Debt Ratio's Impact on the Authors' Rewards on Steem- Understanding the Current Situation

in hive-108451 •  2 years ago  (edited)

Introduction

Many Steem users would be concerned about the state of rewards on the Steem blockchain at the moment as SBD reward vanishes, users would be bothered about what's going on and questions like what has happened to my account? and so on, would arise.

You don't have to panic, rather it's a time for you to get closer to the Steem blockchain and understand what is termed the debt ratio, I will take you on a ride about the concept today and I hope you'd have it all clear in the end.

Debt Ratio.png
Designed with Adobe Photoshop


Debt Ratio on the Steem blockchain

You are familiar with rewards distribution on the Steem blockchain and various settings you'd like to set your rewards to on an article. For example, 100% Power up means you are receiving your rewards purely in SP, 50%/50% implies your rewards would be in 50% SBD and 50% SP but this is also determined by the debt ratio at any point in time.

Authors are the ones that receive SBD rewards on the Steem and it was specifically created for that, curators take their rewards in SP, likewise, locked STEEM (SP) interest is also in SP. As such, SBD is backed by an equivalent STEEM on the blockchain to reward authors.

That being said, the debt ratio comes in to ensure that the printing rate of SBD is put under control based on the STEEM/SBD ratio (debt ratio) depending on the amount required to back SBD. Let's see how authors receive rewards in line with the debt ratio at any point in time.

  • If the debt ratio is less/equals 9%, authors receive rewards in SBD and SP.

  • If the debt ratio is between 9% - 10%, authors receive rewards in STEEM, SBD, and SP and the printing of SBD for rewarding authors declines linearly.

  • If the debt ratio is greater than 10%, authors receive rewards in STEEM and SP. With no more SBD rewards.

The debt ratio in a bullish market phase is always around 9% or below which means fewer STEEM tokens are required to back SBD, as such author gets their rewards in SBD and SP for 50%/50% reward settings.

In addition, in a bearish market phase, especially an extreme one, the debt ratio tends to exceed 10% which requires more STEEM to back SBD, the printing of SBD declines. The printing rate of SBD starts from 100% and declines linearly with the debt ratio and at a point, it hits 0%, there would be no more printing of SBD as such authors get their rewards in STEEM and SP alone for a 50%/50% settings.

Where are We?- The Debt ratio has exceeded 10%

At the moment of writing this article, the debt ratio has exceeded 10% and there would be no SBD rewards for now. To know the current state of the debt ratio, we would need to know the market capitalization of STEEM and SBD to calculate debt ratio.

  • STEEM Market Capitalization = Virtual Supply of STEEM X Current Price.
  • SBD Market Capitalization = Total Supply of SBD X Current Price.

Let's explore a tool to get the supply of the assets in question here and calculate the market capitalization. I will be using https://steemdb.io/.

iMarkup_20220513_122147.jpg
https://steemdb.io/

From the information above, we can easily calculate the market capitalization and the debt ratio. Now we have;

  • STEEM Market Capitalization = 450168459.178 X $0.2283 (Market Price) = $102,773,459.2303374.
  • SBD Market Capitalization = 11268210.807 X $1 (Assuming the $1 peg) = $11268210.807
Now the debt ratio would be calculated using SBD Market Capitalization value/STEEM Market Capitalization value. As such;

  • 11,268,210.807/102,772,459.2303374 = ~ 0.1096 (10.96%). Now, the debt ratio is well above 10% which indicates there is no printing of SBD for now on the blockchain.

iMarkup_20220513_122259.jpg
https://steemdb.io/

The debt ratio is now at 10.96% which implies that the printing rate of SBD would be 0% and it's evident from the tool above. As such, the authors' 50%/50% reward settings now would be received in STEEM and SP and you can see that on one my articles pending payout below.

iMarkup_20220513_123925.jpg
Image Source


The authors' rewards can only come back to SBD and SP for 50%/50% settings when the debt ratio drops to 9 and below, and it increases linearly as the debt ratio is reducing, which means at 9% - 10% that is > 9% to 10%, the percentage of SBD received would be fewer while the remaining is paid in STEEM, until it hits 9 below when SBD printing rate would return to 100%. The bullish market of STEEM would be the way to achieve such a lower debt ratio again.

Conclusion

In conclusion, we have been able to address the current state of author rewards as attributed to the debt ratio and I hope you now understand the debt ratio and its effects on the rewards. There is nothing wrong with your Steem account, it's how the Steem blockchain works and we have just witnessed a season like that again due to the extreme downtrend that occurred in the crypto ecosystem a few days ago. Thanks for reading today and #Steem-on.

Written by;
@fredquantum

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Thank you for the interesting post.

The problem with Steemit is that there are not enough genuine curators.

The curators who can make a difference with their upvotes either want you to delegate your STEEM POWER to them or want you to follow some rules in order to get an upvote. The system is corrupted.

Realy work is good keep it up.

Thank you for replying!

Yeah Of course,

Thank you for stopping by!

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The problem with Steemit is that there are not enough genuine curators.

