How to calculate your upvote value? Part 1 - What is VESTS?

Can't believe after 8 months I'm here, this is the first time I was reading about the economics of Steem. Well, all hail to my learning journey on programming on Steem. (which explains why I didn't post for 7 days now.. LOL) I was trying to find out how to calculate the upvote value of certain account. And this is what I found. I know a lot of steem developers already posted about this. But their post get pushed way too behind (Some dated 6 months or even 2 years ago). So I want to thanks @yabappmatt for making me to read about this. By the way, please vote him as witness, he's helpful and kind af.

There is more than meet the eyes

One of the parameter to measure the popularity and success of an author is by STEEM POWER(SP). The higher the STEEM POWER, the more successful that author is. But in reality, SP doesn't mean a thing in steem universe. It is merely a number that shows how much STEEM you have in your wallet. So what really measures the influence you have on steemit platform?

Introducing VESTS. VESTS is a hidden value on steemit for some reason and you can't even find it on steemit whitepaper. You can only find it on developer-friendly site such as steemd.com which appears like this :

So what does VESTS means?

VESTS is equivalent to an equity to a whole company. And just like real stock, it is the determining factor for the stake or power you have over the whole company. In other words, it is the determining factor if you're the CEO of the company or just an employee. And therefore VESTS have a bigger say than STEEM POWER, and rightfully so control the amount of STEEM POWER displayed on your account. Just like the mastermind behind a highly coordinated crime syndicate. Ok it might sound like a exaggerated example, but you should to know that VESTS is the one pulling the strings on STEEM POWER.

The Affair between STEEM POWER and VESTS

To understand this, first you must understand this important financial concept ----> SHARE DILUTION. What is share dilution? Watch this video, credit to Invest Owl Youtube channel. If that still confusing, try look up investopedia.com and search for stock dilution (it's the same thing)

Ok once you got that in mind, lets apply it to STEEM and VESTS.

So if you check the post from @sigmajin two years ago. He posted about the exchange rate of STEEM to VESTS is about (cause steemd doesn't provide historical value of steem_per_mvest) :

And today (time : 5:07pm 19/2/2018) the data showed steem per mvests is :

Wait, are you saying that STEEM required to buy one million VESTS will always go up each year? Yes you're damn right. So why don't the developer make it constant? Why don't we see STEEM reaching 100$ or more if it is getting expensive every year? This is because dilution of VESTS. Now you should somehow understand why I pointed out that video explaining about SHARE DILUTION?

As I mentioned above, VESTS is a share of a company(in this case steemit) and STEEM is the liquid asset. So your shares on a company will be diluted when new VESTS are generated for the new investor. So how do you make sure your decreased stake on company is compensated? You'll put a higher price tag, (in this case STEEM) to the new shares being issued to the new investor. In steem ecosystem,this is manifested as the rise in STEEM amount to purchase one million VESTS. So the profit from selling a more expensive MVESTS will be redistributed to the existing investors. Even though their shares are diluted, they will get higher amount Steem.

So why don't we just use VESTS as an influence meter?

Well the early investor will be pissed to see their stake decreases with time, so instead we have to give them something nice to see. And that is steem power.

So steem power is merely showing the number of STEEM you used to purchase per million VESTS. And if you're following along, I showed you steem per mvests is increasing every year. Lets say you didn't power up with any steem, theoretically speaking your STEEM POWER should increase over time too! And you're completely right!!

If you check some whales account with enormous SP, everytime you refresh you'll see their SP went up a bit! Pretty cool huh.

Alright this post has been getting too long. I'll post about how to use VESTS to calculate your upvote next time. Thanks for reading!