All the different reward curves explained in an easy to understand way.
I have seen a lot of users asking for an explanation of the different reward curves and how it will affect them.
In this post, I will try to do just that.
I won't use terms like "Vests" or "Rshares" and things most users don't understand or want to know.
I just keep it simple with Steempower and Payout.
Let's start with the N^2 or the superlinear reward curve.
This curve was around when I joined Steem in 2016 and it looks like this:
As you can see looking at the picture, the more Steempower a post receives the faster the payout goes up.
This also means that the start of a payout is very slow. You need a good initial amount of votes with steempower to get the curve started but once it does it speeds up quickly.
As you can see from the example the first 100K Steempower on the post adds $5 to the post. But later that same amount (100k) of Steempower adds $25 to the post.
Under this curve, we had a 50/50 curation and author reward.
What ended up happening was that some popular authors kept getting all the votes because it was simply easier and more profitable for Steempower holders to receive curation rewards to vote for already popular content than to go out and find gems to curate.
If you were a 'good' curator and no-one else would vote for that amazing piece of content you found then all that time and effort was for nothing and you would have been better off voting for already popular content.
In this time all the Steempower was in the hands of a few.
Having Steempower was useless (unless you had millions) and so was buying it. There was no way you could compete with these giant accounts. Even with 10k SP you couldn't make a dent in your own account and help move it forward.
I remember I had 10k SP at some point and my vote was worth $0,01.
If you were not in the in-crowd you would be looking at $0,00 payouts most of the time and you could not empower yourself in any way to make a difference.
This is why the curve was changed. To make it fairer for everyone!
And that brings us to the next curve.
Linear Curve
This is the curve we have today. The linear Curve.
The linear Curve means that Steempower no matter where in the curve it is given will always represent the same amount of Payout.
The curve is as steep in the beginning as later on. This is why when you increase your amount of Steempower your vote is worth more. The two go hand in hand.
The premise is simple. If you want to give away more payout you need more Steempower or in other words, if you want to empower your account you need more Steempower.
I love this curve because it gives every Steemian control over their own account and they can make it grow.
It's an extremely powerful feeling and a good incentive to build a home here.
And this is what happened. We now have a strong Steem middle class and it's getting bigger with the years.
Linear doesn't come without flaws. Building your account is different for everyone. Some build by using their SP to empower their efforts on the blockchain through blogging or by building a business. Others grow their account simply by upvoting themselves or putting it in a bot.
And as another downside. So-called 'Content discovery' on Steemit.com went down the drain. But I didn't care much about that, it was the same people over and over so from my point of view there wasn't much 'content discovery' to begin with.
A lot of smaller users are empowered now under the linear curve and this is about to change under the new proposed curve.
The new proposed curve
This is the latest proposed curve I could find. It's called the convergent linear rewards curve.
This curve is a hybrid between superlinear and linear.
It starts off as N^2. Which means that you need a good initial amount of votes with Steempower to get it started. I have colored it in Green.
After it's up and running it will change to linear (in yellow) preventing payouts to get to high like back in 2016.
What will this mean for you?
Well if you have no Steempower you need people to vote on your content to get it started. If you don't have these votes now, you are looking at $0,00 payout unless you can find a way to make SP holders vote on your posts and you will need a lot more of them under this curve than linear.
Buying SP will not help you as much as it would under linear unless it's enough to get you out of the start of this curve.
If you are a minnow or dolphin then you will find that your vote when you vote on posts with no votes will be worth a lot less, that's because of the n^2 curve. But if you vote for posts that are doing well it should be about the same as it is today because by then the curve has turned linear.
Orca's and Whales will probably be able to blast through the initial n^2 curve. But I'm not 100% sure by how much.
My fear with this curve is that the middle class of Steem will feel less empowered when it comes to their own account.
Curation will change to 50/50 and a separate downvote pool will be introduced are the other changes that will happen.
A downvote under the beginning of this curve weighs much more than later on when the curve turned linear. The plus side: It will, therefore, be very cheap to combat abuse of smaller accounts and vote them to $0. That's good.
But on the downside, it also opens the door of downvoting people you just don't like besides their content. This is especially dangerous for smaller accounts.
50/50 should increase curation. Although I'm not sure how. If an early vote on a post that later turns out to do very well gives a lot of curation rewards than curation is incentivized.
But I can't yet see how this will prevent votes from piling on posts of which it is already known they will do well.
The problem is that any post firsts need to get out of the n^2 curve zone before it becomes profitable and that takes a lot of SP.
So if you are a dolphin curator and you find a post you think will do well, but then it doesn't, then you essentially wasted a vote much better placed on content that would already do well.
This is the one thing I can't visualize in my head so I hope to get some answers about that.
For me, what it comes down to is that there are a lot of unknowns we have to face.
I hope my post adds to the discussion of making it more clear what those are.
The way I see things now:
Taking power away from the middle class in the hope that maybe content discovery on steemit.com will improve is a huge gamble in my opinion and most of the improvements this curve is supposed to bring are based on the hope that big dolphins, orca's and whales will do 'the right thing'.
I doubt that will happen because not everyone in that group wants to be a curator and they should not have to be on the blockchain of opportunity.
I know linear is not ideal. But it's also not bad. At least it empowers every Steemian equality in a simple rule:
more SP = more power
less SP = less power
Even the people that are accused of abusing the system can only do so with their own share and to take profit from this abuse they will have to sell. The middle class doesn't sell but builds, therefore gaining on the abusers every day. It just takes time to play out.
That's it for now.
I have made this post with my best understandings of the current changes. If I have made a mistake I will correct and write about.
If you liked this post and are happy there is a witness out there asking questions for you than please consider @blockbrothers for a witness vote. We are in spot #38.
I am part of witness @blockbrothers.
Please consider us for your witness vote if you think we deserve it here:
Vote for @blockbrothers via SteemConnect
Set blockbrothers as your proxy via SteemConnect
We are the creators of Steemify a notification app for your Steemit account for iOS.
Get it Here:
