[Proposal] Crowdsourcing, Crowdfunding, Guerilla Marketing, and a Steem Endowment
Proposal to use a community on the Steem blockchain to fundraise for an endowment, identify a beneficiary, and bring the beneficiary onto the Steem blockchain.
Introduction
In early 2019, I wrote, A hypothetical method for creating Steem endowments that resist embezzlement, which suggested that Steem could be used to fund an embezzlement-resistant endowment. Later in the same year, I wrote, Potential Steem Use Case: Powering a University's Endowment, where I worked through a model to find out how much investment over time would be needed in order to fund a single student's tuition.
Today, I'm going to take the endowment idea in a different direction, and suggest that we could use the endowment concept to crowdsource a guerilla marketing campaign and draw users to the Steem blockchain.
First, to recap, here's an illustration of how the endowment might work:
In step 1, "Create Endowment Account", we create an account to hold the endowment.
In step 2, "Power up the Endowment Account", we fund the endowment.
In step 3, "Create the Recipient Account", we create an account that will receive the endowment.
In step 4, "Create permanent delegation from the Endowment Account to the Recipient Account", we use the Endowment account's active key to create a delegation from the endowment account to the recipient account.
In step 5, "Deactivate Active/Owner keys for Endowment Account", the delegation becomes permanent.
In step 6, "Recipient transacts on the blockchain with endowment stake", the recipient uses the endowment to generate rewards by posting, commenting, and voting, but can never embezzle the initial endowment.
So my suggestion is that we use crowdsourcing and crowdfunding to make use of this concept in a way that will show off Steem's capabilities to the world. In particular, I propose that we use a community on the Steem blockchain to fundraise for an endowment, identify a beneficiary, and bring the beneficiary onto the Steem blockchain.
Why would we want to do this?
I can see (at least) three reasons why we would want to do this. These include: publicity, attracting long-term stakeholders, and reducing the negative impact of blockchain inflation on Steem token prices.
Publicity
If we create a community and spend 6 months to a year working out the crowdsourcing and crowdfunding mechanics, it can be used to create a buzz that will attract immediate interest in the Steem blockchain.
Attracting long-term stakeholders
The organization who receives this endowment will have a long-term incentive in the health of the Steem blockchain because their endowment is irreversible. If it gains in value, then so does the value of their own income, but if it loses value, then their own income goes down accordingly. The bigger the endowment, the bigger this organization's long-term interest will be in the health of the Steem blockchain and ecosystem.
Reducing the negative impact of inflation on token prices
In the past, there have been several initiatives aimed at reducing inflation by burning tokens, but these have the drawback that they rely on altruistic behavior by participants or else they redirect rewards from productive creators in a way that is contrary to the "attention economy" that Steem seeks to harness.
In contrast, this initiative would remove the tokens from circulation just like burning them, but it would also let the stake continue to work at building an attention economy.
Challenges and obstacles
I see four potential challenges to implementing this idea successfully. These are (i) working through legal/regulatory hurdles; (ii) Finding a recipient who is agreeable to the community and willing to accept the endowment; (iii) Disabling the endowment account's keys in a trustworthy and irreversible way; and (iv) Attracting funds and participation from the Steem community. Here is a small discussion of each:
Legal/regulatory hurdles
This is outside of my expertise, so I don't have a lot to say about it, but the main point is that everything would need to pass legal and regulatory muster, and it would be nice if donations to the endowment could receive favorable tax treatment.
We would need community members with the legal and regulatory expertise to make sure that everything is legitimate. We might, also, want to come up with stipulations on how the endowment could be used.
Finding a recipient
When the @phillyhistory initiative finished their semester on the Steem blockchain, I recall that they approached several non-profit organizations who were gun-shy about cryptocurrency and refused to accept the donations. We would have to find one or more organization who is willing to operate on the leading edge of technological charitable giving.
We would also need a way for the community members to suggest and approve the possible recipients. Steem's proposal system might be useful for this purpose.
Personally, my suggestion would be to find a university who could use the endowment in support of things like research and education in areas like blockchain, AI and game theory (Steem curation and governance) as well as creative efforts (music, art, writing, and journalism departments).
Disabling the keys in a way that is trustworthy and permanent
Two possibilities come to mind for this. The first, and best, possibility would be to know whether the keys can be disabled in like fashion to the @null account, so that no private key exists that could access the funds. If that's not possible, my fall-back suggestion would be for Steemit, Inc. to disable the keys with some sort of formal "burning ceremony" and corresponding legal certification.
Attracting funds and participants
Of course, this is a challenge for all crowdsourced and charitable initiatives. How much time and funding will people be willing to contribute? As an introvert, this feels like the biggest challenge to me. We would definitely need to involve some extroverts in order to elevate participation as high as possible.
Conclusion
So in short, what I'm proposing goes something like this:
- Create a Steem community to launch crowd-sourced and crowd-funded endowment initiative.
- Inside the community, work out more details about what is to be accomplished, and how.
2.1. Fundraising goals
2.2. Timeline
2.3 Perhaps we could involve the Steem Proposal System (SPS) for some sort of matching initiative. - Select recipient(s) for the endowment.
- Set up the endowment as described in the introduction.
- Everyone lives happily ever after.
Personally, I'll go on record saying that (barring unforeseen circumstances) I would potentially contribute 1,000 STEEM to an endowment like this if we can work out the details and launch it during calendar year 2021.
Beneficiaries
- Experimental - penny4thoughts - 36%
- Public Steem API - justyy - 5%
- Public Steem API - steemit - 5%
- SteemWorld.Org Tools for Steemizens - steemchiller - 5%
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.
This is a philosophical point, but I wonder how much evidence there is that inflation hurts token prices or that burning helps. I presume that idea is that increasing scarcity increases value, but isn't there another plausible story where burning a token signals that it has zero value to the person burning it? In non-crypto currencies most people have no idea what the total circulating supply is, my understanding is that that's a complex question even for economists. Is there good reason to believe it has a greater impact in the crypto space?
Well, I would think that the rate of inflation must be one factor among many. For example, if the token supply were doubling every minute, it would almost certainly become worthless very quickly.
But your point is well taken. All other things being equal, scarcity matters, but in the Steem ecosystem there may be other factors that reduce or eliminate any benefit that could be derived from burning tokens. Case in point, it seems to me that the @burnpost experiment never seemed to have much of an effect on token prices.