Hello everyone!
Club5050 is already giving houseful vibes since there are a lot of people joining which is a very good thing. Let's be honest, most people including me joined the club because of extra rewards that Steemit team offered. Because why not? Ain't this the reason we are here?
Fortunately, I happened to read a crypto lecture yesterday after so long. I am so glad that I read it. Because that opened my mind to new things. It is an advanced lecture but I recommend you all to give it a read whether you are eligible or not for the homework. This lecture will help you understand the benefit of club5050.
You can either read the above lecture or read this post. I will summarize in easy words what the professor taught in his lecture so that newbies can also understand it. Though professor has already explained everything in the easiest way possible.
So let's begin...
We know that the rewards of a post are split equally between an author and curators. 50% rewards go to author and other 50% are distributed among the curators.
We also know that 50% share of author is further split into two halves (SBDs + SP). That means an author gets 25% liquid rewards(SBDs) and 25% staked rewards (SP) from a post's payout.
But in reality if we estimate the USD value of rewards then we will see that the above distribution of rewards is not happening. Authors are not getting 50% share and curators are also not getting 50% share. On the contrary, authors are getting much more than 50% and curators are getting much lower than 50%.
Why?
Do you know that, Steemit blockchain defined 1SBD to be equal to 1USD? But if we check the external markets then we will see that 1 SBD is worth several dollars (around $6 - $7).
This change in the value of SBD changes the whole system of rewards distribution.
How?
Let's take an example...
These calculations show that author is getting 78% rewards and curators are getting 21% rewards.
If we check the liquid rewards, we will see that they are also much more than 25%. The author is getting 67% liquid rewards.
Now if we repeat all the calculation with 1SBD = 1USD, we will see that authors and curators are getting 50:50 rewards.
But we can't control the SBD price.
So why is it important to maintain the 50:50 ratio?
To maintain the supply/demand chain. With the author getting 70% liquid rewards, instead of 25%. The supply is increased but the demand is same. And we know that when something is in abundance and its demand is less then it's price also decreases. That's why Steem's price drops.
How club5050 can help?
Club5050 requires us to turn the 50% liquid rewards into staked rewards. This will help to move the liquid rewards amount close to 25% like already defined in blockchain,. There is no harm in doing it because the powered up (staked rewards) are still ours.
If we follow the club5050 rules then we can maintain the balance between supply and demand of Steem which can help in the price increment.
I am sure that's what all of us want - Steem to the Moon.