I’m going to do an experiment for a while by delegating most of my free Hive Power to Ecency. I believe this will give me better rewards than any other format, for the time being. Here’s my logic:
I decided to do a little bit of rudimentary math to figure this out. Currently, delegation to Ecency rewards us in two ways: 1) Hive Power, and 2) Ecency points.
Hive Power Rewards
According to hivestats.com, @ecency is currently earning an APR of 9.69% (this was higher in January when Hive’s price point was growing). They also rewards their delegators with 100% of curation rewards, meaning that we’d get an approximately proportional APR.
February has been a far less lucrative month than January (at which time the APR was higher), with the price of Hive going down, so this APR may not necessarily hold. Economic conditions might still worsen, yet Hive has been holding rather steady – but I’m not going to get into a whole detailed analysis of this right now. Let’s be more conservative and say that an 8-10% is a steady, maintainable APR.
Ecency point rewards
Ecency points are another source of rewards. Currently, 150 points purchases a dollar’s worth of votes, which at Hive’s current price, is equivalent to approximately 2 HP when powered up 100%. Getting 150 points per day requires a delegation of 1500 HP (the ratio is 1:10). Since a post created on the Ecency platform generates 15 points, it’s possible to delegate 1350 HP to generate an additional 135 points for a total of 150 points per day. Thus, at the current price of Hive, for daily posts, it’s possible to generate 2 HP per day through the aforementioned delegation. 1350 HP would thus be returned over the course of 675 posts (a little bit under 2 years).
Now, it’s unfair and unwise to assume that Hive’s price will remain the same for this period of time. In fact, it borders on insanity. I’m going to be bullish on Hive… let’s say that it triples in price over the next couple of years, to roughly $1.50 per Hive. For simplicity’s sake, let’s say that we’re going to average out this price – today it’s a bit under $0.50. This averages out to $1 over the course of a couple of years (please remember that this is all rudimentary and speculative!).
Thus, over the course of 2 years, 135 points per day can add 1 HP in votes per day, for a total of 365 Hive, and over 2 years approximately 730 Hive. Thus, 730 Hive is returned for a delegation of 1350 HP (54%). For simplicity’s sake, and to stay conservative, let’s call it an even 50% over 2 years. That’s an APR of 25%.
We must also remember that the vote from @ecency also brings some of those who follow its curation trail. Thus, the $1 vote actually becomes a little bit bigger (when I boost this post, I’ll tally the total and post it in the comments as an example).
The combination of rewards
An 8-10% APR directly with Hive Power plus 25% APR for Ecency points constitutes a total of 33-35% APR. That’s an incredible return simply for delegating, posting, and boosting a post on a daily basis!
However, the rewards might look even better for newbies, because we’re not starting with a delegation of 1000+ HP – we’re starting small and reinvesting. Thus, our 33-35% APR would likely yield a substantially higher APY!
My current, new delegation to Ecency is ~100 HP, generating 10 Ecency points per day. I also have ~3500 Ecency points (~3000 of which was generously gifted to me by @ganjafarmer, who believed in my concept). With this, I can boost, for 150 points apiece, 23-24 posts (or boost a few posts and add a promotion), and at the current price of Hive, the boosts alone would generate for me an additional 46 HP, which would then be reinvested into an Ecency delegation, bringing me up to ~146 HP, which subsequently generates 14.6 Ecency points per day. There’s clear growth going on here.
Let’s assume that I don’t have any Ecency points. Some more rudimentary math: at an earning rate of ~10 Ecency points per day, it would take me 13 days plus 1 comment to reach 135 Ecency points, and one post would yield another 15 points. Thus, I would be able to make one post every 13 days to boost every post I make. Thus, 2 HP would be generated every 13 days simply by boosting a post. 100 HP generating 2 HP over 13 days → 0.154 HP per day * 365 days = ~56 HP per year on a 100 HP delegation. That’s an APR of 56% at the current price of Hive. When considering the fact that I’d be reinvesting the HP into delegations, the return becomes even higher, because it will take me less time generate the 135 Ecency points (plus 15 from creating a post) I require to boost a post. The APY therefore rises well above 56% just from boosts alone.
