SEC S16-W6 || STEEM Tokenomics

Edited using Pixellab App

INTRODUCTION

Greetings everyone and welcome to my blog as we look into the fascinating world of STEEM tokenomics. In this publication, we will explore the ins and outs of how STEEM works and why it's so exciting. So, like always, I hope you get to learn something new.

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How have STEEM tokenomics mechanisms, such as token issuance and distribution, evolved and influenced the availability of tokens in the market?

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Tokenomics in simple terms is all about how tokens work and are used in a particular system or Blockchain. Tokens as we have come to learn through our cryptocurrency journey are digital coins or points that we can use to do certain things in an app or platform, and we can also sell them to earn money.

In the case of the STEEM tokens, they are special digital coins that are earned and used on the Steemit platform, with the STEEM tokens having their value and can be earned or bought by users and investors alike.

Now, here's the interesting part, when users like you and I create content on this platform (Steemit), such as writing a blog post or sharing cool photos, other users can upvote our content using their STEEM tokens in the form of Steem Power. And here is the thrill, the more upvotes you get from those who have high STEEM tokens staked, the more STEEM tokens you earn.

This is to say that you as a user, are getting rewarded for sharing your ideas and awesome stuff, and you can also use your STEEM tokens to upvote other people's posts and help them earn too and earn for yourself as well.

Therefore, Tokenomics in this case is all about how these STEEM tokens work as a way to reward and incentivize people for their contributions on the Steemit platform and the STEEM Blockchain.

Now, let us look into how the growth of STEEM tokenomics over time has influenced the availability of tokens in the market. So in my findings, I learnt that when Steemit first launched, a fixed number of STEEM tokens were created and distributed to early users and contributors.

Screenshot showing the initial distribution of Steem Steem WP

This initial distribution served as a means to establish the value and utility of the tokens within the platform and as more people joined Steemit and started creating content, the platform introduced a unique mechanism called "Proof of Brain."

The Proof of Brain mechanism is a way of rewarding users who create valuable content that resonates with the community and adds value to the community. That is, when a user like me and your content receives upvotes, we earn more STEEM tokens and the more upvotes we get, the more tokens we earn. However, the percentage of our rewards is always dependent on the amount of Steem token the user who voted for our content has staked over time. This mechanism works as a means to ensure that the tokens are distributed to those who actively contribute and add value to the Steemit platform where our creativity and engagement are directly rewarded.

Steem team explains the concept of voting, gotten from Steem WP

With the continued growth of the Steemit community with more users earning STEEM tokens, the overall supply of STEEM tokens in the market increased leading to an increased availability of STEEM tokens which influenced their circulation and usage within the platform.

The more these tokens are being earned and used by users meant that there were more opportunities for interaction and transactions on Steemit which created a dynamic ecosystem where users could not only earn tokens but also trade them for other digital assets or even convert them into real-world currencies such as Naira, Dollars, etc.

Therefore, the evolving tokenomics of STEEM about its issuance and distribution mechanisms, played a crucial role in shaping the availability of STEEM tokens in the market. Hence, rewarding active participation and valuable contributions, fostered a vibrant community that continues to grow and thrive. Therefore, the more people actively engage with the platform, the more tokens are earned and circulated, enhancing the overall availability and utility of STEEM tokens.

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How can analyzing staking trends on the STEEM blockchain provide insights into community participation and its impact on the stability of the token?

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Before we go into what staking trends on STEEM Blockchain provide us, let us get to know what Staking is all about.

Staking also called Powering up on this platform is all about putting your tokens to work for you. When you stake or power up your STEEM tokens, it means you are locking up your STEEM to increase your STEEM Power. Hence, by staking or powering up, you are showing your commitment to the platform and its community.

Now, when you stake or power up your STEEM, something cool happens, and that is you get to have a say in important decisions like voting for validators. Hence, powering up is like having a voice in how the platform is run and the more STEEM you power up, the more influence you have. This is because your Stake (Steem power) determines how much weight your vote carries when it comes to making decisions about the future of STEEM.

