There has been a rise in discourse, with many users voicing concerns over the top heavy distribution of Steem wealth. I thought I would address these concerns in a BALANCED manner, and see whether we can all come out of the other side knowing a little more about how Steem is distributed, and how this will change moving forward…
This is a valid concern. Steem(it)'s aim to become a Stable Cyrptocurrency is based around wide distribution, and high levels of circulation. High levels of inequality, a number of years down the line, could really hurt the aims of the community and founders to achieve this. It is, however important to remember that we at at the VERY early stages of a journey which has ‘world domination’ as it’s ultimate aim.
The ‘Real World’
A recent report by Oxfam (http://policy-practice.oxfam.org.uk/publications/wealth-having-it-all-and-wanting-more-338125) found that between 2009 and 2015, the wealthiest 1% share of global wealth increased from 44% to 48%, with many factors point to this measure surpassing 50% by the end of 2016. In other words, the wealthiest 1% own the same as the other 99% combined.
Are you in the Top 1% Globally. You need a net wealth of $700,000 and above to fulfil that criteria.
Let’s bring these numbers to US only. The top 1% possess 40% of the wealth (as of 2014), and you would need to have net assets of $7m or above.
Steem
Data from http://steemwhales.com shows that Steem holders distribution looks like this;
Top 1% own: 88.30% (53% of Steem is Held in @Steemit Account, this account has been inclueded, but my summary will show this is probably unfair, and actually the top 1% could be closer to 30%-40% of Steem if you assume this account will be distributed on balance away from the top 1%).
Top 1%-10% own: 10.67%
Bottom 90% own: 1.03%
Now, this is clearly a picture of in-equality, however I should first state that Steemit has had user number growth approaching 600% in the past 4-5 weeks, which will clearly affect this picture (considering it will take some time for these users to begin to use the Steemit platform effectively). So it’s important to not look at these numbers and just state that Steemit is un-equal, and that’s it. What’s important is too see how this might change moving forward…
This ‘fact’ will make Steem different to the real world in that, it is becoming MORE (and not less) equal as time moves on. Let me show some rough figures to see how quickly that might happen…
Quick Calculations
Steem has a dilution rate of 100% per annum
Steem Power is rewarded a 90% ‘Interest Rate’ per annum
Steem Power is Diluted 10% per annum
Creation and Curation Rewards are 10% of MCap Per annum
Creation get’s 75% of the Pot, Curation the other 25%
97% of Steem is Vesting as Steem Power.
So, by these measure, if the top 1% held 97% of their Steem Wealth in Steem Power, and didn’t Curate or Create, they would be Dilluted 10.30% per annum (on Average). The ‘Whales’ do however contribute to the platform, however because of the size of their holdings, let me assume that Creation doesn’t impact their wealth so much, and they achieve an average performance on the Curation side. This would bring the Dilution rate down by 25% to 7.725%.
By this measure, over the course of the following years, we can expect to see Wealth Distribution move as follows;
1 Year from Now: Top 1% Control = 81.47%
2 Years from Now: Top 1% Control = 75.18%
3 Years from Now: Top 1% Control = 69.37%
4 Years from Now: Top 1% Control = 64.01%
and so on…
Unfortunately, the picture isn’t so clear, because the bigger accounts attract attention which instantly makes them above average curators. Let’s look at some ‘Whale’ accounts (which I will keep anonymous because I don’t want to single anyone out);
What is actually happening...
Account 1:
Steem Power: 1,510,167
Curation Reward Last Week: 2059
Average out Curation Reward over the year: 2059 x 52 = 107,068
% Curation Return over a year: 7%
Account 2:
Steem Power: 3,332,665
Curation Reward Last Week: 2929
Average out Curation Reward over the year: 2929 x 52 = 152,308
% Curation Return over a year: 4.5%
Account 3:
Steem Power: 1,676,596
Curation Reward Last Week: 8077
Average out Curation Reward over the year: 8077 x 52 = 420,004
% Curation Return over a year: 25%
Account 4:
Steem Power: 2,146,601
Curation Reward Last Week: 3019
Average out Curation Reward over the year: 3019 x 52 = 156,988
% Curation Return over a year: 7.3%
These results suggest to me that, the dilution rate (being experienced by the top 1%) is likely much lower than the 7.725% I previously extrapolated, however most accounts I looked at were well below the 10.30% limit, and on average I would suggest that dilution is closer to the 3% mark… This I believe shows the inefficiency of the Steemit community (being currently too small) to nullify the 'Whales' power of attraction (especially the Bot accounts). As the user base gets larger, we will see this dilution rate tend to 7.725% over time. A larger user base will breed efficiency.
Summary
Overall, I would suggest that It will take some time to hit numbers that will quashed the voices of discontent, but the Steemit platform is moving in the right direction. Something which cannot be said for the 'real world'. Increasing user numbers will help no end, making it more and more difficult for the top 1% to Curate at such a high level. This will in turn speed this process up to the previous 7.725% I extrapolated.
It is certainly not all hugs and roses, but It is also not worth forgetting that, having so much Steem Power in the hands of the few, of which most are not powering down, is inflating the price of Steem, and increasing the payouts for new users. A completely equally distribution would never work (economically) in these early day, however a model which tends to equality over time certainly can.
Also, 53% of Steem is held in the @Steemit account, which may well be distributed over time to new users, and other initiatives which will only aid in further equality. If you assume this account is not part of the 1%, suddenly the numbers look very close to the 'real world'. (Also, this account does not curate). This account has been included in the calculation above. Although we don't know for sure where these funds will go, ..I'm personally sure distribution will be well outside the top 1%.
We are only a matter of months into this journey. Time will be the equalising factor!!
EDIT: I had Account 3 down as a Bot account. This was incorrect, and the owner of this account has explained to me how this account operates.