The Steem reward system, Part 1: V-shares by theoretical

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theoretical · @theoretical · May 31 '16

$2,199.94

The Steem reward system, Part 1: V-shares

This is the first post in a series about the Steem reward system. Please read my [disclaimer](what-my-posts-arent). Scroll down to the "Conclusion" section of this post for a TLDR version.

The goals of this series are to:

- Describe the nuts and bolts of how the reward algorithm works
- Describe some of the big economic ideas of how the reward system provides a reasonable incentive structure
- Make a few concrete suggestions for future hardforks to tweak the algorithms when improvements are possible

If you're interested in finding out exactly how a click on the "upvote" button, or the passage of time, translates into changes in pending payouts, follow this series!

As discussed in [the whitepaper](https://steem.io/SteemWhitePaper.pdf), content and curation rewards are 1 STEEM per block, or 3.875% per year, whichever is greater. The current implementation rolls both content and curation rewards into a single accumulator called `total_reward_fund_steem`(available with the `cli_wallet` command `info`, the `get_dynamic_global_properties` RPC, or at the [steemd.com](https://steemd.com) alternate UI).

So `total_reward_fund_steem` is the total reward available for all posts as of the current block. As of this writing (block 1872548 on 2016-05-29), `total_reward_fund_steem` is 3,748,054 STEEM. This is distributed according to a post's V-shares [1] (which are called `rshares2`in the code). There are currently about 176,134,568 septillion [2] V-shares in existence, so one septillion V-shares is worth approximately 0.0213 STEEM. As described in the "Allocation and Supply" section of the whitepaper, Steem are added to `total_reward_fund_steem` every block. When a post is paid, its V-shares and rewards are simultaneously removed from the pool, resulting in no net change of the current Steem per V-share.

Conclusion
----------

Here are some points to take away from this post:

- Each upvote "prints" V-shares, causing the upvoted post to get an increased percentage of `total_reward_fund_steem` and slightly decreasing all other posts' percentage.
- The network "prints" a little bit of STEEM every block [3] and adds it to the reward without regard for the number of V-shares that have been issued, slightly increasing each post's payout every block.
- The `total_reward_fund_steem` on July 4 will be worth well over $2 million at STEEM's current prices, meaning that if we only have 1000 actively posting users, it is entirely reasonble to expect each user will *on average* [4] get at least $2000 worth of STEEM.

[1] The reason I want to stop calling them `rshares2` and start calling them V-shares will be revealed in a later post in this series.

[2] One septillion is 10^24 = 1,000,000,000,000,000,000,000,000.

[3] As discussed in the whitepaper, for every 1 STEEM printed to pay post rewards, 9 STEEM are printed to be divided among all holders of Steem Power, meaning that users who make a long-term commitment to the network by holding SP are protected to some extent from the inflationary effects of the "printing press".

[4] The payout per user will be unequal; there will be many users who get much less than $2000, or even nothing at all. This hypothetical situation is further based on the totally unrealistic assumption that the price of STEEM will remain the same over time. Remember my disclaimer.

👍 blocktrades, smooth, rainman, summon, blackjack, steemit200, skywalker, fuzzyvest, pharesim, nextgencrypto, badassmother, roadscape, complexring, witness.svk, au1nethyb1, arhag, hr1, rossco99, samupaha, newyo, bhuz, xeroc, benjojo, joseph, liondani, hipster, eeks, coinfund, berkah, boatymcboatface, donkeypong, vato, tuck-fheman, ozmaster, theoretical, pfunk, steempower, liberosist, unosuke, fminerten1, nanzo-scoop, testz, valtr, cryptoctopus, markopaasila, hannixx42, idol, b0y2k, aizensou, xav, bbqbear, modeprator, steemrollin, pstrident, nenad-ristic, joshua, void, tshering-tamang, officialbitcash, easteagle13, pinnpe, teatree, canhazlulz, william-noe, and 32 others