Steem team explaining the power of SP, gotten from Steem WP

But then, there is still more to it. When you stake (power up) your STEEM, you also earn rewards in the form of additional STEEM tokens and higher curation rewards. This is like a little thank you for being an active and committed member of the community, and the more Steem you power up, the more rewards you get to earn making it a way to encourage users to hold onto their tokens and actively participate in the platform.

Therefore, staking trends on STEEM refer to the patterns and behaviours of users when it comes to staking their tokens. Some people may stake or power up a lot of tokens to have a greater influence and earn more rewards, while others may stake fewer tokens but still enjoy the benefits of having a say in the platform's decisions.

Hence, analyzing staking trends on the STEEM blockchain can give us some really interesting insights into how active and engaged the community is, and how it affects the stability of the token.

Here, lemme break down what I mean. When we talk about staking trends, we are looking at how many people are choosing to lock up (power up) their STEEM tokens and participate in the platform. Therefore, by analyzing these trends, we can get a sense of the level of community involvement. That is, if more people are staking (powering up) their Steem tokens, it shows that they believe in the platform and want to have a say in its future.

So, why does this matter for the stability of the STEEM token? Well, when more people stake their tokens, it can have a positive impact on the token's stability. Think of it like this: when people stake (power up) their Steem tokens, they are showing a long-term commitment to the platform as they are not just earning and selling the tokens for quick profits and this kind of commitment helps create a more stable and reliable ecosystem for the Steem token.

And again, when people stake (power up) their Steem tokens, it reduces the circulating supply of STEEM in the market which can potentially decrease the selling pressure on the token, making it less susceptible to sudden price fluctuations. Therefore, powering up our Steem tokens is all about creating a stronger foundation for the token's value.

Then again, analyzing staking trends also provides us insights into the level of community participation and engagement. That is, if more people are staking (powering up) their Steem tokens, it suggests that the community is actively involved and invested in the platform and this can lead to more collaboration, content creation, and overall growth of the community.

Therefore, by looking into and understanding the staking trends on the STEEM blockchain, we can get a better understanding of how active the community is and how it impacts the stability of the token.

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How do incentive mechanisms, such as Proof-of-Brain, help shape the STEEM ecosystem and motivate content creators and curators?

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Proof-of-Brain to which I have explained how it works in the upper section helps in shaping the STEEM ecosystem and motivates content creators and curators.

Proof-of-Brain is a very cool way in which users of the Steem Blockchain are rewarded for creating and curating content.

That is when you create content, like a blog post or images captured by you, and you share it on the STEEM platform, other users can read or view it and give it a thumbs-up, or what we call an "Upvote" or "like". These upvotes determine how much STEEM you'll earn.

But it's not just about the number of upvotes or likes you get as the value of the votes depends on the STEEM power of the people who give them, I.e., those who liked your post. STEEM Power (or Staked Steem) is like a superpower that users have, and the more of it they have, the more influence their votes carry.

So, when you create good quality content that people enjoy and find valuable, you are more likely to get higher-value upvotes from users with more STEEM power which means you will earn more STEEM tokens as a reward for your efforts.

Now, talking about curators, these are the people who go around the platform discovering and promoting great content created by other users, in simple terms, users are curators even though we have designated curator accounts manned by selected users. When a curator (you and I) finds a piece of content they really like, they can also vote for it and just like content creators, curators can earn STEEM tokens for their votes which we know as "Curation Rewards".

Hence, the idea behind the Proof-of-Brain mechanism is to encourage content creators and curators to contribute to the STEEM ecosystem by rewarding them with STEEM tokens this creates a positive feedback loop where creators are motivated to produce high-quality content, and curators are motivated to find and promote the best content out there.

Therefore, by using this incentive mechanism, STEEM aims to foster a vibrant and engaging community where content creators and curators are recognized and rewarded for their contributions as a way of encouraging creativity, collaboration, and the sharing of valuable content.

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What are the potential challenges related to the distribution of rewards on STEEM, and how might these challenges influence the perception of market participants?

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As good as the intentions behind the STEEM method of distributing rewards, there seem to be some challenges so let us talk about the potential challenges related to the distribution of rewards on STEEM and how these challenges might influence the perception of market participants.

