RE: Want to boost your steem power fast? Consider higher APR
@umich Thanks so much for this incredibly new way of looking at the lease or delegation rates. I assume you are looking at the NET interest rates for the investor, after factoring in the 10% commission and extra 7 days an investor must wait to have his delegation returned?
If I am right, the cost to the delagatee must be more than 37%.
For example, if a delegator delegates 1000 steem at a net rate of 37% APR for 4 weeks, he is tying up his steempower for 5 weeks (due to the one week cool-down period. This means he has to receive 1000 X 37% X % / 52 = 35.58 steem after the 10% commission. Before the 10% commission, the amount to be paid by the delagatee is 35.58 *10/9 = 39.53. For the 4 weeks, this is equivalent to an annual rate of 51.39%.
Is it worth it?
That depends on the value of an upvote and the value of SBD. Let's take the above example. If you have 1000 steem each 100% vote is worth $0.27. With the current price of SBD at $5.30, that makes a vote worth $0.64 for the author and $0.211 for the curator. In total that's $0.851 per 100% vote. Assuming that you are a shill voter and effectively only voting for yourself you could keep all of that and vote 100% 10 times a day or every 2.4 hours.
So now you have borrowed the voting power of 1000 steem and you can vote yourself with $0.851 10 times a day for 28 days. That gives a total return of $0.851 X 10 X 28 = $238.28. Remember, you paid only 39.53 steem to receive the delegation. At the present steem price of $4.33 it means it cost you $171.16 to earn $238.28. That's a 39.2% profit in just 28 days! The annual equivalent profit is 39.2%*12 = 470% profit per annum.
Conclusion
The delegator makes around 37% but the delegated makes 470%. The conclusion is that it is well worth leasing steempower, providing you can put the votes to good use.
@swissclive, thank you for an elaborated comment!
You are right, I'm using "Effective price" (that accounts for the 10% commission) and I do include the cooling off period of 7 days to calculate APR for existing leases. For the requests I'm just using the posted APR. Hence, these are the NET APRs from the perspective of investor. For delegatee it is somewhat higher but since minnowbooster.net only publishes net APR I decided to leave it as is to keep things simple.
Taking into account the 10% commission it is much better for both delegator and delegatee to strike a direct deal instead. I think the value added comes from the 3rd party guarantee that the payments are going to be made to delegator and delegator is not going to revoke SP too early.
Given the selfvoting scheme you propose I wonder why such APRs are still available in the market. It sounds like a great arbitrage opportunity to rent all that SP (and selfupvote) until APR goes up and prohibits such kind of behavior.
Dear Swissclive friend, I am the winner of the contest developed by @Karlin "mascota divertida" and that counted on your wonderful contribution. Again I would like to thank you for that gesture.
Now, regarding your interesting analysis of this post, I have the following doubt. Why do you compare the 37% delegator gain to the 470% delegated gain? Isn't 37% of the delegator's profit supposed to be monthly and 470% of the delegated's profit is annual? Or is it that the monthly profit of the delegator is 3.08% per month so that when multiplied by 12 months (one year) it is 37%?
Forgive my ignorance, and I apologize for the used English, as I use the help of a translator to communicate with you. Thank you in advance for the clarification you can give me.
Greetings and a big hug.
Translated with www.DeepL.com/Translator
Hi @jamesbacon. The quoted rates are all annual. It’s 3.08% per month. The potential profit could vary greatly if you pay too much to lease steem, or if you are down-voted by a whale who does not like self-voting.
Ah ok now I understand perfectly! Thanks for clearing up, bro.