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barrie	0	100%
smooth	29,399,227,804,616	100%
rainman	16,598,388,468,430	100%
berkah	413,197,364,568	100%
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blackjack	9,915,166,974,824	100%
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pharesim	5,203,484,495,549	100%
samupaha	1,298,574,355,867	100%
hr1	2,267,577,970,000	100%
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theoretical	71,629,964,100	100%
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ozmaster	76,683,033,600	100%
xeroc	796,425,789,874	100%
testz	15,183,580,000	100%
complexring	3,002,019,984,595	100%
arhag	2,634,794,003,862	100%
witness.svk	2,910,907,961,391	100%
joseph	613,826,583,214	100%
bhuz	862,752,787,767	100%
aizensou	4,875,604,400	100%
au1nethyb1	2,822,597,182,020	100%
b0y2k	5,177,930,000	100%
mineralwasser	0	100%
boombastic	0	100%
mrs.agsexplorer	0	100%
bingo-0	0	100%
bingo-1	0	100%
benjojo	639,989,115,793	100%
steempower	58,572,619,484	100%
boatymcboatface	184,548,885,167	100%
pfunk	68,804,922,820	100%
idol	8,338,132,970	100%
markopaasila	10,763,057,727	100%
tuck-fheman	128,838,121,620	100%
donkeypong	147,163,821,475	100%
joshua	713,736,419	100%
modeprator	2,009,657,955	100%
steemrollin	1,164,484,076	100%
unosuke	43,368,033,227	100%
valtr	13,672,362,057	100%
void	576,038,613	100%
pstrident	935,723,576	100%
tshering-tamang	554,281,371	100%
noisy	0	100%
nenad-ristic	814,176,647	100%
easteagle13	510,637,000	100%
vato	133,171,597,646	100%
officialbitcash	528,362,195	100%
pinnpe	492,680,902	100%
eeks	505,832,603,644	100%
hipster	512,906,025,404	100%
teatree	470,105,685	100%
james-show	428,693,807	100%
cryptoctopus	12,367,070,285	100%
bbqbear	2,089,005,226	100%
nanzo-scoop	20,451,885,969	100%
jerome-colley	324,697,521	100%
canhazlulz	445,988,680	100%
william-noe	442,027,708	100%
yoona-lee	382,968,015	100%
hannixx42	9,674,245,480	100%
xav	4,239,508,583	100%
amartinezque	421,257,221	100%
alenevaa	424,582,327	100%
murh	0	33.01%
tie-warutho	403,958,136	100%
rok-fabiani	358,742,426	100%
b4bb4r-5h3r	348,243,788	100%
tinfoilfedora	38,810,217	100%
bitcoinbbqsupply	37,959,637	100%
olivia-sorenson	394,276,299	100%
thebugadu	291,058,411	100%
stormbringer	324,642,195	100%
press-release	61,622,099	100%
coinfund	451,789,003,552	100%
rubybian	0	100%
steemtest	4,756,941	100%
elargroup	163,219,539	100%
breathe3000	176,625,924	100%
criticalproof	239,932,537	100%
liberosist	47,824,960,065	100%
alex.chien	0	100%
buyselltrade	41,995,757	100%
vonpetro	0	100%
steemrussia	0	100%
elliptic	0	100%

@cryptogee · May 31 '16

Hmm, I don't get it myself, I have a post that peaked at $7609, it is now under $7000. However my over post that peaked at about $1400 has lost about $70 so how is that possible, that one loses over 10% and the other less than 5%?

It's quite depressing to see my top post just plummet, at this rate it will be 0 by the time the 4th comes.

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@abit · May 31 '16 (edited)

The real reason is in the post:
>Each upvote "prints" V-shares, causing the upvoted post to get an increased percentage of total_reward_fund_steem and slightly decreasing all other posts' percentage.

By the way, although I think this post is very good, in order to encourage new users and/or articles/blogs which are not about Steem/blockchain, I won't up-vote it (which will decrease other posts' percentage of total reward). Sorry.

👍 roelandp

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@hipster · Jun 24 '16

$2.63

So, your curator reward is lost.

