RE: Steem vest ranks: Plankton < Minnow < Dolphin < Orca < Whale

[yabapmatt]

Now I don't fully understand the relationship between STEEM and VESTS and how the total supply of these measures will change over time.

Hey @dhimmel - here's a post I made a while back explaining the relationship between VESTS and SP: https://steemit.com/steem/@yabapmatt/understanding-vests-and-the-steem-power-illusion

Basically there's no such thing as Steem Power - it's all just VESTS. VESTS are a token on the Steem blockchain like STEEM and SBD and Steem Power is just a way of showing the value of your VESTS in terms of STEEM.

The post can explain it in more detail.

Comments

[dhimmel]

@yabapmatt great post! Yes, I did not understand this dynamic at all.

Here are the spoilers:

STEEM POWER doesn’t really exist. It’s not a token like STEEM and nowhere in the blockchain is anything recorded in STEEM POWER

When you “power up” your STEEM, you are really paying STEEM to buy VESTS and when you “power down” you are selling your VESTS for STEEM.

your STEEM POWER slowly goes up over time as the price of VESTS increases!

I'm not 100% sure about this but I think the price of VESTS increases at the same rate as the inflation. So with each block new VESTS are created which causes some inflation, and the steem_per_mvests amount is increased based on that.

So STEEM Power is really just there to show the value in STEEM of your VESTS?

When you power down, you essentially are selling VESTS for STEEM in 13 separate time-gapped trades. Does that mean on week 13 you are actually getting more STEEM than on week 1 because the STEEM/VEST exchange rate has increased? Therefore, when you power down, you will actually get more STEEM in the end than the amount of STEEM Power you initiated the power down with?

[yabapmatt]

Yes and yes. I'm actually working on a new Steem wallet project that will show Steem Power to 6 decimal places with a cool animation so you can see it increasing in real time to bring attention to this fact that few people are aware of. Hopefully i'll have some time to finish it up sometime soon.

[dhimmel]

Wow! Now I'm starting to wonder whether STEEM Power is a lousy concept in general. Perhaps we'd be better off if frontends explicitly valued things in terms of VESTS or MVESTS. I guess the power up / power down terminology is explanatory, but VESTS definitely are underappreciated when they're the actual measure in the blockchain.

I'm actually working on a new Steem wallet project that will show Steem Power to 6 decimal places with a cool animation so you can see it increasing in real time

Can't wait to try that out.

So holding STEEM as opposed to VESTS sucks in three ways:

1. The exchange rate of the STEEM (in terms of VESTS) is going down over time
2. The total supply of VESTS increases over time, further decreasing the value of STEEM. At least when you hold VESTS, you are better positioned to claim your share of VEST inflation (for example by delegating to a voting bot and immediately converting STEEM/SBD revenue to VESTS).

Now what happens if everyone sells their VESTS for STEEM? This would decrease the total number of VESTS. Does the number of new VESTS created also go down? In other words, is the inflation rate a percent of total VESTS or a set number of VESTS?

[yabapmatt]

My feeling is that Steem is overly complicated, especially for the mainstream audience it's trying to reach, so I actually like that they created the concept of STEEM POWER to simplify things. If the majority of people on here who are struggling to understand basic cryptocurrency concepts had to now deal with VESTS too I think it would really be too much.

That being said I think information about VESTS and how STEEM POWER really works should be more easily available and visible for those of us who prefer that level of detail.

So holding STEEM as opposed to VESTS sucks

Yes, the only downside to holding VESTS is the long-term commitment. If you are ok being invested for the long term then there's absolutely no reason to hold liquid STEEM (except maybe to pay for a few things here and there).

Now what happens if everyone sells their VESTS for STEEM? This would decrease the total number of VESTS. Does the number of new VESTS created also go down? In other words, is the inflation rate a percent of total VESTS or a set number of VESTS?

The number of new VESTS that are created is governed by the overall inflation rate of the platform, which includes both liquid and vested STEEM. It is not affected by at all by powering up or down.