steem Dollar such that it matches a 1:1 Steem Dollar/USD rate, then we will receive $43. Risks are that there is an unfavourable conversion rate or not enough buy support.
Other Costs
We still have to deduct other costs such as commission and transfer costs. For example:
- Commission for STEEM to BTC conversion (e.g. 0.25%):
$0.05 – $0.08 - Possibly transfer BTC to a different exchange about
$0.01Bitcoin Transaction Fee - Commission for BTC to USD conversion (e.g. 0.25%):
$0.05 – $0.08 - USD withdrawal fee (e.g. 0.1%):
$0.02 – $0.03
My pay-out of "$114.69" in Steem is:
- $50.10 worth of Steem Power AND
- A) Blockchain conversion ($0.10 volatility): ~$34.40 - $49.14 cash OR
- B) Internal Market (optimal exchange rate): ~$43.00 cash
Starting July 4th, authors get 75%
Thanks @dan I have updated the article to reflect the July 4th change.
Great article! Really valuable insights for writers on steemit!
Thanks, I am glad I could help.
This is the best and most clear article I have read about the pay-out. I sort of got lost with al those other articles saying different things. This clears it al up for me and is spot on. Thanks!
Thanks Maurice,
I also found little information in other articles and the white paper. Most information is from the slack channel thanks to @jabbasteem @arahg @ned and @dan
Nice to have some definite answers about the Steem rewards. Thanks.
Does this mean if I want to hold my earnings to begin to earn interest on them I do nothing or do I need to convert everything to Steem?
Hi @soulsistashakti ,
both your STEEM Power and your Steem Dollar earn interest. Currently Steem Dollar receive 10% interest. This is automatic by just holding them in your wallet, no action required from you.
Thank you very much and thank you for your efforts to help the community better understand Steem :)
Your are welcome :) This is a great community.
Is the interest rate on Steem power and Steem dollars the same?
No, it is not the same. Calculating interest on Steem Power is a bit more difficult - it is certainly more than 10% just because Steem is also inflating quite a bit over time. This article offers a calculator for Steem Power interest: https://steemit.com/steem/@taoteh1221/steam-power-interest-rate-calculator
Thx most illuminating!
My pleasure :)
I'm bookmarking this. Should I leave half in Steem power and half in Steem dollar?
Leaving it in Steem is not wise, right?
Thanks @stellabelle,
No leaving it in just Steem is not wise because it yields not interest and inflates over time. However, you will get half of your reward in Steem Power and half in Steem dollar anyways (see post). So the only decision you have to make is if you want to:
Steem Power is a long term investment and has various financial advantages if you believe that Steem will succeed in the next 2 years. Among other things with a lot of Steem Power you will get high interest rate and your votes will yield a high curate reward. However it can only be retrieved in 104 payments over 2 years as Steem. So it has a low liquidity.
Steem Dollar can be converted back to Steem almost instantly (using internal market) and thus provide much more liquidity.
Thanks
Long term it is not wise.
This is great thank you. So just to be clear on a few of things:
Am I correct on those?
Thanks for the great work.
Thanks @mctiller,
I hope this answers your questions:
Thanks. That does help.
Now I just need a tutorial on how to use the internal market. :)
Finally it all makes sense now. Thank you :)
This post worth more than a hundred bucks. Upvoted!