👍 satoshifund, hipster

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1 reply

@smooth · May 31 '16

Isn't the exchange rate a factor too? It has been declined quite a bit recently.

👍 tie-warutho

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1 reply

@pheonike · May 31 '16

The price is based on the voters steam power at the moment. If the person who voted for you votes for other people then their individual vote is woth a little less.  The more a person votes, the less each vote is worth during that day. That's why the price will changes.

👍 djleo, cryptogee, tie-warutho, stormbringer

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@elargroup · Jul 22 '16

Good post theoretical, I will start following you. Keep em coming.

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@liondani · May 31 '16

$0.20

> "As discussed in the whitepaper, **content and curation rewards** are **1 STEEM per block, or 3.875% per year**, whichever is greater. The current implementation rolls both content and curation rewards into a single accumulator called total_reward_fund_steem(available with the cli_wallet command info, the get_dynamic_global_properties RPC, or at the steemd.com alternate UI)."

Is it only my feeling that a 3.875% reward per year for content & curation could be a little bit higher (and reduce instead witness rewards?) I think content creators and curators are/will be  the heart of this project and deserves a bigger % overall...No?

👍 liondani, hipster, bola

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@abit · Jun 1 '16

Content providers get 3.875%, curators get another 3.875%.

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@kingtylervvs · Jul 20 '16

Thank you for posting. QUESTION: should steemit let us steemers advertise using steem? Be sure to tell everyone you know to come vote here at: https://steemit.com/steemit/@kingtylervvs/if-steemit-ever-does-decide-to-advertise-there-is-only-1-way-it-could-work-in-my-opinion-debate