When considering the fact that I’m also taking 100% of rewards in Hive, and my medicine posts (many of which I’ve already pended) generate ~5 HP apiece (after including @stemsocial and my wonderful growing community FreeCompliments @hive-140084 as beneficiaries), I’ll be delegating even quicker. 5 HP per post + 2 HP from Ecency would yield me 7 HP per post, which gets delegated straight to Ecency. Over the course of less than 15 posts, I’ll have doubled my delegation, and thus halved the time it would take for me to generate 135 Ecency points so I could boost my next post. This raises the APY even further. Incredible!
It must be considered that boosts are manually curated, so not all posts will be boosted. Posts with 150 point boosts ($1) + those boosted the day of publication + high-quality works are most likely to get a successful boost; those that do not meet this criteria may not get boosted. I make sure that my posts meet these criteria, thus I have some confidence that I can get boosts on a large proportion of my posts.
Final APR / APY
It’s hard to determine this because there are numerous shifting factors, including: Hive’s price, total Ecency curation, successful boosts, etc. However, even with the most conservative of estimates, it’s not hard to fathom that a newbie with <100 HP can receive an APY of well >50% by delegating to Ecency and actively posting.
After hitting the 1350 HP delegation mark and boosting posts on a daily basis, additional Ecency points can be used for promoting posts (which has the potential of bringing additional eyes to your posts for anywhere between 1 – 14 days). I have promoted a couple of my posts before, and it did indeed capture some people’s attention. Thus, there is still room for additional profitability from delegations >1350 HP for daily posters, and this also brings the potential of gaining new followers.
At some point, there will be diminishing rewards for delegating even higher amounts to delegate to Ecency, but it remains a strong investment regardless. Even when considering a rather quickly rising price of Hive, it still gives us a very strong APR, which can be converted into a higher APY through reinvestments.
Keep the following points in mind: as the dollar price of Hive increases, the value of Ecency points decreases; the less frequently you post / you boost your posts (i.e. if you’re earning more Ecency points than you spend), the less APR/APY you’ll earn; the less curation Ecency provides on a given day, the lower the direct Hive APR/APY; the less successful boosts you have based on Ecency’s criteria, the lower your APR/APY. Additionally, 150 point boosts are more likely to be approved than higher-point boosts due to limitations on how much can be given away. Also – this is not financial advice, but rather, an experiment… and here is how I will conduct it:
The weekly blog – some real math
From this point forward, I will tally up my Ecency points earnings, Hive earnings, and reinvestments, and make a calculation on an Excel worksheet to determine how much APY I’m generating. Since I’ll also be leaving comments and using my previously collected Ecency points, the values will not be completely reflective of the true APY generated (the true values might be a bit lower). It’s also possible that I won’t be posting quite as frequently as I would like, as I’m frequently working >80 hours per week, and as much as I enjoy Hive, Ecency, and LeoFinance, it takes second priority to my day job and to my family. This would potentially lower the APY that could potentially be earned.
There will be some actual mathematical formulas in play here, with the logic explained in subsequent posts. Over time, we’ll come to see how successful this delegation will become. Based on my own conservative estimates, I’m expecting a resounding success. I’d also consider this a potentially tremendous victory for Ecency as a platform and as a recipient of delegation, because its current structure is built to best reward active, contributing members.
As it grows, I’ll also try to model the FreeCompliments community to reward its users for commenting just as much as for posting. Currently, I have not found any community which is able to do this, so if we manage to do so, we’ll be breaking ground for encouraging direct engagement with posts – which is essential for the growth and strength of a community.
And don’t worry, LeoFinance. I’ll be using your platform for microblogging as well. This has been your most recent focus, and it’s an exceptionally strong feature with great potential, and I hope to see it continue growing. I’ll also continue referring people to use this excellent feature. I love me some Threads!
A little sidenote: I tried the experiment for a couple of days while building up my formula sheet… and accidentally undelegated from Ecency, resulting in an additional 5 day delay. Not a big deal. This experiment blog got delayed by only a week!
EDIT: here are the first week's results.
Here are the second week's results.
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