There have been a lot of posts over the past year talking about various ideas and proposals for the next hardfork. We seem to be getting close to a point where the changes for the next HF are relatively finalized, so I wanted to share my views.
The first part of this post will provide a high level overview of the changes that are currently in the proposed HF, for anyone who is not familiar with them.
Steem Proposal System (SPS)
The SPS will work similarily to the current rewards pool, except instead of providing an unknown amount of rewards "after the fact" (once you create a post), it will allow users to get paid a predetermined amount for proposed work.
The key benefit to this is that it will allow entities (other than Steemit, Inc.) to make proposals for various things that will improve the value of Steem - such as development projects, marketing, etc. Since I joined Steem back in 2016, one thing that I have heard people say over and over again is "Steemit is not doing this" and "Steemit is not doing that". With a funding source that stakeholders can allocate towards various projects, we will now have the opportunity to pay for some of these things ourselves.
Whether it will be successful remains to be seen, but if participants and stakeholders take it seriously and use it well - there is a lot of potential to add a lot of value to the platform - for both stakeholders and users.
One of the big sticking points on this proposal is how to fund it. From what I have heard, Steemit, Inc. is planning to provide some level of "seed" money to get it going. This would be a finite amount of funds though, so there has been a lot of discussion on how to sustain the SPS fund long-term. The main idea on the table is to divert a portion (likely somewhere around 10%) of the inflation currently going into the rewards pool to the SPS fund. I realize there is a lot of controversy surrounding this - which I will touch on later on in the post.
Economic Improvement Proposal (EIP)
The EIP is the second part of HF21 that is being discussed. This is a collection of three main changes that stakeholders and witnesses have been proposing as ways to improve the economics behind Steem.
The TLDR version of the changes is:
- Moving from a linear rewards curve to a convergent linear rewards curve.
- Increasing the percentage of rewards that are distributed to curators.
- Create a separate “downvote pool.”
Opinions on HF21
Thought process behind the changes
I suspect it is going to be hard for most users to see how these changes are going to make things better for them (especially when viewed in isolation). I suspect most users will translate the changes into:
- More power for whales
- More money for whales
- Less money for authors
- More downvote abuse
Before you go down that path though, I suggest you ask yourself: Does it really seem like Steem is working well the way it is today? I feel that pretty much everyone that has been here for long enough knows that the system we have in place today is not working.
- Bid bots pretty much rule the platform.
- Very few stakeholders are spending time looking for quality contributions to reward.
- Many users who contribute a lot to the platform struggle to get any decent rewards.
- Little to no marketing is being done.
- Very few changes that users have been asking for are actually getting done.
- The STEEM price has fallen significantly from the all-time-high, and there is not much optimism for it going much higher than it is today. In fact, a lot of people are worried that it will just continue to go lower.
A lot of users, stakeholders, and witnesses have been talking about the issues surrounding Steem for years now. There have been tons of proposals and plans, but very little has been done to improve the situation since the last economic hardfork (HF16).
One thing a lot of users likely don't understand is how difficult it is to go from an "idea" to a successful hardfork. I have seen and discussed hundreds (possibly even thousands) of ideas during my time as a witness. Getting enough people to support an idea, then getting someone to actually develop + test code for it, and then getting a super-majority of witnesses go agree to adopt it is REALLY HARD.
The EIP (combined with the SPS) is not a perfect / ideal solution that is going to magically solve all of our problems. It is a culmination of several years worth of discussions among a lot of very smart users, stakeholders, witnesses, and people at Steemit, Inc though - who have all been trying to come up with a way to fix this place and make it better. It represents a consensus on items that we believe will improve the platform and that we can actually get to the finish line.
The goal of HF21 (whether you believe it will actually work or not) is to try and make this place better for all of us. Making it better means encouraging more of the behavior that we want, and discouraging the behavior we don't want. It means more money going into the hands of users who are contributing to the value of Steem, and less money going into the hands of the users who are just here to leach. Hopefully, this leads to more value being generated - which can potentially lead to a higher STEEM price.
HF21 in it's current form is not what I personally view as the best path forward. If it were 100% up to me, there are a lot of things I would do differently. Despite my objections over individual items in the proposal however, I do see the "package" of changes as a significant improvement from where we currently are.
The outcome of HF21 is impossible to predict. While we have had a lot of very smart minds talking about these changes for a very long time, the big unknown is how all of this will affect user behavior. Will we shift users into more of a mindset where the goal is to reward what we want to encourage, and penalize what we want to discourage? Or will we just end up with more of the same - users trying to maximize short-term personal gain at the expense of everyone else? I really hope that it is the former, but unless/until the changes are live - there is really no way to know.
Authors will likely complain over what appears to be a more than 50% reduction in their rewards. While I fully understand the concern, and it is 100% legitimate - I am looking at it from a much different angle. Instead about worrying about how cutting the rewards of a quality member from $10 to $5 is going to hurt retention - I want to figure out how we get to a point where that user is earning $100 or even $1000.
Will we get to that point? I don't know.
What I do know though, is we need some major changes to the system in order to even have a chance of getting there. It is not guaranteed to work by any means, but in my mind - SPS + EIP is the first step.