This is a democratic community decision.<br><a href="https://steemit.com/steemit/@kingtylervvs/if-steemit-ever-does-decide-to-advertise-there-is-only-1-way-it-could-work-in-my-opinion-debate"><img src="http://www.animatedimages.org/data/media/75/animated-train-image-0018.gif" width="145" height="93"/></a>
<a href="https://steemit.com/steemit/@kingtylervvs/if-steemit-ever-does-decide-to-advertise-there-is-only-1-way-it-could-work-in-my-opinion-debate"><img src="http://2.bp.blogspot.com/-TEzRcgPOwzg/U9TQY7gafSI/AAAAAAAAAoE/mcn0ax6a1Tk/s1600/Coin-1.gif" width="14" height="16"/><img src="http://2.bp.blogspot.com/-TEzRcgPOwzg/U9TQY7gafSI/AAAAAAAAAoE/mcn0ax6a1Tk/s1600/Coin-1.gif" width="14" height="16"/><img src="http://2.bp.blogspot.com/-TEzRcgPOwzg/U9TQY7gafSI/AAAAAAAAAoE/mcn0ax6a1Tk/s1600/Coin-1.gif" width="14" height="16"/><img src="http://2.bp.blogspot.com/-TEzRcgPOwzg/U9TQY7gafSI/AAAAAAAAAoE/mcn0ax6a1Tk/s1600/Coin-1.gif" width="14" height="16"/><img src="http://2.bp.blogspot.com/-TEzRcgPOwzg/U9TQY7gafSI/AAAAAAAAAoE/mcn0ax6a1Tk/s1600/Coin-1.gif" width="14" height="16"/><img src="http://2.bp.blogspot.com/-TEzRcgPOwzg/U9TQY7gafSI/AAAAAAAAAoE/mcn0ax6a1Tk/s1600/Coin-1.gif" width="14" height="16"/><img src="http://2.bp.blogspot.com/-TEzRcgPOwzg/U9TQY7gafSI/AAAAAAAAAoE/mcn0ax6a1Tk/s1600/Coin-1.gif" width="14" height="16"/><img src="http://2.bp.blogspot.com/-TEzRcgPOwzg/U9TQY7gafSI/AAAAAAAAAoE/mcn0ax6a1Tk/s1600/Coin-1.gif" width="14" height="16"/><img src="http://2.bp.blogspot.com/-TEzRcgPOwzg/U9TQY7gafSI/AAAAAAAAAoE/mcn0ax6a1Tk/s1600/Coin-1.gif" width="14" height="16"/><img src="http://2.bp.blogspot.com/-TEzRcgPOwzg/U9TQY7gafSI/AAAAAAAAAoE/mcn0ax6a1Tk/s1600/Coin-1.gif" width="14" height="16"/><img src="http://2.bp.blogspot.com/-TEzRcgPOwzg/U9TQY7gafSI/AAAAAAAAAoE/mcn0ax6a1Tk/s1600/Coin-1.gif" width="14" height="16"/><img src="http://2.bp.blogspot.com/-TEzRcgPOwzg/U9TQY7gafSI/AAAAAAAAAoE/mcn0ax6a1Tk/s1600/Coin-1.gif" width="14" height="16"/><img src="http://2.bp.blogspot.com/-TEzRcgPOwzg/U9TQY7gafSI/AAAAAAAAAoE/mcn0ax6a1Tk/s1600/Coin-1.gif" width="14" height="16"/><img src="http://2.bp.blogspot.com/-TEzRcgPOwzg/U9TQY7gafSI/AAAAAAAAAoE/mcn0ax6a1Tk/s1600/Coin-1.gif" width="14" height="16"/><img src="http://2.bp.blogspot.com/-TEzRcgPOwzg/U9TQY7gafSI/AAAAAAAAAoE/mcn0ax6a1Tk/s1600/Coin-1.gif" width="14" height="16"/><img src="http://2.bp.blogspot.com/-TEzRcgPOwzg/U9TQY7gafSI/AAAAAAAAAoE/mcn0ax6a1Tk/s1600/Coin-1.gif" width="14" height="16"/><img src="http://2.bp.blogspot.com/-TEzRcgPOwzg/U9TQY7gafSI/AAAAAAAAAoE/mcn0ax6a1Tk/s1600/Coin-1.gif" width="14" height="16"/><img src="http://2.bp.blogspot.com/-TEzRcgPOwzg/U9TQY7gafSI/AAAAAAAAAoE/mcn0ax6a1Tk/s1600/Coin-1.gif" width="14" height="16"/><img src="http://2.bp.blogspot.com/-TEzRcgPOwzg/U9TQY7gafSI/AAAAAAAAAoE/mcn0ax6a1Tk/s1600/Coin-1.gif" width="14" height="16"/><img src="http://2.bp.blogspot.com/-TEzRcgPOwzg/U9TQY7gafSI/AAAAAAAAAoE/mcn0ax6a1Tk/s1600/Coin-1.gif" width="14" height="16"/><img src="http://2.bp.blogspot.com/-TEzRcgPOwzg/U9TQY7gafSI/AAAAAAAAAoE/mcn0ax6a1Tk/s1600/Coin-1.gif" width="14" height="16"/><img src="http://2.bp.blogspot.com/-TEzRcgPOwzg/U9TQY7gafSI/AAAAAAAAAoE/mcn0ax6a1Tk/s1600/Coin-1.gif" width="14" height="16"/><img src="http://2.bp.blogspot.com/-TEzRcgPOwzg/U9TQY7gafSI/AAAAAAAAAoE/mcn0ax6a1Tk/s1600/Coin-1.gif" width="14" height="16"/><img src="http://2.bp.blogspot.com/-TEzRcgPOwzg/U9TQY7gafSI/AAAAAAAAAoE/mcn0ax6a1Tk/s1600/Coin-1.gif" width="14" height="16"/><img src="http://2.bp.blogspot.com/-TEzRcgPOwzg/U9TQY7gafSI/AAAAAAAAAoE/mcn0ax6a1Tk/s1600/Coin-1.gif" width="14" height="16"/><img src="http://2.bp.blogspot.com/-TEzRcgPOwzg/U9TQY7gafSI/AAAAAAAAAoE/mcn0ax6a1Tk/s1600/Coin-1.gif" width="14" height="16"/><img src="http://2.bp.blogspot.com/-TEzRcgPOwzg/U9TQY7gafSI/AAAAAAAAAoE/mcn0ax6a1Tk/s1600/Coin-1.gif" width="14" height="16"/><img src="http://2.bp.blogspot.com/-TEzRcgPOwzg/U9TQY7gafSI/AAAAAAAAAoE/mcn0ax6a1Tk/s1600/Coin-1.gif" width="14" height="16"/><img src="http://2.bp.blogspot.com/-TEzRcgPOwzg/U9TQY7gafSI/AAAAAAAAAoE/mcn0ax6a1Tk/s1600/Coin-1.gif" width="14" height="16"/><img src="http://2.bp.blogspot.com/-TEzRcgPOwzg/U9TQY7gafSI/AAAAAAAAAoE/mcn0ax6a1Tk/s1600/Coin-1.gif" width="14" height="16"/><img src="http://2.bp.blogspot.com/-TEzRcgPOwzg/U9TQY7gafSI/AAAAAAAAAoE/mcn0ax6a1Tk/s1600/Coin-1.gif" width="14" height="16"/><img src="http://2.bp.blogspot.com/-TEzRcgPOwzg/U9TQY7gafSI/AAAAAAAAAoE/mcn0ax6a1Tk/s1600/Coin-1.gif" width="14" height="16"/><img src="http://2.bp.blogspot.com/-TEzRcgPOwzg/U9TQY7gafSI/AAAAAAAAAoE/mcn0ax6a1Tk/s1600/Coin-1.gif" width="14" height="16"/><img src="http://2.bp.blogspot.com/-TEzRcgPOwzg/U9TQY7gafSI/AAAAAAAAAoE/mcn0ax6a1Tk/s1600/Coin-1.gif" width="14" height="16"/><img src="http://2.bp.blogspot.com/-TEzRcgPOwzg/U9TQY7gafSI/AAAAAAAAAoE/mcn0ax6a1Tk/s1600/Coin-1.gif" width="14" height="16"/><img src="http://2.bp.blogspot.com/-TEzRcgPOwzg/U9TQY7gafSI/AAAAAAAAAoE/mcn0ax6a1Tk/s1600/Coin-1.gif" width="14" height="16"/></a><br>Upvote the #steemengine for in house steemit poster ads!
<a href="https://steemit.com/steemit/@kingtylervvs/if-steemit-ever-does-decide-to-advertise-there-is-only-1-way-it-could-work-in-my-opinion-debate"><img src="https://steem.io/images/steem.png" width="140" height="160"/></a>

