How to Use the Bid-Based Voting Bots

The "bid-based voting bots" (from now on simply referred to as bid-bots) have existed for some months. In the early days, users simply made a transfer to the bot username and received an upvote. It was all a bit random; often it was profitable but sometimes not. Every such bot also suffered from the same flaw - running out of voting power (VP). So sometimes such bots had to pause their upvotes waiting for their VP to recover. Now things have developed; now we have an open market.

The Steem Upvote Bot Tracker was created by @yabapmatt and has changed the game. Now each user can analyse the market and make a judgment as to whether to bid for a vote or not. Before launching into some numbers, let's take a look at how the market works.

Vote Value

The first column after the bid-bot username is the "Vote Value". This is the value of one 100% upvote from that account. If you are the one and only bidder, this is the value of the upvote you will receive. After voting, the bid-bot's VP drops from 100% to 98%. Then, during the next 2.4 hour cycle, that VP will climb back to 100%, ready for the next round of upvotes.

Display Currency

Before doing anything else, you need to understand how the "Display Currency" changes the numbers you can see on the Tracker. The two most useful views are POST REWARDS and USD; the SBD and STEEM views may be useful, depending on which currency you used to make your transfer, but I rarely use them.

POST REWARDS shows you an estimate of the value that will appear on your Steemit article as "pending rewards". The USD view shows you the value (in USD) of your "payout rewards". This is an important distinction and vital to understanding how these bid-bots convert your transfer into an upvote.

How Author Rewards Are Calculated

The "pending rewards" are calculated across all active posts; the formula is complicated and related to the proportion of votes you receive compared to the whole system. The important part here is that the "pending rewards" are shown in US$ using the current Steem blockchain price of STEEM and the internal peg of 1 SBD = 1 USD.

When your post expires, those "pending rewards" are converted into "post payout". This is when 25% of the "post payout" is distributed as "curation rewards", and then the remaining 75% is the "author rewards" and split 50-50 (you are using the 50-50 option, right?!) between SP and SBD. The amount of SP is calculated based on the blockchain STEEM price and the amount of SBD is calculated based on 1 SBD = 1 USD.

A Numerical Example

Let's assume you have "pending rewards" of $16 and your post is just about to reach payout. How much will you actually receive?

Firstly, 25% goes towards "curation rewards"; that's $4 distributed to your upvoters, so you have $12 left.

Those $12 are now split into $6 worth of STEEM and $6 worth of SBD. Let's now assume that current prices are 1 STEEM = $4 and 1 SBD = $4. Your $6 worth of STEEM is divided by the current price, so you will receive 1.5 STEEM as SP. The $6 of SBD are converted at the blockchain rate of 1 SBD = 1 USD, so you will receive 6 SBD. However, the market price of SBD is $4, so your 6 SBD are worth $24.

	pending rewards on Steemit	payout rewards	payout rewards in US$
curation rewards	$4	1 SP	$4
author SP	$6	1.5 SP	$6
author SBD	$6	6 SBD	$24
Total	$16	8.5 SBD	$34

Your total "author rewards" are therefore worth $30! Your total "post payout", including the "curation rewards" is actually worth $34, rather than the $16 shown in your "pending rewards".

Note that this difference is only due to the fact that the open market price of SBD is higher than $1. In your Steemit Wallet, you will still see your "author rewards" as 1.5 SP and 6 SBD. But if you wish to sell those SBD, they will be worth the market price.

One important side-note here: the internal Market, where you can exchange STEEM and SBD, is very close to the open market, so that, in our example, you will be able to trade these two currencies at a rate of STEEM/SBD = 1.0.

What Should I Bid?

Taking the above example, if you wish to gain a $16 upvote from a bid-bot, then you will have to bid (transfer) $34 worth of STEEM or SBD! Also note that $4 will go to your post curators, so you will personally receive $12 of the upvote.

How is this possible? How can you pay $34 for a $12 author reward? Where's the profit in that?!

