Steemit is a blockchain-based blogging and social media website. Users can gain a cryptocurrency, STEEM, for publishing and curating content. The company is owned by Steemit Inc., a privately held company based in New York City and a headquarters in Virginia.
Steem is the fundamental unit of account on the Steem blockchain. All other tokens derive their value from the value of STEEM. STEEM is a liquid currency, and therefore can be bought or sold on exchanges, as well as transferred to other users as a form of payment.
Steem Power (SP)
There is significant value to having long-term commitment because it enables communities to make
long-term plans. Long term commitment of stakeholders also causes them to vote for long-term growth
rather than short-term pumps.
In the cryptocurrency space, speculators jump from cryptocurrency to cryptocurrency based mostly on
which one is expected to have short-term growth. Steem wants to build a community that is mostly owned
and entirely controlled by those with a long-term perspective.
Users are able to commit their STEEM to a thirteen week vesting schedule, providing them with
additional benefits within the platform. STEEM that has been committed to a thirteen week vesting
schedule is called Steem Power (SP). SP balances are non-transferrable and non-divisible except via the
automatically recurring conversion requests. This means that SP cannot be easily traded on
When users vote on content, their influence over the distribution of the rewards pool is directly
proportional to the amount of SP that they have. Users with more SP have more influence on the
distribution of rewards. This means that SP is an access token that grants its holders exclusive powers
within the Steem platform.
SP holders are also paid interest on the balance of SP that remains vested. 15% of the yearly inflation is
paid to SP holders as interest. The amount of the interest that they receive is directly proportional to the
amount of SP they hold relative to the total amount of vested SP across all users.
Transferring from STEEM to SP is referred to as “powering up”, while transferring from SP to STEEM is
referred to as “powering down.” SP that is powered down is returned to the user over a period of thirteen
weeks, via 13 equal weekly payments, starting one week after the power down is initiated.
The Power of Steem
Steem recognizes that the value of all user contributions (posts and votes) is greater than the sum of the
parts. A single comment is worth next to nothing, but millions of curated posts is worth many millions (or
possibly even billions) of dollars. A single vote provides little curation value, but billions of votes is very
effective curation. Content without curation is of limited value. Given all the content of the Internet minus
the links between it, Google would struggle to produce useful search results. It is the links between
information that give it significant value.
Minimizing Fraudulent Feeds
SP holders elect individuals, called witnesses, to publish price feeds. The elected witnesses are
presumably trusted by those who have a vested interest in the quality of the feed. By paying those who are
elected, Steem creates market competition to earn the right to produce feeds. The more the feed producers
are paid the more they have to lose by publishing false information.
Mitigating Timing Attacks
Market participants have access to information faster than the blockchain’s three and a half day moving
median conversion price can react. This information could be used to benefit of traders at the expense of
the community. If there is a sudden increase in the value of STEEM traders could request conversion of
their SBD at the old, lower price, and then sell the STEEM they receive a the new higher price with
Minimizing Abuse of Conversions
If people could freely convert in both directions then traders could take advantage of the blockchains
conversion rates by trading large volumes without changing the price. Traders who see a massive run up
in price would convert to SBD at the high price (when it is most risky) and then convert back after the
correction. The Steem protocol protects the community from this kind of abuse by only allowing people
to convert from SBD to STEEM and not the other way around.