Steemit team acknowledging some challenges, gotten from Steem WP

The number one challenge for me is the fact that the distribution of rewards on STEEM is based on votes and likes from other users. This means that the popularity of content plays a big role in determining the rewards it brings the user who has created it and this can sometimes lead to a situation where certain types of content or certain users, like popular topics, trends or users, receive more attention and rewards compared to other types of content or users that may be equally valuable but less popular.

Another challenge is the potential for abuse or manipulation of the reward system. Since rewards are based on upvotes, there's a possibility that some users may try to game the system by creating multiple accounts (account farming) or engaging in voting rings (Bot use) to artificially inflate their rewards or even self-voting. This can create an unfair advantage for those who engage in such practices and can undermine the trust and fairness of the system.

Steem team acknowledging some challenges, gotten from Steem WP

These challenges can therefore influence the perception of market participants in the following ways.

First, it may create a perception that the reward distribution on STEEM is biased towards popular content or users, which can make it harder for new users or new niche content creators to gain recognition and rewards which may discourage some creators from participating or limit the diversity of content on the platform.

Second, the potential for abuse and manipulation can diminish trust in the system. Because if users believe that the rewards are not distributed fairly, it can lead to a loss of confidence in the platform and its ability to reward genuine quality content which may result in users becoming less active or even leaving the platform altogether.

However, it is important to note that the STEEM community is aware of these challenges and is actively working on addressing them like providing a separate Curation team for certain purposes, for example, Curation Team 9 for supporting Newcomers and Curation Team 3 for users who support the burnsteem initiative. The Steemit team are still constantly exploring ways to improve the reward distribution system, enhance transparency, and prevent abuse such as AI use, Plagiarism, Self voting etc which moderators of various communities and curators alike have to review users' publications.

Screenshot showing some parameters checked on our content

Therefore, by implementing different measures to tackle these challenges, the perception of market participants can be positively influenced, fostering a more equitable and trusted ecosystem.

However, while there are challenges related to reward distribution on STEEM, it is good to note that it is an ongoing process of improvement and by addressing these challenges, the platform aims to create a fair and rewarding environment for all content creators and curators alike.

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How can STEEM’s deep understanding of tokenomics guide investors in their decisions, particularly around staking, content creation, and rewards management?

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Okay, let us look into how understanding the team's tokenomics can guide investors in their decisions, especially when it comes to staking, content creation, and rewards management.

Tokenomics as I earlier explained refers to the way a cryptocurrency like STEEM is designed and how it functions within its ecosystem. In the case of STEEM, has a unique tokenomics model that can help investors make informed decisions.

When it comes to staking, STEEM allows users to "power up" their tokens by staking them. This means that users can lock their tokens in a process called "Powering Up" to gain more influence and voting power on the platform and by powering up their tokens, users can have a greater say in determining which content gets rewarded and can potentially increase their own rewards as well.

In terms of content creation, STEEM's tokenomics model encourages users to create and share high-quality content. The more engagement and positive feedback a piece of content receives, the higher the rewards it can earn which incentivizes creators to produce valuable and engaging content that resonates with the community.

As an investor, understanding this dynamic can help guide your decision-making when it comes to supporting and engaging with content that aligns with your interests and values.

Regarding rewards management, STEEM's tokenomics model ensures that rewards are distributed based on the value that content brings to the community. This means that popular and well-received content has a higher chance of earning more rewards.

As an investor, understanding this aspect can help you assess the potential value of content and make informed decisions on how to allocate your resources, such as upvoting or supporting content that you believe will have a positive impact.

Overall, by having a deep understanding of STEEM's tokenomics, investors can navigate the platform more effectively. They can stake their tokens to increase their influence, support high-quality content, and make strategic decisions on how to manage their rewards. This understanding can guide investors in maximizing their engagement, potential returns, and overall participation in the STEEM ecosystem.

CONCLUSION

In conclusion, STEEM tokenomics offers a fresh and innovative approach to rewarding content creators and users on its platforms. With its unique features and incentives, STEEM has the potential to revolutionize the way we engage with social media and online communities.

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I wish to invite @starrchris, @ngoenyi, @chants and @hamzayousafzai.

Thank You for your Time

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NOTE: Always have a smile on your face, as you are never fully dressed without one.