RE: Blog rewards CAN’T be widely distributed
This a common misconception.
I was aware of the before and after weighting of curation rewards.
A low SP holder gets nothing for voting on a post after a whale. The system works to reward people for voting before the whales on popular posts.
They can frontrun the whales. They can study what the whales like to vote for. It is the circlejerk effect so many people are mentioning.
I did it. I voted Jeff's posts early and earned outsized curation rewards when the whales voted later.
Also many minions may not realize they have to vote before, so they vote any way, because some whales did.
Also the pact knows what they are going to vote on, so there is no guessing involved.
If you're a whale with say $0.5m- $1m worth of SP, it makes no sense to think like a small time hustler and indulging in nefarious activities for a few thousand extra dollars.
Well there are scenarios where that isn't the case. For example, if you are a whale shorting the price and then you do activities which cause a run away from STEEM POWER, then you can drive the ratio of STEEM POWER to STEEM very low and you can stay in STEEM POWER minting money at 349% yearly as I showed the math for in my recent blog. Then on top of that dominating rewards at you take nearly all of them by gradually taking over more and more of the voting power. You are profiting in every way. That is sort of nuclear option though so I am not counting that as the likely one. Which is why I wrote in the blog post that "perhaps tolerable".
Also it does make sense to act like hustler because the deviant whale can convert illiquid STEEM POWER to liquid STEEM DOLLARS as rewards, so he can cash out sooner. Also can perhaps obscure that he is cashing out.
That $1 million in STEEM POWER can normally only be cashed out at ~$10,000 per week.
Game theory is very complex. It is very easy to miss some cases.
Sounds overly complex to me. I like to keep things simple. Running down the price to gobble up even more SP, will just leave the holder will a bag of worthless STEEM as people will simply move on to another platform. The sentiment already is that too much SP has been accumulated by founders and early miners.
Voting on posts before they are popular is the name of the game (if you're curating for a profit). Right now the game IS crude. "Popular" posts are simply posts that whales are likely to vote on. Front running isn't circlejerking, it's rational, if you are curating for profit.
In the future spotting popular posts will be more nuanced. There are already different group of whales with different voting strategies. I know this because I've studied them and I'm currently earning curation rewards at a rate of over 100% pa return on my SP, simply by pre-empting their behaviour. In the future, this will become harder and harder to do this as more or more whales invest or earn their way up the ladder.
My point is, any whale "pact" (or predictable behaviour) can be counteracted by those further down the chain. Any "pact" that solely benefits whales, will simply see the rational 'minion' or 'dolphin' bail on the project, they will obviously be clones and alternative to Steemit around the corner (with likely a more even distribution). I don't think there is a pact as, in my experience, people are fundamentally useless at them!
The whales will simply be shooting themselves in the foot by getting too greedy because unlike most cryptos they cannot just dump their bag. If they choose to cash out in freshly minted SBD, they'll be leaving a lot more acquired SP on the table.
@anonymint - You make many valid points. Indeed you may be reading the situation perfectly.
I agree with.
I agree with.
I agree with #1 and #2 in terms of your analysis of the vulnerabilities....
However I do think the analysis is incomplete without an acknowledgement of how the Curation Rewards play a factor (if the whales are acting rationally).
I also can't say I've seen the vulnerabilities in #2 manifest in terms of pacts amongst whales just yet. Of course it is possible. It certainly would be in tune with what happens in the rest of crypto.
However it would be so transparent and foolhardy, that I struggle to believe anyone can be that short-sighted, especially given the inroads Steemit is making into the social media space in such a short space of time.
I'm now convinced a blockchain based social media platform will take off. Steemit has first mover advantage. It doesn't need to be perfect (and isn't) it just needs to top Facebook etc., in terms of censorship and rewards to contributors, they can muddle their way through the rest. Steem could easily x10 x100 it's marketcap in short order if it reaches a critical mass of users. To blow that because whales are stuck in a crypto mindset? After only a month after the soft beta release? I guess stranger things have happened...