Steem Economic Changes Update — Steemit

Steem Economic Changes Update

in steem •  2 years ago

Today I implemented most of the changes discussed yesterday. You can track our progress toward implementing these changes on github here.

I have tentatively set the hardfork date to Tuesday November 16th, which means we will attempt to have a final release with all the necessary changes by November 9th.

This hardfork will finally require all witnesses to migrate to the ChainBase implementation.

Things that have been implemented:

  1. Instantaneous Annual Inflation set to 9.5% (except for Steem Dollar variance / interest)
  2. 75% of inflation awarded to reward pool
  3. 15% of inflation awarded to Steem Power
  4. 10% of inflation awarded to witnesses
  5. top 19 witnesses receive 1/5 the pay per block of miners and runner up witnesses
  6. no more reward for including a POW transaction in a block
  7. price feed median period changed from 7 days to 3.5 days
  8. Steem Dollar conversion delay changed from 7 days to 3.5 days

There are two things left to be implemented:

  1. Equihash
  2. Expiration of Witness Votes after 3 months

Due to the desire to deploy these changes rapidly, we will retract the $500 bounty if it is not completed by Monday morning.

This schedule is tentative and may be subject to change if testing discovers issues.

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There are three important things in Steem.
Low inflation, Shorter vesting period, UI
UI, Now it is your urgent priority I guess dan. Do u have a UX expert in Steem?
According to my experience, UX expert means death or survival of company which meets its customers through web.

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I totally second this. Ux should come with development, not come after it.

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I totally agreed with this. UI is very important if you want people to stick around.
The founders needs to hire a designer team and rewrite the whole thing. Adding a few features here and there is not going to cut it. This UI is so 1998, we need a sexy 21st century interface.
My suggestion would be to have a twitter like interface with a earn steem link that will redirect people to a home type page showing all different option to earn steem. ( blogging being one of them, betting, filling survey,etc..) developers could then create different kinds of app to earn steem that will be added to this page. Today we have many app but they aren't very usefull to mainstream users.
Also the reddit style format should go imo, this shouldn't be the reference for people who use this site, the reference should a twitter like social media and the blogging part should only be one way among many to earn steem. Just my 2 cents.

Isn't a reduction of the power down time going to increase the sell pressure even more? Why would whales who were still powering down even at a price as low as 10c / STEEM (which suggests they aren't having much faith in the project and trying to get as much out as possible as soon as possible) suddenly turn around when they now have the opportunity to exit in as little as 3 months? With the power down period reduced 8x, you would need the number of whales powering down to be reduced 8x too just to keep the same sell pressure as today.

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The solution isn't to restrict selling, but to increase the demand for buying.

If you are locked in a cage you cannot wait to get out. Remove the lock and all of a sudden you feel comfortable.

Now look at it from the perspective of someone looking to get in the cage. They are more likely to enter if they are not afraid of getting trapped.

Also don't think of individual whales, but massive numbers of smaller minnows and dolphins.

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The way to increase demand for buying is simple: reduce price.

Changing the Power Down rules is an ex post facto action which economically harms those who have already Powered Up in reliance on the two-year period because it impairs the obligation of contract. As explained in the whitepaper, there are reasons for the two year period of reduced liquidity (a characterstic of the good bought) in exchange for greater influence on the platform.

Ironically, decreasing the Power Down time requirement also decreases the trust and confidence people have in Steem and the decision of whether to Power Up because the three month period can or likely will just be removed altogether as soon as it is beneficial to those who have the ability to do so.

So, why not wait until that happens? Thus, there will likely just be more potential investors sitting on the sidelines until Steem proves worthy of investment by being attractively priced and trustworthy in terms of the good they are buying.

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I agree, a price reduction would increase demand without decreasing confidence. When you reduce the confidence as this move does then no one is going to Power Up. I think the platform from a technical standpoint has a future, but when I see the founders Powering Down and changing the rules to make their Power Down even more efficient, it begins to effect my confidence. So now I'm Powering Down when I never intended to do it.

In addition I do not know what Steem Power represents anymore. Apparently it's a contract which can always be changed on a whim, so there is no economic certainty about what my Steem Power will be worth in the future or what it currently is worth. So by Powering Down ASAP I reduce my own uncertainty.

