Originally steem dollars were intended to allow a consistent earning on steem, because they were (and are still supposed to be) pegged to one dollar. This means that at any time, one steem dollar should can be exchanged for one dollar worth of steem.

For example: If steem's price was $0.5, one steem dollar can be exchanged for 2 steem. When the steem price reaches $5, one steem dollar can now be exchanged for 0.2 steem.

This system was made for content creators. Let's say a content creator regularly posts on steemit, and earns $100 a day. 50% of his earnings will be in steem power, which takes weeks to cash out, while the other half of his earnings will be given in steem dollars, which can be instantly exchanged into bitcoin, and then into dollars. This allows content creators to cash out their profits and pay their bills and expenses with steem dollars, without having to constantly power down steem power, because powering down takes weeks and can be inconvenient. This also allows a consistent revenue from steemit that doesn't depend on the volatility of steem, because even if steem's price crashed 90% in one day, the content creator still has a good income, since steem dollars are pegged to $1 and can't crash.

However, recently, the price of steem dollars has risen well above $1. It even reached $15 at one point in December. Now it is back to around $7. And this is even better for everyone on steemit, here is why:

As we said earlier, 50% of earnings on steemit are in steem dollars. We are paid in steem dollars as if steem dollars are worth $1, because that is how the steem blockchain works.
Let's go back to our example. The content creator made 100$ on his post. Therefore, he will earn 50 steem dollars. That would normally equal $50, which is half of the payout. BUT, because steem dollars are being traded at $7 now on bittrex and poloniex, that means that the content creator actually earned 50 x 7 = 350$ in steem dollars.

In short, payouts on steemit have been crazy in the last month. Now, when you look at the amount generated by upvotes below a post, you should know that the real value earned by that post is in reality four to five times higher that the price that is shown.

For example, if we get a $1 upvote on a comment, we actually earned $4 from this upvote. And everyone is happy!