You hit the nail on the head with that one, D3. I was always looking for a way to describe my discontent with Steemit, and your reply here describes it perfectly.

I hope you are well.

I'm fine and I hope you are doing well too.

Thank you for leaving a comment!

man, you're really helping people around and I come to this war just to see your replies. your post are very interesting

I am making $92 an hour working from home. i was greatly surprised at the same time as my neighbour advised me she changed into averaging $ninety five however I see the way it works now. I experience mass freedom now that I'm my non-public boss.
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Great explanation ✌🏻 Let’s wait this will take care the blockchain, useful information for users

Thanks for reading through, @alejos7ven. The market of STEEM is gradually on the rise, this is a time for users to acquire more Steem and to stake more of their rewards. Everything would take the right shape with time.

god bless you

I thought as much, i have even told my newbie that this is the only way steem/steemit will surviving, thank you @fredquantum for throwing more light to it

I'm glad you found this piece interesting and educative. Thanks for your time.

Muchas gracias por esta información, es muy útil para todos los que hacemos vida en la plataforma 👍

Good to know that you have learned a few things from my article today. It doesn't affect your blogging on Steem. #Steem-on.

Thank you so much @fredquantum Sir, for this detailed explanation and awareness creation as regards The

Debt Ratio's impact on the Authors' Rewards on Steem- Understanding the Current Situation.
***@fredquantum

It's indeed an eye opener for us all.

Thanks for reading through this piece and learning from it. I'm glad it helped.

You're welcome 🙏

Thanks for this great post Prof. It has helped me to understand the current ratio.

That's a very important concept to learn about rewards distribution on the Steem blockchain and I am glad that you have learned about it today.

Thanks for the clarification

You are welcome.

Thank you for this valuable article, it really ease tension and I've learned something new the debt ratio. I hope everything will be normalize soon.

Thanks for reading through as well and I am glad that you have learned something in the process.

I hope so too

This is a well explained publication regarding the current happenings in the ecosystem, but then, the calculations are a bit confusing.
Now, we have clarity of the situation at hand.
Thank you, and let's hope steem bounces back, so that we will receive our normal author and curation rewards.

It's a great pleasure to know that you have learned a few things from my publication today.

Yes, thank you.

So, please per your knowledge and experience, what duration does it take for the dept ratio to normalize?
Thus moving from >10% to <9%

Until the Steem market cap is appreciable to achieve 9% debt ratio again when divided with the SBD market cap. Knowing that the market cap is a product of the supply and price, the only way to achieve an appreciable Steem market cap again is when the price of Steem goes bullish.

This is not a time to sell but rather a time to acquire more STEEM, power up, and adopt 100% power up reward settings again as we contribute to the Steem ecosystem.

Noted.
Thanks for the gist.

SBD Market Capitalization = 11268210.807 X $2.40 (Market Price) = $27,043,705.9368

I don't think the market price of SBDs is used in the calculation by the blockchain. The ratio that the blockchain cares about is the one for SBD -> STEEM conversions, which want to treat 1 SBD as being worth $1 USD.

Thanks for the observation, friend. I have studied a few journals on the internet that have followed the same steps I utilized but I noticed that those times, the market price of both assets were very close (Say, SBD = $3.2 STEEM = $3.32) or when SBD was around $1 or slightly below. I now have the understanding of putting the $1 peg of SBD into consideration on the Steem blockchain and the calculation has been edited. Thanks once again.

Buena explicación, y era esperada por todos los usuarios de esta plataforma, porque la desaparición del SBD nos ha preocupado a todos. Gracias por la explicación.

Your SBD has gone nowhere, the rewards are just respecting the blockchain algorithm. Thanks for reading.

Thanks for the insight prof. Clearly, there is more to Steem than meets the eye

Good to know you read through and have something added to you today, @cherub27. Greetings.

Thanks for bringing clarity to this Chief.

It's good to know that this helped. #Steem-on.

Thank you for sharing this information with us.
It will come in very handy!

Thanks, ma'am. I'm glad that you read through and have learned more about our dear Steem.

Wow! Wow!
Thanks for such a detailed presentation about the debt ratio and how it affects authors rewards recently.

Thanks for reading through the article today, @monjuapollonia. And I believe you have learned something very important today.

Omo

Thank you for making things clear cause the situation already caused a lot misconceptions.

Thank you.

I know there would be many, as such I made this piece so that users don't panic. This is a time to acquire more Steem, power up rewards and keep writing. I'm glad you have learned something today. #Steem-on.

This just brought lots of ease to steemit users, well detailed ..

Thanks for the info, God Bless!!

I'm glad to know that it has eased a lot of panic individuals, it's nothing serious rather a time for us to be more active on Steem. Amen, thanks for the wishes, man.

Thank you sir

I'm glad that you read this piece. #Steem-on.

There's no problem.
But isn't the debt ratio more favorable for authors if it stays below 9% as SBD help authors in earning more Steem during conversion?

Or is this current Steem reward equivalent to the previous SBD reward authors once had?

I will say the previous rewards are better.

But, I will suggest we set our author rewards to 100% SP, since SBD has gone for awhile.