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This must be your first rodeo with Dan, otherwise you would have expected this to happen after a few months. ;)

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I've interacted with Dan under a different alias from Bitshares. I understand how he operates and he is a very talented hard working developer. That said, we know certain decisions with Bitshares were controversial (the merger?).

I accept that Steem at this point in time is an experiment. It is the first of it's kind and we can only learn through trial and error. I just hope Dan and Ned are not wrong in these decisions because it's not just money at stake but also perception.

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First. glad to see you back. Second. you said rodeo :P

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@fuzzyvest

First. glad to see you back. Second. you said rodeo :P

and this is where I make a Mom joke AFK. :b

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I agree, a price reduction would increase demand without decreasing confidence. When you reduce the confidence as this move does then no one is going to Power Up. I think the platform from a technical standpoint has a future, but when I see the founders Powering Down and changing the rules to make their Power Down even more efficient, it begins to effect my confidence. So now I'm Powering Down when I never intended to do it.

You are contradicting yourself there, you say you want a price reduction but then say that you are upset that the founders are selling.
You know what affects investors's confidence is basically a few accounts controlling the vast majority of the VESTs in this platform. The more the power is spread, the more the platform will be decentralized and resistant to abuse, that's what investors want and the founders selling just accellerates the process to get there.

So now I'm Powering Down when I never intended to do it.

The fact that you are powering down now indicates to me that you lack economics understandings of this platform. Many whales have stopped powering down after this announcement which was predictable ( I actually called it in my previous posts)

So by Powering Down ASAP I reduce my own uncertainty.

You are acting out of emotional feelings not rational thinking.

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You are contradicting yourself there, you say you want a price reduction but then say that you are upset that the founders are selling.

I'm not upset the founders are selling. I'm upset about changing the function and nature of Steem Power to the point where no one can tell us what it represents or why it matters. This changes the whitepaper explanation and makes all previous explanations worthless. Steem Power used to be influence, and people who would buy it used to represent people who had so much faith in Steem that they either are willing to risk losing their money, or their time, with the belief that Steem Power will develop enough utility in terms of a power up that the utility on the Steem Platform itself will be worth more than the utility of the money they put into it.

For example if I buy WoW gold and power up an account, it's because I know what I can buy with it in the game and what I can do with it in the game. I don't buy WoW gold merely to hold it and sell it later for $ but I buy it as a power up for the game to power up my character. Steem Power no longer represents what it used to represent and I can't know what it is now. I can know at some point in time it's worth some amount in dollars but like with WoW, the players of WoW who truly enjoy the game don't care what WoW gold or items their character has is worth in $ because they enjoy the game.

You are acting out of emotional feelings not rational thinking.

Risk management. It's less risk to get certain value than to gamble. Why should I gamble if I didn't want to speculate with my Steem Power? But now that people can Power Down at a faster rate, and I'm not going to get the interest I thought I could get, it's now a gamble and too much risk to stay in Steem Power. This is not emotional, this is risk reduction.

I admit, when Steem was fun, or when the focus is on making Steem Power of utility in Steem, then yes I could become irrational and that is the whole point of a game. People don't play games to be rational but they play it to have fun. When it's all about speculation and appealing to speculators, now it's all about being rational and it's no fun. We can't do very much with Steem Power, except power it down. It's not our fault if the developers didn't give it enough utility.

You know what affects investors's confidence is basically a few accounts controlling the vast majority of the VESTs in this platform. The more the power is spread, the more the platform will be decentralized and resistant to abuse, that's what investors want and the founders selling just accellerates the process to get there.

There was an agreed upon formula for the spread of power. Now the formula is changing even before there is much utility for that power. So why do I want power in a game which isn't currently fun and the developers aren't focused on making fun? If the focus was on making it fun for people who have more SP then I would think different but right now the focus seems to be on bringing fun to speculators powering down, so what do you expect?

The people who power down get to trade crypto currencies and have fun doing that. The people who hold SP get to do what? Curate? But that matters why? That is fun why?

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So why do I want power in a game which isn't currently fun and the developers aren't focused on making fun?

Well I don't know, why did you power up up until now?

