Explanations to our downvotes and the need of them for a better Steem
Before the EIP that was introduced with the HF
We had 75/25, curators would earn 25% from the posts but it was never fully 25% as voting early, which many did to front-run other curators, returned funds to the pool.
OCDB would take e.g. a 10 steem bid, give back a guaranteed upvote of 10% ROI, meaning the 75% that would go towards the author was calculated to return 11 Steem after payout was due and 100% of the bid would go out to everyone delegating Steem to OCDB proportionally. On top of that OCDB would also return all the curation rewards, this meant that we had to powerdown most of our accounts to feed @ocdb Steem to pay out delegators as curation rewards only come in SP and the powerdown could not cover all of it as the SP was constantly growing due to the increased amount in delegations we were receiving for giving delegators some of the highest ROI compared to bid bots. Imagine that, even though we guaranteed curated authors in our whitelist a 10% fixed profit we were still outperforming most bid bots that were supposedly selling "promotion", I do wonder why that was the case.
Most bid bots had it different as they were not "non-profit", meaning instead of sending the delegators 100% of the bids they would take 5-15% for themselves and who knows what happened with the curation rewards or how much of those were returned. At the same time they operated through bidding windows where they offered say 1 full vote (2% vp) and then garnered bids until vp was back at 100% and depending on the amount of bids in that window (say 1 full vote only gave out 100 steem in rewards) it would determine what ROI the buyers would get if there were many competing for it which is something I personally had no issues with as buying bids to be used for promotion should cost you but since there was low demand in promotion most users stopped buying votes if there already were many votes in the bidding window. Some bots would refund bids if a certain threshold of -15% ROI was reached, some had no limit but most had a 10-15% ROI if there was no competition between the bidding windows for votes.
So the problem here was that with the decrease in price of Steem and decrease in users on the platform most of the time when users purchased votes it was mainly for the profit as there was almost no demand for actual promotion that would cost them for the attention and visibility + a good return the bid bots offered. Imagine a world where you buy an ad on Reddit and aside from getting all the attention for your business and new customers/followers, they would also give you back most of the money you spent on ads and most of the time a profit, sound crazy? Welcome to the past 2 years of Steem.
With the EIP we introduced downvotes to counter exactly this and other disagreement on rewards. On top of that we also got the curve that would lower the rewards depending on where on the scale from 0 to 20 steem rewards the post was at, this is of course something that many were against and the minnows were up in arms pointing at whales taking more of their rewards because they could get themselves to the high end of the curve where the rewards were not taxed anymore. While this was my biggest concern I saw it as something that would be better once more curation happens on Steem by "killing off" profitable bid bot votes.
So as you can see there are a lot of moving parts with the EIP where together they compliment each other but if one of them doesn't happen - such as not using your downvotes at all - it could easily nullify all the other parts of it such as small content creators getting to or past the curve because most stakeholders and ex bid bots would not curate but sell votes which at the same time would disincentivize other stakeholders to curate and be content with the increase in curation rewards.
So let's go past the HF now and look at the changes
Now we have 50/50, 25% "free" downvote mana and the curve which is way too complicated for me to explain but let's just say the closer the rewards are to 20 steem post rewards the less they are penalized by it.
Why we are downvoting profitable bids.
If you've managed to follow along so far you may understand that we can't force bid bots to stop selling profitable votes, there are no actions on the chain to do that except hardfork them out or reset delegations which also would require a HF at the cost of immutability of the chain. What we can do is give small downvotes to users purchasing profitable bids so that they become unprofitable.
Think about it, if a bid bot is at 100% vp because it isn't receiving any customers it will be forced to curate or it will just lose out on curation rewards that have been increased by a lot since the HF. You purchasing a profitable vote does not only give you an unfair advantage to beat the curve compared to every other user not purchasing votes, but at the same time you are taking away curation from the chain by giving them your Steem. On top of that they are now receiving both Steem from you and curation rewards while only giving you a 10-15% profit - that is if the community wouldn't downvote you, but either way the bid bot won't care, it already received the bid which if cast on low quality content would remove a lot of it's curation rewards but even if they received 0 curation rewards they possible got a lot more return from your bid. That bid is then sent to delegators of the bid bot minus a cut and what does that tell us? Oh yeah, delegating to bid bot x is way more profitable than honest curation and we're back to pre-HF content discovery and a broken proof of brain.
Now you may start to see why the downvotes are crucial. Unfortunately we are still seeing a lot of bid bot votes being cast, the bid bots don't want to sell votes for promotion that would not give you a profitable vote back. Why would they, they know most people would not use them then - that's the bait they keep flashing with out there to try and get more customers instead of curating content based on quality, effort or something else that benefits Steem as a whole.
There are many who keep calling our downvotes for "policing" and while I'm not trying to take any credit as we were not the first users to realize the need of these downvotes to increase the amount of stake that is used towards curation, content discovery and a better trending that we had when it was mainly posts there through bids in the past - I have to say that the change has been quick and impactful and I'm glad to see so many more ex bid bots going curation or at least shifting to hybrid. I hope they realize why they need to make the change into not selling profitable votes as it is unsustainable and only hurts the price of Steem as it has in the past 2 years.
Any bid bots still fighting this or customers being for it can't be viewed as anything else but only being interested in the Steem ROI in my opinion. I have an open mind and would love to hear your opinions on this. Blaming the decline in price on the downvotes after years of dropping in value and out of alexa rankings is pretty unfair considering the difference it has caused in honest curation where good authors have to purchase votes instead of getting them for free in a working proof of brain system that sets aside our dpos model from the rest.
Selling votes is something that can co-exist with curation, though. If the userbase on Steem is much bigger and people want to purchase votes that don't directly result in a profit then they are free to do so and the rest of users are free to downvote them based on the content they are promoting. We at @ocdb won't target unprofitable votes and will move towards the next step that we started off with early in the HF - which was breaking off voting rings that would vote-trade and only curate a certain low amount of users and farmy posts and successfully broke off two big ones while at it. The community will then decide if they want to downvote unprofitable votes, it is also not hard to imagine that if the content really is good the customer of the paid votes may end up with a profit on top of it - but that's for the wisdomw of the crowd and proof of brain to decide, not the lack of downvotes and bid bot owners enticing them with guaranteed profitable votes that we had pre-HF.
Anyway, I wanted to make some things clear after some discussion today in the steemspeak server where @fyrstikken was talking.
Let me know your thoughts, we are flexible and open to any better solutions.