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@liondani · May 31 '16

> ## "The Steem reward system, **Part 1**: V-shares"

I want to read now **Part 2**:

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@treeleaves · Jun 22 '16 (edited)

<html>
<p><strong>Part 2</strong>: <a href="https://steemit.com/theoretical/@theoretical/the-steem-reward-system-part-2-v-shares-from-r-shares">https://steemit.com/theoretical/@theoretical/the-steem-reward-system-part-2-v-shares-from-r-shares</a></p>
</html>

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@modprobe · May 31 '16

$0.18

What's got me confused is what exactly is the effect of a downvote? I downvoted a post, and my downvote was the only vote (up or down) it had received. When the UI refreshed, I was still the only vote, but his payout had gone from 0 to ~50 cents. How can a downvote give the poster rewards? I checked it on steemd.com too to make sure I was the only vote, and I was.

I haven't bothered to read the code yet to figure out what exactly a downvote does.

👍 hipster, arkanaprotego, tie-warutho, caprica1

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@noisy · Jul 21 '16

I believe there were some changes in distribution algorithm. Is this article up to date?

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@teatree · May 31 '16

Can I ask a potentially silly question? My Steam Power seems to be increasing gradually by itself. Why is this/by what mechanism is this happening?

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@markopaasila · Jun 1 '16

New SP is constantly printed to you. For every STEEM and SBD created, 9 times more is created and given to SP holders, which should protect them from those who have liquid steem. Read more from the white paper or search the forum for SBD, SP, and STEEM, especially @dan's posts.

properties (22)