The people who power down get to trade crypto currencies and have fun doing that. The people who hold SP get to do what? Curate? But that matters why? That is fun why?

I don't know, you tell me. Why are you here? why have you powered up? what did you expect?

What do you propose to make it more fun? Steem power are locked in a contract and that gives you voting rights. This design is very restrictive to any kind of game someone wants to create.
Steem the currency would actually be best suited to created Wow gold/linden dollar type currency as SP can't be transfered.

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SP wasn't mean to be liquid, or a currency, in the original whitepaper. I powered up in the hope of long term success and in the hope that others would power up after I did. When confidence decreases or when I don't know why anyone should power up then I start powering down.

Friends lists, groups, subscriptions, gamification, and less of a focus on how much money each person has.

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"In addition I do not know what Steem Power represents anymore. Apparently it's a contract which can always be changed on a whim, so there is no economic certainty about what my Steem Power will be worth in the future or what it currently is worth. So by Powering Down ASAP I reduce my own uncertainty."

Something tells me you have powered up a bit. I agree. This is going to make alot of people question how stable steem is to build on...

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I agree with nearly everything I have read you say @dana-edwards. I honestly dont see why steem would spike from someone buying and powering up on this news. Me thinks it be a bit of a rare coincidence...and that guy/gal will likely be quite angry then they see this change to steempower.

Let people build on steem and stop worrying about the other stuff. Steem and steempower work! Or see my other post if you must do something like this, only include the scale where everyone can choose what level of steempower they want to have.

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It's a tax on Steem Power holders because the interest is being reduced. I understand the need to reward bloggers and curators but it's really hard not to perceive of it as a tax and a tax on the wrong people in my opinion.

In any case will it raise demand? I have my doubts that any quick fix or economic band aid will raise demand. I think raising demand takes months of iterative improvement in UX/UI and features.

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The way to increase demand for buying is simple: reduce price.

This is not true, when people see a price go from $4 back to $0.1 they ask themselves what is wrong with the platform. And it is easily verifiable by looking at the daily volume of steem which kept going down regardless.
The way to increase demand and confidence is an increased price of steem which means an increase of the capacity of the platform to handle more users.

Steem power is not what gives you influence in the system. What gives you influence is the % of the total steem supply that you have, so steem is your influence and steem power is steem.
Powering your steem is just a necessary process to participate and curate, but it doesn't give you any financial benefit and never did.

the decision of whether to Power Up

Why should you care if people power up or not? Do you care if people are selling their bitcoin?

Many here have this idea that you need to lock people for 2 years to keep them involved in the platform long term, this is a misconception. If you want people to stick around,participate and invest long term all you have to do is make their investment slowly grow overtime and create a viable model. ( The current hyperinflated model is not sustainable as it creates a constant downward pressure on the steem price which means a pressure on the rewards of this platform)

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100% agree with this. However, I am inclined to say that providing various "steempower levels" might for powering up and down might be a very helpful way to let people choose their own risk profile for having their funds locked away. Little changes during beta (especially when only adding options) are ok. Huge economic changes (as @tracemayer says above)---please no. It will definitely cause more uncertainty and only frustrate people who have already bought and powered up steem under a perceived contract.

So why not instead allow Bob to choose between 3 plans for "powering up"?

  • Plan 1 -- 3 month powerdown, 11% voting power and dilution protection
  • Plan 2 -- 1 year powerdown, 44% voting power and dilution protection
  • Plan 3 -- 2 year powerdown, 88% voting power and dilution protection

Give plan number 3 the extra benefit of letting them power down at a % as opposed to the binary choice Plans 1 and 2 get.

In this way, you let the market decide which steempower realm it wants to be in. I guarantee there are many people out there who would hold some steempower with Plan 1 if they need to be able to have access to the money at some point in time in the future. Or Plan 2 could be interesting to some who are a bit more interested in making this more of a way of life.

Then as a user I can choose (as opposed to having this stuck on me without a choice).

The price declining with STEEM is the fair way to let this settle itself. If whales sell to the point that steem is driven to $.001 you will just see more whales who power up. But let me ask you... but if they are secretly building amazing things with their powering down, might they drive the demand up without decreasing price? ;)

Some whales are doing precisely that with the help of friends.

