Yesterday, Steem Dollars started being included in post payouts again for the first time since some time around June or so. When we go through these transitions, it can be confusing to people who haven't seen it happen before.

[![](https://cdn.steemitimages.com/DQmVXGc3y4yNtdASaaVnqr7UgTC46N2r7N57L7bDDBoHtBd/image.png)](https://cdn.steemitimages.com/DQmVXGc3y4yNtdASaaVnqr7UgTC46N2r7N57L7bDDBoHtBd/image.png)

In order to understand what's going on, let's take a look at the pie chart to the right. The three forms of post payment from the Steem blockchain are shown there. These are Steem Power (SP), STEEM, and Steem Backed Dollars (SBDs). The pie chart shows the approximate STEEM value of those tokens in all wallets on the blockchain (as of yesterday)^*: - Steem Power (SP)/staked STEEM (which, technically, is an abstraction for VESTS) is shown in light blue. - STEEM is shown in dark blue. This is the fundamental unit of the blockchain. - SBDs are shown in orange. The orange slice is what we need to focus on in order to understand when SBDs will and won't print. We also need to remember that SBDs are a form of blockchain debt. Under the "standard" conditions - when the total value of all SBDs is less than 10% of the virtual supply (all STEEM plus all SP plus all SBD debt in circulation) the holder of the SBD is entitled to redeem 1 USD worth of STEEM from the blockchain using a blockchain conversion function. Importantly, when the price of STEEM goes up, the SBD debt in terms of STEEM goes down (and vice versa). If STEEM is worth $0.50, then one SBD can be redeemed for two STEEM, but if STEEM is worth $1.00 then the same SBD only converts to 1 STEEM at the blockchain layer. Thus, the orange slice gets smaller when the price of STEEM goes up, and it gets bigger when the price of STEEM goes down. - If the size of the slice is 10% or higher, SBDs stop printing entirely. (Aside: Technically, the slice will never exceed 10% because the blockchain stops paying in full dollars for SBDs when this threshold is hit. This is informally known as the "haircut price". SBD investors take a haircut if they decide to convert to STEEM at those prices. Authors and curators also take a haircut in terms of post payout values.)

[![](https://cdn.steemitimages.com/DQmWv1nMQAuMCYq3mAdZF2kVfeCNALZtivrj8TyTroJPDYN/image.png)](https://cdn.steemitimages.com/DQmWv1nMQAuMCYq3mAdZF2kVfeCNALZtivrj8TyTroJPDYN/image.png)

- If the size of the orange slice is between 9% and 10%, both STEEM and SBDs will be paid, as illustrated in the graph to the right. - If the size of the orange slice is less than 9%, then all liquid rewards are issued as SBDs. Yesterday, the threshold dropped below the 10% threshold, and right now with the orange slice at 9.9%, the blockchain is paying 90% in STEEM and 10% in SBDs. This balance will continue to fluctuate according to the line chart above until the size of the orange slice drops to 9% (STEEM approx. $0.29) or climbs to 10% (STEEM approx. $0.26) again. I think that description covers most of the basic points. Hopefully, this might be helpful to anyone new who may not have observed one of these transitions before.

^*The STEEM value in the pie chart is calculated using the blockchain's internal prices for STEEM and SBD, which will typically differ from market prices on external exchanges. The STEEM price is the median of the last 84 hourly price feeds from the witnesses, and SBD is always priced at 1 USD (subject to "haircut" adjustments).

Thank you for your time and attention.

As a general rule, I up-vote comments that demonstrate "proof of reading".

Steve Palmer is an IT professional with three decades of professional experience in data communications and information systems. He holds a bachelor's degree in mathematics, a master's degree in computer science, and a master's degree in information systems and technology management. He has been awarded 3 US patents.

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