Steem leasing is an opportunity to play in the capital market without needing a large quantity of capital. One of the problems dealing with mortgage notes is that it is capital intensive. There is money to be passively made, except that you are typing up a lot of money for a long term. Each mortgage note is in the tens of thousands of dollars.
With leasing out your Steem, it is similar to mortgage notes in that you are tying up your Steem Power for a term. However, you can find requests for smaller leases of 10, 50, 100, or 200 SP. In real dollars, this is not a lot of money. A 10 SP lease, for example, ties up about $3 in today’s prices. Your return can range anywhere from 10%-20%.
Of course, it’s not all rainbows and unicorns when you lease out Steem. For one, you are losing out on higher payments from posting and curation. You may be able to realize bigger gains from participation in Steem rather than leasing out your SP. I think that if you are a prolific creator and curator, you may be better off doing that type of work. Also, if you aren’t prolific but get good support from the community, you’ll realize higher gains.
On the other hand, if you post less frequently or don’t get much community support, leasing may be the better option. You would get a guaranteed return.
Going back to the drawbacks of leasing, there is some time lost between leases as it takes a few days for delegated Steem Power to become available to you again. So, if your lease term is a week, you lose a week in which your SP is not working for you. In 52 weeks, you can get 26 weeks of income. Suddenly, an 18% return is only 9% on an annualized basis. Therefore, longer terms are better. The most I have seen are 24 weeks. This minimizes your lost time.
Moving on to the benefits, the rate of return is rather decent, putting aside the crazy fluctuations in Steem prices. If you simply focus on the Steem ecosystem, 15% is not bad. In addition, payments for the lease are daily. This means you are putting new capital to work on a daily basis either to boost your content earnings or to build up SP for another lease.
Leasing Steem can help you boost your earnings with leverage. Imagine being a Dolphin by leasing 5000 SP for 12 weeks for about $70. What would your posts be worth? What would your upvotes be worth? For about $70, you can control about $1600 of Steem Power at today’s prices. This is like buying merchandise on credit when you have a reasonable expectation of selling all of it profitably after paying off the loan. If creating on Steem is your business, it makes business sense to create higher reward content than lower reward content. Can you make $70 in Steem in 12 weeks as a Dolphin? More? Being rewarded for your creativity requires materials. The materials are brain power, time, and Steem Power. You can’t increase your time or brain power. You can increase your Steem Power through leases.
On the macro level, leasing is good for Steem as well. If people are tying up their excess SP in leases, they aren’t cashing out. The same goes for people leasing Steem. If your goal is to boost your earnings by leasing Steem Power, most likely you have a program going on to create content or curate like crazy. This brings price stability to Steem. I would argue that having a capital market is healthy for Steem because it adds another reason to be and stay invested.