That might be a good option but you know that it takes a week for one to receive one's reward and that's a whole lot of time.
Steem can increase and SBD will be back within that period.

You are absolutely right, comrade.

That's the next line of action in this kind of situation. Powering up 100% would be ideal since the printing rate of SBD is already at zero.

Ok.
But with what you explained, SBD is at zero due to debt ratio being above 10% which is as a result of the current low price of Steem and SBD.

This means that if the price of Steem and SBD should come up during the week, it is expected to take the debt ratio below 10% meaning that minting of SBD will continue as usual.

With the above in mind, don't you think leaving the reward ratio at 50:50 is still ideal as the price of Steem and SBD is expected to come up before the next 7 days.

You can always track the status of the printing rate of SBD here.

iMarkup_20220514_054103.jpg
https://steemdb.io/

Ok
Thank you

Kind regards, friend. Thank you for sharing this great information where it clarifies this whole topic of rewards very well. Don't panic. Let's keep showing quality content. I wish you success.

Thanks for reading. It's a time to do more writing on Steemit, acquire more Steem and power up more (adopting 100% power up reward settings would also be great).

Hi, @fredquantum It is very important this article professor, and with this many users can be calm and clarify what happens. It is a very wise way to control the printing and curb indebtedness Thank you very much for such an important article.

It's necessary for users to know about this, I learned about it sometimes ago and I am glad this has helped many users in the situation.

Thank you very much for your important post-information, dear professor.

You are welcome. Thanks for reading through.

Un saludo amigo @fredquantum
Excelente explicación, muchas gracias por esa gran contenido de valor. Un abrazo #affable #oneporcent #venezuela

It's important for users to understand the current situation and I am glad this helped. Thanks for reading.

Well written prof., these is really very informative and educative. Thanks for the information.

I'm glad that you read through and have learned from this article today. #Steem-on.

Thank you Prof for this educative lecture about debt ratio and the current state of steem in general.

You are welcome and I'm glad you read through. #Steem-on.

Muchas gracias por esta explicación, profesor!! era muy necesaria :)

You are welcome.

Thank you for the explanation @fredquantum. I now understand the sudden change in my account. I won't have worries like I did before.

I pray we have more rise in steem

Glad that you know the cause now. Thanks for reading.

Thanks for explanation!

You are welcome.

Hello, thanks for your skillful explanation of this stuff, there were lots of numbers there but I think I understand the main point here. Thanks again.

You are welcome. They are numbers you can easily understand, it's basically the product of supply and market price of the assets to get their market capitalizations, then the debt ratio. Anyways, good to know you now understand the situation of things.

excellent explanation, I congratulate you for your pleasant work dear friend.

Thanks, @endersontowers.

Thank you proff for sharing with us, i am now relax

There is no cause for alarm. Continue being active on Steem. I'm glad this helped. You are welcome.

Hello Prof.. you didn't give my answer.

How much time I need wait to work for in crypto academy ..??

Screenshot_2022_0515_150339.jpg

Continue creating original content on Steemit, you'd be qualified to participate in the Academy sooner.

Thanks for clearing the doubt

You are welcome.

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very nice explanation and awareness very well done

Thank you.

Waow.. I became scared oh. Thank you, this article was helpful

Don't be scared! Steemit is healthy, the algorithm just has to respect the dynamism of the market. Thanks for reading.

I have seen and read about your description and explanation. And how long will this condition continue?👍 and thank you for the information, greetings @figure-village.

The bullish market of Steem would take care of that.

Thanks for clarification.

You are welcome.

Muchas gracias por la oportuna información, aunque ya había indagado algo sobre eso en post anteriores de otro profesor antiguo, no tenia conocimiento de como hacer correctamente el calculo de la deuda

¿Esto podría tener un efecto negativo en la receptividad de los usuario?

Hello, @dexsyluz. I'm glad that you have learned a few things from this today. That being said, this doesn't have any negative effects on the users, it's a time for us to stay more active, and the market is on the rise again. The algorithm just has to respect the market situation. Steem is healthy as ever, keep doing more on Steem. #Steem-on.

Gracias por la explicación, muchos estaban asustados por no saber que ocurría, acá nos dejas todo más claro, saludos 🖖

I'm glad that you are now calm. #Steem-on.

Thank you very much for information . Have a Nice Day bro

You are welcome.

Thanks for sharing this vital information. Some of us are still learning this system of rewarding as I add new gems to my portfolio on the https://atomicwallet.io/, where users have exclusive access to their private keys.

Thank you for this information. It's well appreciated

You are welcome.

thank you for great post!

Thank you for creating this post. I found it very informative.

good post. love it

Thanks, I appreciate this post. I know it's been months since you posted it, but I still want to comment.

I did not know about debt ratio affecting SBD payouts, this is new to me. In fact, I did not even know what debt ratio was.

Again, I appreciate this. Have a great day!
JP

I'm glad you have learned something about debt ratio as far as the STEEM blockchain is concerned. Thanks for reading through and for leaving a comment today, @jeffbradt. Have a great day as well.