P.S. Please dan do not do this. It has nothing to do with your idea not being good as much as it has with the idea coming after I have seen some pretty big buying and powering up spikes from people coming in. Changing the contract causes too many problems. Just add options. Don't take them away.

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As we can see from this example, 2 year power down or any (non-liquidity) or economic rules can and will be changed when the majority of stakeholders find it economically convenient. This means we cannot take seriously any current or future rule set in Steem code which governs any economic aspect of Steem. This means all signs and signals on our accounts such as $ amounts or "wealth" which can be considered an outcome of a current figment of code, can be changed at any given time in the future so can we really say we know what anything is worth when it's held in a smart contract?

The point here is, until it reaches your bank account it doesn't exist because it's not wealth but merely a projection of possible wealth if the code to make it possible doesn't get changed. I'm not in favor of changing the economic rules which I agreed upon when I powered up because I was convinced to power up by an entirely different narrative, as a way to gain influence on a social platform, not as a way to make a quick profit, speculate, or receive an ROI. I didn't know what Steem Power would be worth or if it would be worth anything, and now I accept we can never know what our Steem Power will be worth in the future because there can be code changes which change the economics and as a result change our calculations about how much our Steem Power may be worth.

On one hand we can Power Down much faster and this allows us to rush for the exits but at the same time I see this move as like yelling fire in a burning building. Yes if you create more exits people can get out much faster and less people will have heart feelings, but then when people do get out there is no reason for new people to want to get in when they know it's so trivial to get out and that at any time Steem Power can just be made totally liquid, or even be made so people can sell it to each other. I have no idea how to sell the concept of Steem Power right now because I don't know what Steem Power is or what value it has due to this move.

If it's influence then not being able to Power Down quickly is proof of long term interest. It reveals confidence. When that is lost, there is no evidence anyone is confident in the future of Steem in any measurable way. As a result I'm in Power Down because if I don't do it now I might not be able to get even a few $ out after a few months. I hope I'm wrong but I expect and predict that everyone rational is going to Power Down in a rush to exit and get whatever value out they can before the next person takes it and I see no alternative to this scenario when it's a 3 month period.

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I was convinced to power up by an entirely different narrative, as a way to gain influence on a social platform

How is this going to be any different than now?

or receive an ROI

Hmm..so you suggest people buying steem power should be driven by ideology instead of money, this is a flawed business strategy. Investors are essential to bootstrap the platform and keep it running and these investors are only interested about ROI.

If it's influence then not being able to Power Down quickly is proof of long term interest. It reveals confidence.

This doesn't reveal confidence in any meaningfull way, what reveals confidence is an open system where everyone can cash out anytime but nobody does.

I hope I'm wrong but I expect and predict that everyone rational is going to Power Down in a rush to exit and get whatever value out they can before the next person takes it and I see no alternative to this scenario when it's a 3 month period.

Why do you assume that people will rush to the exit? Do you not think the concept of steem is interesting and has potential? What you implied with this statement is that the only reason steem isn't dead yet is because people's money is locked, do you not think steem is attractive to people for reasons other than " IM TRAPPED, CANT GET OUT"

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When people are playing games, they aren't motivated by ROI. No one is upgrading accounts in order to get more ROI. People upgrade accounts because it makes the game more fun to them so no I'm not saying it's ideology, but it's about fun and entertainment.

Steem doesn't and will never be safe enough to attract real investors. Crypto traders are more like gamblers. You can gamble enough as it is just posting and curating on Steem so why do you need this?

Why do you assume that people will rush to the exist? Do you not think the concept of steem is interesting and has potential? What you implied with this statement is that the only reason steem isn't dead yet is because people's money is locked, do you not think steem is attractive to people for reasons other than " IM TRAPPED, CANT GET OUT"

Because it's not being treated as a game. So now it goes into an entirely different mindset. Who is going to take the risk if the founders are Powering Down and confidence is low? I mean no one is really going to be there to Power Up in the future that I can see and who wants to hold the bag? When you start moving toward an investor narrative and focus only on making money then you will make people behave in different ways than how gamers or chatters or bloggers typically behave.

