Proposal – Abolish the 50%-50% Rewards Option

There is no one magic solution for difficult problems. I believe with watching, studying, and proposing things I, and other users have a chance to bring small positive changes here. Here is one idea.

Disclaimer: Correct me if I'm wrong.

Available Reward Options

• Decline Payout
• Default (50%/50%)
• Power Up 100%

The Default Option

You may think "this guy is crazy, he want to delete the default option". Yes, I know, it doesn't seem to be a conservative change, but the truth is, we haven't noticed that previous hardforks made this default option obsolete.

Sadly, I wasn't here at the (first?) golden age, but we could know just from the hardforks' number that Steem got many changes since it has been started. Choosing it as a default option was a good idea then, but now, it needs to be revised.

Was Different Then and Relevant Now

• Steem has an economic model with hyperinflation
• The power down period was 104 weeks long
• There was enough money (higher STEEM price) to don't kill each other for bones
• Price feed conversion was a week long (SBD-->STEEM)

Hyperinflation

Then

The hyperinflation helped in the long term commitment and discouraged speculators. If a user held liquid STEEM, it diluted fast, so they powered up instead to save them from the inflation.

Now

Steem has 9.5% APR, decreasing inflation rate now, which means people can hold liquid STEEM without a huge penalty, so they can speculate. More liquid STEEM on the market cause lower price, falling price raise selling pressure as the ship is sinking...

After HF17

The inflation won't change.

104 Weeks Power Down

Then

That 2 years power down period closed out short term speculators and the downward pressure on the price was distributed on longer term, therefore was lower. Authors and other participants have knew that they have to wait to get the cash.

Now

What is not changed, is users could get ~50% of their rewards after ~1 day (since the next 30 days 2nd payment period is nearly irrelevant). After that, they can power down the 2nd half of their 1st payment in 13 equal parts.

After HF17

There will be only a 1 week long payment period, what makes more sense IMO.

Bigger Marketcap

Then

Don't worry, be happy, just print the money.

Now

Gimme that fraction of cent, I deserve it more!

After HF17

Future will tell.

Price Feed Conversion

Then

7 days long, which was seem to be way longer in hyperinflationary environment.

Now

3.5 days, which is not very quick but the price usually don't change that much and this length is a legitimate requirement for security reasons.

After HF 17

This won't change.

SP Is OK, What About SBD?

There is another problem when we want to change to a 100% power up option not just as the default one, but the only one with a user can earn rewards by posting. This problem is the distribution of SBD.

So, we need to spread SBD somehow, but not directly to the authors as a reward.
SBD is printed at 5% rate, which means that 5% of the whole inflation (9.5%) is distributed as SBD. Who gets rewards others than the authors?

Dear Witnesses, what would you say if I would propose that the SBD should be distributed to you?
Witnesses' rewards are 10% of the inflation, that would mean that you would get 50% SP and 50% SBD for your efforts. You, as trusted members of the community, could hold, exchange, convert or burn them to serve your own and/or the Steem network's interest. You could serve as market makers providing high liquidity. You should already know how, and when do things that could serve the shareholders (at least better than the avg. user could).

I would like to do that as this, but spreading that 5% with the rewards is also an option. It's less optimal, though.

Conclusion

With the changes in the past, long term commitment got a huge hit. I don't say that the changes were wrong, but the whole system has to adjust to the changes, otherwise it will lose the balance. Steem couldn't work without commitment.
I assume, we could agree on that the more optimal form of storing wealth on the Steem blockchain are vests.

If everyone have to power up all of the rewards, or in other terms, get their rewards in SteemPower, that would cause many positives.

• First of all, the higher commitment. No more comment on that.
• It would lower the amount of available liquid STEEM, so the downward pressure on the price. The users would have to power down to get STEEM. Getting the firts payment is only a week, and the only payment period will be the same long after the HF17.
• The users would have to power down and exchange STEEM to get SBD. It would mean that they'd only do that when they'd need them, so more STEEM would be vested.
• Witnesses could control the amount of liquid STEEM more by holding all the freshly printed SBD. Also, it has a more chance that witnesses who decide to convert SBD to STEEM would power up us much as they could afford immediately. They only have to wait for the 3.5 days conversion. That is not the only option for them, though, as I've written above in the SBD section.
• When the price fall would slow down, or stop, there would be less anxiety on the platform which is a requirement for acquiring and keeping new users. This side effect is even more important than the price itself...
• It would be easier to predict future market movements (and make counter steps if necessary).

One could argue that this amount is not big enough to count that much in the market price, but its big enough

• to attack each other, isn't it?
• for authors to writing new posts;
• for investor leaving the party, for their money flows out quickly, continuously, despite the fact early adopters should those who at least believe in the technology.

Authors looking for a quick buck need to go elsewhere. Meanwhile, those who stay and work to grow the long-term value of the platform will gain in Steem Power. – @dantheman

We can therefore conclude that the price will mostly be impacted by a change in demand for holding STEEM long-term. – Steem White Paper

My Past Ideas/Proposals

If you are interested in my past proposals, here is a list. Please note the posts' dates when you find mistakes in them and judge my preparedness.

• Introducing Pipes – Promoting Promotion While Burning Debt
• It Is Time for Separating Downvotes from Flags
  • Are Disagreements Equal Abuses?
  • Is Reputation Important?
• From SteSMS to SteMMS - The Lack of Short Contents on Steem
• Have Your Say the State of Steemit
• Multi-blog Proposal for a Better Performing Attention Economy

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