RE: Steem Basic Income - A Waterfall of Sustainability
If you've got the time, I'd like to see some more detailed math. Right now in my head I'm picturing that the waterfall effect ends up being detrimental to pool 1 in the long run, but I know I'm missing a few details, and it would be helpful if you could fill those in.
Let's say a new sponsor-sponsored pair enters into pool #2. 1 STEEM has been sent in to the main account, which powers up 0.5 and then uses the other 0.5 to purchase a delegation lease. I presume that the lease is for more than enough SP to cover the 4 SP that would be delegated to pool #2. However, the lease only provides a temporary boost. After the lease expires, we end up with the main account having taken in 0.5 SP and giving out 4 SP, for a net of -3.5 SP. Now we add to that 75% of the rewards that the main account earns (because 25% gets reassigned to pool #2), and this is where the numbers turn murky because I don't know what those reward numbers are. So for now, I'm seeing this...
long-term effect on pool #1 per pair of new members = -3.5 SP + 0.75 * (unknown amount).
Can you fill in the rest and/or tell me what I did wrong here?
I think I see what you're missing. At the start it's ~4 SP per share, but there are two separate components that contribute to that.
The first component is the 2 SP delegation (targeting 2 SP voting power), and the second component is 25% of pool 1's SP. Since that won't grow as quickly as pool 2 grows its share count, the effective SP per share of pool 2 will gradually decrease toward 2 SP, until it maxes out its membership and we start pool 3. That's the growth dilution that we keep talking about. Then the effective SP per share of pool 2 will start to gradually grow again.
When pool 1 receives the 1 STEEM for registrations into pool 2, it will lease just enough new delegation to offset the growth dilution from the increasing the delegation to pool 2. The rest will be powered up to the benefit of both pools. There is still some risk of the effective SP dropping after delegations start to expire. That was always a risk that will be offset by the upvotes members give to @steembasicincome posts (upvote behavior is a big part of what drives the long-term sustainability).
I hope this helped, but let us know if you have any further questions!
My reference point is 4 SP per pair, which is effectively the original 2 SP per share you mentioned. However, I got confused on the procedure of what happens with the 1 STEEM when there are new sign-ups into pool #2, so thanks for clearing that up.
If the end result is that the 2 SP per share delegated to pool #2 comes from a lease, and then when the lease expires so does the delegation (thereby requiring pool #2 to rely on its own earnings plus its 25% share from pool #1 from that point forward), then the whole system makes sense. I hope that I've correctly understood how the waterfall works now.