If you can get for example $10,000 if you Power Down immediately, vs the risk of waiting for Dan and Ned to power down, wouldn't you take what you can within the 3 months if you see the biggest holders doing it? And when Steem Power has a value which now is not concrete or we don't even know what it is, why would anyone want it?

Tell me what Steem Power is and why I should not power down? Try.

This doesn't reveal confidence in any meaningfull way, what reveals confidence is an open system where everyone can cash out anytime but nobody does.

If the goal is to cash out at some point then apparently people aren't confident in the value of Steem Power. They are perhaps confident Steem Power will be worth something in dollars but that is not the same! When people start talking about never wanting to cash out or enjoying the benefits of having a lot of Steem Power that is when you know there is confidence but right now that doesn't exist and may be gone after these changes. If Steem Power is a power up in a game, but people only want to acquire it to sell it for fiat, well what does that do for the fun of the game? It's like WoW has people in China farming for WoW gold, but these players aren't having fun.

The summary, Steem is not fun enough anymore for people to want to not Power Down even when they might not even need the money. Steem speculators aren't playing games or focused on fun.

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Almost everyone cares about power. Rich and poor both want power. Only people who lack money want money. So trying to appeal to ROI is a much smaller market demographic than appealing to "fun" and to "power". Steem Power in my opinion should represent power on this platform, but in order for that to happen there needs to be a lot of features and utility which depend on Steem Power. More Steem Power should unlock more utility and features so people feel a subconscious desire to acquire it.I understand most of us need money. I just don't think competing for money is fun. Competing for power is fun and natural. People who have power from other networks will not have power on Steem and that alone is a reason for Steem Power to exist but right now I'm not confident.
And I don't assume when the people Powering Down leave that somehow the new people will follow a different narrative. I'm seeing the "investor narrative" overtaking all other narratives and I know from experience how crypto investors act when they talk about "strong hands" and "weak hands". I've seen this before.

I get your point. But nobody cares about power in a platform that has no rewards, what makes this thing innovative and power something people want is the money aspect.

I understand what you are saying and agree with pretty much everything but as I said the rewards on this platform have been going downhill for the last couple months and users have left as rewards went down.
You are not going to be able to compete with facebook and the likes just because you have games on the site, most of these sites already have games anyway, the innovation here is the money aspect so it is very important that these rewards are steady.

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My point is that money isn't and has never been the only possible reward. Money is what people get when they sell their rewards but Steem Dollars and Steem tokens aren't money.

Facebook isn't competition so the aim shouldn't be to compete with Facebook. Steem doesn't need a billion users to be a success. 50 million users would be a success.

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Because it's not being treated as a game. So now it goes into an entirely different mindset.

It never was to begin with. If you read the whitepaper there is no mention of SP being some kind of in game currency.

However I agree that the gaming aspect is interesting but this doesn't mean it can't coexist with speculation. Speculation exists in every succesfull business , what do you think stocks are?

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SP was never marketed as a currency and Steem was marketed as a social media game.

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There are many other expressions of confidence in the Steem economy.

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Dude, of course STEEM changes and hardforks quickly and efficiently with just a shareholder vote. It's what a DAC is designed to do. If u want to change the rules, then u need to get more skin into this game man. Minnows don't have a majority vote yet, but someday....and the quicker that day comes.....feel it?....yup, this change helps bring it faster if whales can dump entire positions into minnow schools.

Imagine waking up tomorrow and finding out that all the whales dumped, and suddenly you are one of the bigger fish in the sea.Then nobody could be jelous of whales. This change brings hope that more whales will dump into my buy orders to make me a dolphin

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These are the types of changes that give people like tone vays a foot to stand on. Perception and word of mouth is everything. Advertising does nothing compared to it. What will the new whales who have bought into steempower heavily pass around through word of mouth. And how much positive advertising and effort will they put into bashing a platform you are working hard to put value into.

These types of changes are so dangerous...because it literally guts the earlier contract and leaves very little left. Dan please learn from history on this one man. Instead of taking options away--add them.

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Exactly and this is what we mean by UX, User experience. Steem and Bitshares both suffer from poor UX even with some of the best technology in the industry.

Adding options rather than taking them away is all about perception. In addition, people who agreed to the old terms of the Steem Power now get to get out in 3 months? If we simply let these people live with their choice and add new choices for new power ups then I would be happy with that.

