Is delegation really profitable? Let see how can we review their performance before investing our hard earned SP.

Steem Power Delegation

On wallet page, you can find the definition of delegation is...

Delegation is donated for influence or to help new users perform actions on steemit.

If you were a minnow who create high quality content, with great contribution to the community, and your work being loved by a whale, you may be delegated with some SP to power up your effort. This is by the original design and purpose of SP delegation.

However, a more common case is that someone has a project that is making profit on steemit. The project owner want to raise more fund to further scale up his work. He will then ask for investor's SP delegation.

For example, SP is a critical success factor for an upvote bot. The more SP it got, the higher bid it can accept, and therefore more likely to be profitable.

Above is an example of a whale bot. He has got 123,503 SP by his own and got a further 239,045 SP delegation from other investors, giving a total of 362,098 SP!!!

Would you also consider to invest some SP to this bot? Before any decision, let's collect more information first.

Steem Power Delegation Information

There is no secret (or privacy) on blockchain. We can view delegation information of any account. Steem Reports is a good tool for this purpose.

By typing in the bot name, you can see the list of accounts who delegate how much SP to this bot. The longer the list, the more popular is this bot. You may also have an idea about how much SP other people delegate to the bot for reference.

Delegation Return

With reference to a couple of promotional posts created by the bot owner, they usually mention how delegation works and the benefits of delegation. However, there seems no concrete figures about how much return can be expected. For the bots, it may be difficult to commit a solid ROI to investors due to some reasons out of their control. Especially for the small bots, we can see some are quite under bidded with plenty of idle time. With that said, does it mean it is better to invest in large bots? Let's firstly see an example of a relatively small bot.

Case 1 - A small bot

Above is the wallet of an investor of a certain small bot. We can see the bot send the earnings to the investor on a daily basis. That is an on-going passive income. By sampling a week of data, it is found that the daily earning is about 0.042 SBD with an investment of 50 SP.

Invest 50 SP, average daily earning is 0.042 SBD

At the time of writing, SBD/STEEM price is 1.2. The annual return on investment is therefore 25.5%. If we compared this with the common banking products, the return of SP delegation is...

Is 25.5% the best deal? In the above example, it is a small to medium size bot with total of 36,000 SP delegated from 39 investors. Let's see one more example.

Case 2 - A large bot

This time, we check out the wallet of a person who invest in a certain large bot. By sampling the same amount of data, the average daily earning is about 0.041 SBD. Up to this point, it seems like 0.04x is the norm among bots. But further looking into details, the SP delegation by this investor is 100 SP. That is...

Invest 100 SP, average daily earning is 0.041 SBD

Double the investment, daily earning is about the same

Conclusion

A high profit making bot does not necessarily give a high return of SP investment, and vice versa.

The more investigation you do, the more secure will be your investment.

To be fair to the bots, above calculation is only base on a small sample of data by hand. It is by no means accurate. The idea introduced here is that there are tools we can use to review the bot performance. Before making any decision, it is useful to firstly evaluate the SP delegation amount and return by looking into daily earnings of existing investors.

How much SP do you have? How are you making use of it? Please feel free to share your experience.

Thanks for reading.