My understanding of the KE Ratio on the Hive blockchain and if it matters
On the Hive blockchain the KE Ratio (Rewards / Stake Coefficient) is an indicator that captures how much reward a user has withdrawn relative to how much HIVE they still have staked. Why does it matter? Well, simply because it can reflect if you are a long term investor in this ecosystem or just one passing by. The simple formula for it would be to sum the author rewards with the curation rewards and to divide their result with the accumulated Hive Power. The result of it would than be used to categorize the Hive user behavior and to have that transparent to the other users - this feature is shown by the PeakD interface together with each value from the formula. Based on this, one can target higher curation to those that are here for the long run, are building and growing with this ecosystem.
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KE Ratio formula
The KE Ratio formula is pretty simple and as I've already presented the contained elements, here it is.
KE Ratio interpretation
The KE Ratio use some simple intervals to categorize a user:
- KE < 1 emphasizes that the user is staking more than they have withdrawn. This might be equivalent with a long term supportive user that contributes and believes in what this ecosystem can evolve into together with its tokenomics.
- KE = 1 means that the user has withdrawn roughly as much as they still have staked. This usually shows that the user is not here for the long run or rather that he doesn't contribute to the health of the economy is any specific ways.
- KE > 1 reflects that the user has withdrawn more than they’re staking. I wouldn't say that such users are milking the platform, but in the same time this shows that this could be just a revenue stream that is invested or used for other purposes and outside the ecosystem from here.
KE Ratio example
A practical example applied on my user @behiver would result in the following output:
- Author Rewards = 19,127.73 HIVE
- Curation Rewards = 8,753.98 HIVE
- Staked HP = 50,118.986 HIVE
- KE Ratio = (19,127.73 + 8,753.98) / 50,118.986 ≈ 0.56
The KE Ratio of 0.56 for my account would categorize me as a long term investor in the Hive blockchain and this reflects the reality quite right. But this can be right in my case, but it doesn't necessary apply in the same way for all the Hive blockchain participants. Why? Well, simply because there are some limitations and context to consider as well.
KE Ratio limitations and context
Here are some of the additional items that might interfere with a 100% interpretation of the KE ratio, even if this might apply to a smaller portion of users or to some deviances that could not be easily spoted.
- KE is a snapshot and it reflects cumulative behavior up to the present moment. It doesn’t represent exchanges or history over time. This can mean also that maybe 99% of their time in this ecosystem they were long term investors, but they've steered to a different strategy or have specific needs at some point.
- It doesn’t show context. If someone powers down during an emergency or to invest elsewhere, a temporarily high KE might be misinterpreted. Maybe you use the funds to buy Bitcoin and Ethereum low and when those are jumping off the roof you take the earnings and pour them back into Hive. That could be a strategy on its own, even if I don't think many would do it.
- It should be used with other metrics like reputation, voting behavior, commenting activity or engagement growth to assess an account’s contribution quality. We cannot just look at the "financials", but also to the way they contribute and help grow this ecosystem. For example some can use the funds to pay for developers making tools, games or dapps for this ecosystem, thus even if Hive goes out, also another form of contribution and finite product comes in.
What opinion do I have about the KE ration? I like numbers, so having an indicator providing some additional stats that can bring some lights about an account or another, I think are beneficial. Now, if we should look only to the KE ration when curating or upvoting content, witnesses or DHF proposals? For sure not as that's simply not enough. In the end I think it is a good indicator to start from and maybe spot the long term investors and maybe have a more in depth view for the others... this if we care enough about targeting the curation and using it wisely. But like I said, there is more context required to it in order to get the full picture.
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Thanks for the primer. I was wondering about this stat's significance.
The way I see it, the current reputation system should more or less be replaced by KE Ratio, with the difference that delegation also should count toward it. Too many people now who make content have the delusion, or at least highly overestimate the fact that their content has actual economic value. This makes it feel normal to them to use Hive as an 'income genrating' platform. While in reality, most of the value from Hive comes from those who actually buy & hold. Don't get me wrong, I do believe good content really matters, but it should be both where both the content and the stake in the platform relative to the earnings matter.
Where I see things go wrong mainly is that there is just too much free lunch now on Hive with all the Curation projects that seem to totally neglect KE Ratio and sytematically upvote pure value extractors. Just go to any of the curation compilation posts, click a random one that got upvoted and check the wallet behavior, almost everyone is cashing out and nobody is buying hive even at these prices. Often these are users that get systematically upvotes because they are meeting the quality standards and are on the list of a curator who also just wants to earn and cash out.
There are just not enough reasons right now to Buy Hive and the only real way to change that I would think is that people stop upvoting the pure value extractors by looking at their KE Ratio. This still allows anyone to come in new and do well on Hive. I have no issue with those who quit Hive to cash out everything they earned, but if they ever come back they have the duty to fix their KE Ratio. I also have no problem with those who cash out making content which is upvoted by individual whales who really like their content (which rarely ever happens).
In the end, Hive needs good content and for the price to slowly trend up instead of down. Right now, being a 'Hive Investor' feels more like being a donator.
That 0.56 on your account tells a clear story, you’ve kept more skin in the game than you’ve taken out. Your snapshot caution is spot on, a 90 day rolling KE and a simple flag for recent power downs would catch strategy shifts without misreading people. For curation I’d blend KE bands with simple engagement signals like reply rate and vote patterns, so numbers don’t shout over context. What do you think about adding a tiny trend arrow next to the PeakD value to show direction? My vote has trust issues with single numbers.
The KE Ratio offers a valuable lens for evaluating user engagement and long-term commitment within the Hive ecosystem. By comparing withdrawn rewards to staked HIVE, it provides insight into whether users are reinvesting in the network or primarily extracting value. A ratio below 1.0 suggests a healthy balance, indicating that the user retains more Hive Power than they've withdrawn—an encouraging sign for sustainability and governance participation. Metrics like this enhance transparency and can help identify stakeholders who contribute meaningfully to ecosystem growth.
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I read such related article some months ago and it helped me to restrategize for the long run. For now I have been able to beat down my KE from 17 to 5.9. I am still pushing for the 1 and thes the <1. Thanks once again for reflecting such articles, always helpful.
I completely agree with what you wrote: KE is a valid indicator but if taken as a starting point because there are also other elements to consider that KE does not take into account.
!PIMP