I made a rough comparison. Please correct me with anything wrong.

CategoryAnnuallyDaily
NewCurrentNewCurrent
Current Supply215,000,000215,000,000215,000,000215,000,000
Total Inflation20,425,000315,360,00053,465532,514
To Reward15,318,75021,024,00040,09957,600
To Steem Power3,063,750283,824,0008,020777,600
To Witnesses Total2,042,50010,512,0005,34628,800
To Top 19 Witnesses1,338,1909,510,8573,50326,057
To Runner up and POW Witnesses704,3101,001,1431,8442,743
Per Top 1970,431500,5711841,371
Per Runner up/POW352,155500,5719221,371
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Does that mean our current SP "interest" rate is divided by roughly 96? Yikes.

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SP never gave any interest. What is divided is the inflation rate.

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That really is more accurate, though I hadn't put it in perspective before. Thanks. It takes some shuffling of the thought process to grasp it.

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Awesome work! I would love to see a confirmation of those numbers. I might try to verify them myself. Thank you for sharing this @clayop!

The proposal mentioned changing the power-down time from 2 years to 3 months. Are you going ahead with that or is it being reconsidered?

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Would be a shame if it wasn't implemented. A 2 years withdraw period is a burden for most people and the 15% awarded to steem power holders is actually inflation so It's not going to incentivize people to power up. If they keep this 2 year inconvenience I'm not sure how they are going to get people to power up. Participating in the curation game shouldn't have any barrier to entry and even a 3 months lock period creates unnecessary hurdles to participate.
Most people that decided to lock their steem for 2 years did so because it was the only way they could invest in steem, now people can invest in steem without locking their steem. The result is that people investing in steem will probably increase but people curating and powering up will decrease. A few days ago I was suggesting a very short lock time period and to increase the curation rewards percentage to encourage people to curate by giving them the best conditions to do so. The worst thing in this type of platform is if the whole thing is run by bots, you d have no content diversity at all.
A shorter withdraw period also means a faster re-distribution which is key at this point. Locking people's steem for so long will just delay a whole transition process that will be inevitable anyway.

Anyone with a shorter investment horizon than 2-years is unable to participate in the Steem Platform which is discouraging people from bringing capital and increasing liquidity.
The long-term divesting schedule of Steem Power means the network is less efficient when it comes to price discovery.

From this quote though it seems that they want more liquidity and more efficiency when it comes to price discovery, that means a shorter withdraw period.

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Seems like they have to if they are going to change the interest rate. The 2 year lock was agreed on with the understanding that the balance would by hyper inflating.

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Yeah, I guess it's safe to assume.

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Looks like yes, if you follow the link to github:
https://github.com/steemit/steem/issues/551

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I noticed the absence of the power down change also. Would be great to have a clarification on the matter. Also, is Hardfork 15 going ahead as scheduled on 8th Nov?

On a different note, very impressed by the pace at which this is being implemented.

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This is my proposal to make it a little less daunting as I do see it as a risky and radical change.
https://steemit.com/steem/@beanz/powering-down-going-from-104-weeks-down-to-13-options-to-power-down-slow-and-other-ideas

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I'd really like to know the answer to this too please. Will the SP lock in be reduced to three months or less? It will be catastrophic to passive SP holders if not I think...

Better but… system is still very complicated to grasp, which is discouraging. System still overwhelmingly favours whales, and cryptocurrency cannot have a future if the most of it goes to a selected few. System still favours explanations on itself over quality contents.

Awesome @ dantheman my favorite point is number 8. That will be a great change that I will love very much!

Thanks for doing this and for taking the community's input. The new annual inflation rate will be set at 9.5%... what was the old rate? Also do you think the inflation rate will be something that we will need to continuously adjust (either up or down) based on market and growth conditions?

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It was about 100% roughly if I remember correctly.

Keep up the great work!
The community loves to see updates! :)

no more reward for including a POW transaction in a block

means mining will no longer provide any rewards at all?

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miners still get paid for producing blocks on time, but witnesses no longer get paid for including POW produced by other miners.

Great work Dan (and team), that was quick!
I'm really surprised nobody jumped on that bounty yet..