The problem is thinking about it in terms of dollars; you should look at it in terms of STEEM or SBD. In this case, you would transfer 5.5 SBD (worth $34) and you will get back 1.5 STEEM and 6 SBD (worth $30) plus 4 SP to curators.

Still, where's the profit? before looking at that, let's look at another parameter shown on the Tracker: the "Current ROI %".

Current ROI

As I said above, each bid-bot has a maximum value for a 100% upvote. That upvote is spread in proportion with the transfers from bidders.

If a bid-bot has a value of $500 and two bidders each bid 10 SBD, then each will get 50% of that $500, or $250 each. Now that sounds worth it, right?! But that won't last, as a new bidder comes in and transfers 20 SBD, the upvotes are now split in the ratio of 2:1:1. The original two bidders now receive $125 each. This process continues until the bid-bot reaches close to parity: this is when the total incoming transfers is close to the total value of the bid-bot.

When looking at the ROI, you should set the "include 25% curation" to ON. This means you are seeing your actual returns with the curation rewards already deducted.

Assuming the bid-bot is exactly at parity, you will see the ROI=0% and your bid of 8.5 SBD worth $34. If you are viewing the data in USD you will see the Vote Value as also $34, and if you are viewing in POST REWARDS you will see the Vote Value as $16. It would be a nice feature to distinguish Vote Value with and without curation, but the Tracker does not do this at the moment. Instead, if you play with the "include 25% curation" toggle, you will see that it changes the ROI value; with the toggle ON, you see your estimated ROI after the curation rewards have been deducted; with the toggle OFF you will see the ROI including curation rewards. You want the toggle ON and ROI greater than zero.

The Best Strategy

Now that we have looked at some of the data shown on the Tracker, we are ready to figure out a good bidding strategy.

The Steembot Tracker actually makes the strategy very easy. It includes a column labelled "Max Suggested Bid"; if this already shows 0.00 then that bid-bot already has a negative ROI. If the "Max Suggested Bid" is positive, then you can bid up to that amount. In reality, other users will be looking at the same screen and coming to the same conclusions, so bid up to whatever you are comfortable with, but I would keep it to a half or even a third of the value shown.

When looking within the Details of a bid-bot, I would set "include 25% curation" as ON, then set the "Display Currency" to USD. Then, firstly look at the ROI figure and then at the Vote Values - that ROI figure is the Vote Value after the curation rewards have been deducted.

If you then wish to see what the actual Vote Value will look like on Steemit, then change the "Display Currency" to POST REWARDS.

How Profitable Are The Bid-Bots?

If you are lucky and the ROI after curation is positive at the end of a bidding cycle, then you have made a small profit, otherwise you are likely to make a small loss. So why do people use them? The simple answer is to promote their posts! You may actually find that the real profit is in all the other user upvotes you get. It is also a way to increase your SP without powering up your your STEEM, or trading SBD for STEEM.

Lastly, remember that these types of auctions are notorious for people over-bidding in the excitement of getting something! If your primary interest is to promote your post, then that's fine, but if you are looking to profit just from the bid-bot upvote, then pick a time of day when there are few other bidders. If you thought that the bid-bots were some kind of magical ATM, then think again!

One Last Thought

The bid-bot owners have come under pressure to reduce the number of crap-posts and 6th day upvoting, and any other abuse of the facilities offered. Most bid-bots have reduced the "Max Post Age" to about 3 days. Also, many bid-bots now keep a blacklist of users; these include posters of copy-pasta picked up by @cheetah and @steemcleaners and others, as well as spammers. Please check the Steemit page for each bid-bot and you should see recent posts about their blacklisting policy. Note that most will not issue refunds if you are blacklisted and continue to bid. Just a warning.

Any questions, please ask.

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_{images: Steem Upvote Bot Tracker}
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Please Comment, Resteem and Upvote. Thanks!

@rycharde manages the AAKOM project and the MAP forum.