Why the 100% payout option is really closer to 70%
After pouring your heart and soul into writing a your best post yet, choosing pictures that perfectly catch the mood of your post and picking 5 insightful tags there is one final decision to make before you post.
50:50 or 100% Power up? lets face it no one really chooses decline payout!
At today's prices you would get about 30% more for you post if you choose the 50:50 option and immediately convert your SBD to Steem.
SBD
Steem Backed dollars or SBD are one of the most impressive innovations of the Steemit platform in my opinion. SBD is a counterparty free asset that is worth about 1 US Dollar. The idea is that market forces automatically correct the value of SBD so that it is always trading at 1 US dollar in value. It takes the volatility out of Cryptocurrency which is a good thing and the innovation of not having a counterparty backing it means credit risk is reduced.
In contrast consider what happened with the UDST in recent months. It's back at parity now but market forces built in a discount as there were concerns over the credit worthiness of the backing institution. In short there were worries there would be a run on the bank.
Market Forces
In recent months SBD has been trading above 1 US dollar which means that market forces should act to drive down the price in the long run, back to 1 US dollar.
Which Payout Option to Choose...
When you get a payout from a post you get the value either in;
- Steem Power if you choose the option to power up 100%
- or a mixture of 50% Steem Power and 50% Liquid Steem if you choose the 50:50 option
If the price of SBD is above 1 US dollar, to maximise your returns, it is better to choose the 50:50 payout option and when your post pays out you can convert your liquid rewards to Steem or Steem Power manually. This is the market mechanism that should drive back down the price of SBD to about 1 dollar in value. It's a bit manual but can increase you post payout significantly.
On the other hand if SBD is below 1 dollar you would maximise your post payouts if you choose the option to get a payout 100% in Steem Power.
Many thanks to @deanliu who brought this to my attention a few days ago.
@bitgeek has provided some detailed examples of his recent payouts and how they are broken down between Steem and Liquid Steem in a recent post 50/50 is a better Payout option right now!
SBD or $
One final note for reference. The price quoted in the markets tab, on www.steemit.com is SBD. It seems at first glance much lower than what you would get on Poloniex but that's because the trading pair is Steem and SBD not Steem and USD or SBD and USD. There may be a small difference but it is not that big at time of writing. The savings in this post are based on todays fx rates:
- 1 Steem = US $2.08
- 1 SBD = US $1.62
Thank you for reading this. I write on Steemit about Blockchain, Cryptocurrency, Travel and lots of random topics.
Image Sources https://pixabay.com/
Wow. You are really good at this and understand the market really well. I now get the exact reason why we have sbd. Just a question; i want to cash out, is it advisable for me to use the market or convert it through the 3.5 days payout
That is a tough one to answer as it depends on whether the price is going to go up or down in the next 3.5 days. When you go to convert SBD to Steem you get the following message which I think sums it up nicely
Amazing of you to share with the community this priceless piece of information.
I'm not sure if it's better for the abs itself to trend above 1 or drop to the 1 $ peg.
Hopefully steem price will rise soon.
Cheers and much love :)
-Goldie
We are all hoping for the Steem price to go to the moon :)
Thank you for commenting, I think the steem price at $1 makes more sense as it gives stability and certainty for those that require that. If you want to benefit from increases in the value of the currency you can invest in Steem or Steem Power.
@eroche thanks for a detailed explanation of the payout structure. I already knew most of this information, but I thought you presented it in a ver clear and concise manner. This will be helpful to many Steemians out there!
Thank you.
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This post received a 40% upvote from @randowhale thanks to @eroche! For more information, click here!
Very informative article thank you
That's how you do it, the secrets out. Great breakdown! 🙌🏼🙌🏼
Upvoted because I'm trying understand the financial aspects and what to do when I gain some Steem dollars - I'm still very new at this
If you think Steem will go to the moon, convert to Steem or Steem Power :)
I see you are new to steemit, welcome and feel free to ask any questions and I will be glad to help.
Thank you - that is much appreciated @eroche
Great Article! Upvoted and resteemed!
That was an awesome lesson in crypto-arbitrage!