I made a relevant post with a market update, opinion on the changes and timeline of upcoming events moments before you posted this if you (or anyone) is interested

I find it difficult to see what the ramifications of implementing these changes will be. Looking at the price of Steem it's being received as positive so far. Let's hope it will stay this way! Thanks for all the hard work Dan.

Wow that was a fast reaction! Thanks for implementing this. This is really a great news.

I like this proposal.

Instantaneous Annual Inflation set to 9.5%

Would you consider halving this inflation rate every e.g. 4 years to mimic Bitcoin's halving?

Without it, our main marketing slogan ("Steem works just like Bitcoin, just instead of rewarding burning electricity, it rewards producing & curating internet content") is not really justified. Bitcoin's halving is perceived as an important factor for its valuation.

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Bitcoin halving may be its undoing. We did consider that concept, but feel steem would become nothing if rewards went to 0. It is always easier to reduce inflation than to increase it. Bitcoin went for 6+ years with much higher than 10% inflation. I think we can let Steem ride for 6+ years with 10% inflation and see how it goes.

Monetary policy is not an exact science.

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It's not an exact science, but a long term inflation level at 9.5% without some promise of a decrease doesn't sound very attractive. If Bitcoin didn't have some promise of a reduction over time, I don't think it would have been successful.

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There are many ways you could reduce this inflation by burning coins.
The promoted features does just that, advertisement in the platform could be bought for steem and burnt, subscription, steemit gold , hero status,etc..and all kind of special treatment could be bought on the platform by burning steem. You could probably reduce the inflation down a lot with these.

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There is so much left to innovate, pretty awesome with open-source. :)

Thanks for the update @dan

Good luck!

I believe beyond building trust this move will result in the HODLing of Steem which can also create another wave of inflation.

Perhaps if this was implemented sooner the risk could be avoided but from this point on I don't see any other better move.

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How on earth does it build trust to change the economic rules on a whim? Yes we know they can always change the rules (update the economic priorities) but this doesn't give me any confidence that the future updates will be in my favor. In addition, the less stake certain developers have, the less rational reasons they would have to be economically concerned about the fate of Steem.

Oh wow your implementing equihash too, awesome. I really like all of these changes, and I applaud you for getting a real community consensus! Awesome work Dan and Ned :)

This hardfork will finally require all witnesses to migrate to the ChainBase implementation.

Do you mean ChainBase will be included in the Nov/16th hardfork? or, is Nov/16th hardfork going to be the final preparation for the ChainBase update which will be planned later on?

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I mean that Nov 16th hardfork will only be available with the new chainbase backend. We are not going to back-port the changes to the old architecture.

Maybe I missed that point, but why are the payouts not done in Steem dollar anymore?

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Steem Dollars are a liability of the Steem Network. Issuing new Steem Dollars increases the debt/steem ratio and could collapse the entire system if there were not a "debt ceiling". As the price rises and/or people convert Steem Dollars into Steem the network will automatically start paying in Steem Dollars again.

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sorry quick question will we still get rewards for voting , more rewards for that

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Currently, 57,600 STEEM per day go to authors and curators(voting rewards). Under the proposed changes, 40,012 STEEM will be allocated for those purposes.

credit to @smooth for providing these numbers

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How is that better? Less Steem is going to them?

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The reduced inflation means a higher price, less steem will be compensated by a much higher steem price. The proposal reduces the inflation to 148% now down to 9.5%.

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A higher price is only possible with an increase in demand. An increase in demand requires that the game be desirable. A game becomes more desirable as it becomes more fun. Steem Power needs to be desirable in order for Steem to be locked up long term.

So while I'm not really against reducing the inflation rate if that was all they did, but they want to reduce interest on Steem Power and make huge changes which effect the dynamics in unpredictable ways. I would be for reducing the inflation rate and reducing it for all factions equally but the proportions are being changed too and I don't support that part because it's coming at the expense of Steem Power holders.

Now I admit, the biggest holders pretty much own Steem. So they can make these changes but by showing their hand this early on it reveals that anything can be changed by the same mechanism if the minds of certain people can be influenced. So there is no certainty anymore about what certain things represent.

