How to Calculate the Value of a Vote

Hello everyone, in this post that I made about a week ago (How To Steem - Part 1 - Learn, Learn, Learn!) I talked about how one of the most important things for being successful here on Steem - or most anywhere else for that matter - is learning. The more you know and the more you understand about how something works, the more success you will have with it.

In that post, I said that: “Whenever I am finally able to understand a topic that was very hard to find a detailed explanation for, I note it down, since that’s probably a good topic for a post.” Recently I have been working to understand how exactly the rewards for each upvote on a post or comment are calculated. This is something I have not been able to find any in-depth explanation of with some Google searching, so - like I said -  it’s probably a good topic for a post since others may have the same questions.

Additionally, there are some parts that I still don’t fully understand - so I would really appreciate it someone reading this can help fill in the gaps for me in the comments! Anyway, here goes…

Calculate Your VESTS

The first part of calculating the value of your upvote is determining how many VESTS you have. VESTS are like shares in a company, but in this case they are shares in Steem itself, meaning how much influence you have over the reward fund from which your vote value comes (more on that later). 

When you “power up” and purchase Steem Power you are really purchasing VESTS. The reason behind this is important to understand, but it is out of the scope of this post, so I will refer you to this great post if you wish to learn about it: https://steemit.com/interest/@sigmajin/understanding-the-steem-economic-system-vests-sbd-steem-dilution-interest-and-all-those-crazy-things It is a little outdated so the specific numbers have changed a bit, but I believe the concepts still all remain the same.

To find the number of VESTS you have is pretty easy - you can look it up on http://steemd.com/@yourname. You want to look for the following values: “Vesting shares”, “Delegated vesting shares” and “Received vesting shares”. You can see the values for my account below (http://steemd.com/@yabapmatt):

“Vesting shares” is the number of VESTS have received from purchasing Steem Power, “Received vesting shares” is the number of VESTS that have been delegated to me by others, and “Delegated vesting shares” is the number of VESTS that I have delegated to others. To calculate my total VESTS used when voting, you add “Vesting shares” to “Received vesting shares” and subtract “Delegated vesting shares”. In my case that is:

8,860,656.464688 VESTS + 4,999,492.045680 VESTS - 59,696.776925 VESTS = 13,800,451.733443 VESTS

Then we multiply by 1,000,000 to make it a whole number of: 13,800,451,733,443 VESTS

Calculate Your Voting Power

Now that we’ve calculated how many VESTS I have, we need to apply the amount of my voting power that will be used. For now we will assume that I am at 100% voting power and giving a 100% weighted vote. You may have noticed that such a vote will use 2% of your total available voting power. I’m not going to go into the details as to how that is specified / calculated (since I’m still a little unclear about all of that myself) but for the purposes of our calculations we need to multiply the number of VESTS we calculated above by 2% which gives us:

13,800,451,733,443 VESTS * 0.02 = 276,009,034,669 VESTS (276 billion, woohoo!)

We now have the exact number of vesting shares which will be applied to one 100% upvote at 100% vote power. The next thing we need to figure out is how much those vesting shares are currently worth.

The Reward Fund

There is only a fixed amount of STEEM available for rewards at any time and this is called the Reward Fund. The amount of STEEM your vote gets from the Reward Fund is determined by the percent of the total amount of vesting shares from all recent votes in the entire Steem blockchain that your vote makes up. We can see what the total amount of vesting shares from all recent votes on the entire Steem blockchain is on http://steemd.com in the “Reward Fund” section under the “recent_claims” property:

At the time of writing the value is: 296,277,010,153,854,712. That's only 296 Quadrillion, let's be glad this is done by computers!

So now we can calculate what percent of the total my vote comprises:

276,009,034,669 VESTS / 296,277,010,153,854,712 VESTS = 0.00000093159113 (we just went from really big, to really small, really fast!)

We can also see the total amount of STEEM currently available in the Reward Fund by looking at the “reward_balance” property which, at the time of writing, is: 706,497.619 STEEM.

This means my 100% vote at 100% power is currently worth:

0.00000093159113 * 706,497.619 STEEM = 0.65816691522 STEEM (ok, not so bad!)

Convert to SBD

We’re almost there! Post rewards are displayed in SBD, not STEEM, so the last step we need to do to calculate our upvote value is to convert the STEEM we calculated above to SBD using the current price feed. Once again we can get this from http://steemd.com as you can see below:

To get the current conversion rate from STEEM to SBD we divide the “base” by the “quote” so at the time of writing we have:

1.024 SBD / 1.000 STEEM = 1.024 SBD / STEEM

So finally we can take our vote value in STEEM, multiply it by the conversion rate and get our final vote value of:

0.65816691522 STEEM * 1.024 SBD / STEEM = 0.67396292119 SBD

We can round that to a nice easy $0.67 SBD and whew, we’re done! Now you can multiply the vote value we just calculated by different voting power and vote weights to see what the value will be of your vote in other scenarios. For example at 75% voting power and using a 20% vote weight my vote would currently be worth:

0.67 SBD * 0.75 * 0.2 = $0.1005 SBD

What Factors Affect Vote Value?

So hopefully that exercise was as helpful to everyone else as it was to me. The most important thing it helped me realize was the different factors that affect the value of votes. The current price of STEEM is the most obvious one, but the less obvious one (at least initially, to me) was the “recent_claims” in the Reward Fund.

Since there is only a fixed amount of STEEM available in the Reward Fund at any given time, if all of a sudden double the amount of vesting shares worth of votes were submitted then the amount of STEEM available for each individual vote would be cut in half.

This initially seemed very worrying to me, but I only recently came to realize that if double the amount of vesting shares worth of votes are submitted, then that means a LOT more STEEM would have to be purchased on the open markets. This would likely more than double the value of STEEM and therefore have a net increase to the value of each vote in SBD.

That’s all for now, it’s getting late and I’ve spent way more time than I anticipated on this post! Please let me know in the comments if I’ve gotten anything wrong and I will correct it asap. Thanks for reading!