Savings Rewards

Steem Dollar rewards bring stability to you

STEEM Dollars (SBD) are a new approach to creating a robust, counter-party free, pegged currency. Holding SBD pays interest. SBD is always convertible to $1.00 worth of STEEM.


Cryptocurrencies are unique in that they are the only digital asset that is not someone else’s liability. They are fungible, decentralized, and as valuable as the network of users that support them. Historically they have suffered from very high volatility and are mostly held for speculative purposes.

STEEM borrows a concept from the startup world known as a convertible note. Convertible notes come in many forms, but the basic idea is that they are worth $1.00 of shares at a future price. STEEM Backed Dollars (SBD) convert to a crypto-currency rather than to shares in a company. The price used to convert SBD to STEEM is derived from a reliable decentralized price feed.

Earn Interest on Savings

SBD pays users who hold it interest. This interest rate ensures that SBD can be safely held with minimal opportunity cost. The actual interest rate can be changed by consensus of the active miners. This gives STEEM the flexibility to adjust the interest rate to be appropriate for market conditions.

Where does Interest come from?

Steem creates new SBD to pay interest on existing SBD. This increases the debt-to-equity ratio of STEEM. STEEM creates financial incentives for 90% of all virtual STEEM to be vesting for at least a year. The virtual STEEM supply is the amount of STEEM that would exist if all SBD were converted to STEEM at the current feed price. The impact of creating new SBD to pay interest is to increase the virtual STEEM supply and reduce the percent of vesting STEEM. As the percent of vesting STEEM falls the rate of return paid to vesting STEEM automatically increases to attract new long-term capital.

If we ignore the accounting details, the economic impact of paying SBD interest is to transfer value from holders of non-vesting STEEM to SBD holders. This value transfer benefits both parties because holders of SBD are effectively extending credit to Steem. This credit gives STEEM holders leverage that increases their profits when STEEM rises and increases losses when it falls.

Decentralized Price Feed

A price feed is produced by 21 active miners. Once per hour the median published feed is logged. The median of all feeds logged over the past week is used to determine the rate at which SBD converts to STEEM. With this process it takes 51% of active miners colluding for 3 and a half days to meaningfully corrupt the feed. It is safe to say that STEEM holders with a vested interest in the future value of STEEM will be very pro-active in voting for reliable miners to produce feeds.

Conversion Requests

When a user requests a conversion from SBD to STEEM their request is delayed for 1 week and then executed at the future moving median exchange rate. This process ensures that no one can use the feed delay against the network.

Conversion requests will primarily be used by speculators looking to buy large quantities of STEEM without moving the market.

Liquid Market

Most users will prefer to use the internal market to perform instantaneous trades between STEEM and SBD. The internal market will track the real-time price of STEEM much more reliably because professional traders can take advantage of arbitrage opportunities. To further enhance the quality of the market, the STEEM network rewards individuals who provide liquidity by leaving orders on the book.


SBD is a perfect token for merchants to accept because it is backed by a liquid market and can be reliably converted to $1.00 worth of value in their bank.

Default Risk

No system is perfectly secure against default. A hyper-inflationary collapse of the STEEM access token could create a situation where all SBD must be converted to STEEM at a value less than $1.00. The STEEM network minimizes the likelihood of this happening by economically incentivising 90% of all STEEM to be committed for at least a year. This means the debt-to-equity ratio of the STEEM network is normally under 10%. Even a 50% fall in the value of STEEM would only result in a 20% debt-to-equity ratio which is still conservative by financial industry standards. The Steem network automatically increases incentives for long-term investment in STEEM as the debt to equity ratio increases.

Steem is a decentralized network following the rules of a blockchain. Steemit, Inc does not and cannot gaurantee the value of SBD or STEEM. If you choose to hold these assets you do so at your own risk. It is possible for them to lose any and all value they might have.