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A much higher percentage of the new steem created is going to authors and curators.

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Here's how I understand it as a regular person who is not an economist:

SBD is basically like a note (it's actually a smart contract) that says you will get a dollars worth of Steem at a later date. When the ratio of SBD value to Steem reaches 10% the system stops creating new SBD - this recently happened due to the low price of Steem.

The result is to stop there being an imbalance between the two because it could potentially result in the value of SBD in existence exceeding the value of Steem which could cause an economic crisis of sorts.

That is why the mechanism exists. As soon as the "debt" represented by SBD falls to below 10% of Steem then the SBD payouts will return.

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Nicely put! If SBD breaches 10% a conversion would require more steem than is what is in existence and crash the system. Therefore the SBD can only remain pegged as long as the price of Steem doesnt get "too low"...

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Not quite, the system won't "crash" until that ratio hits 100% , and the conversion actually creates the steem - and we have more mechanism's in place to reduce SBD debt before that ..

But hopefully these changes have just reversed the trend :)

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Yes hopefully they have! :)

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Corrections: stop at 5% but not 10%; after 10% one SBD won't be able to be converted to as much STEEM as 1 USD (hard-coded).

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@abit Thanks for the correction:)

That was really fast! I'm impressed.

I'm seeing that yesterday's post has buoyed a lot of spirits and that is not just reflected by the market. There seems to be a much more positive mood amongst both the established users and some of those who are newer.

Now we need to look at some more active marketing strategies too - I've been thinking about this for some time and have a few ideas which I might do a post on at some point when I have something firm.

Right now though the integration of advertising would really help and I heard Ned in Steemspeak talking quite positively about it. The sooner we can get this incorporated and get more businesses interested in using the platform the better IMO.

Overall things are looking up. Thank you for your continued efforts and for listening to the community.

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I know advertising brings with it a big boost in revenue...but one of the things I enjoy most about this platform compared to others is the absolute lack of advertising...the quieter atmosphere is far more appealing to me than FB, Twitter, etc., etc. I'd feel less targeted on an actual battlefield than I do on advertisement rich social media platforms. I know it has to happen, but I for one, am not looking forward to it.

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We can do a lot less adverising than say facebook... Just a couple well placed ones could potentially bring enough money in to balance out the supply/demand issues, and who knows, maybe even tip the scales in the other direction where we actually have more demand than supply ;)

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What if you were to get paid to watch a video or ad? Don't watch, don't get paid, watch and get paid.

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Not a bad idea.

You could also then pay to not see ads

You may be on to something @streetstyle

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not sure about paying to not see, but if you don't watch the ad then you just don't get partake in the ad payout.
Imagine, I am a Nike Shoe fan, they make an awesome video ad and post it on their steem it blog. Maybe they can pre-fund the post somehow (hint hint steemit) and all those who up vote it (algo. that detects whether someone actually watches or maybe it's interactive and requires user response for full payout) and watch the ad, are rewarded / partake of the steem tokens.
Don't watch, don't participate, don't care, Don't Get Paid. Simple.
Maybe you watch the ads on Golf shoes and get rewarded? Or whatever your preference. Or don't watch any ads.

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These are all fine ideas...I would just hate to see everything go the route of other social media platforms where everything becomes all about the almighty advertising dollar. Or, since Steemit does seem to prefer categorizing content accordingly, perhaps we can just add an "advertising" category, and those who want to view them can, and those who don't want to view them can go on their merry way...of course they will still stream through the "NEW" tab on the Home Feed, but for those like me who visit the categories that interest us separately...an "advertising" category would work nicely...I could simply avoid it altogether if I choose to...just a thought...my two cents on the subject, as it were.

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Depends how it is done.

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had to be fast, the liquidity of system was falling :)

Congratulations, this determination is definitely sending a very strong message to the market (STEEM up 115% in 2 days, not bad, even for a crypto).

Any feedback about the hosting payment feature? I left a comment at the yesterday post, but probably got lost. Here's an updated, more clear post about this: https://steemit.com/steemit/@dragosroua/steemit-enhancement-proposal-extend-the-voting-period-over-30-days-by-implementing-a-hosting-fee

I am curious if @dantheman saw that, because it will impact medium / long-term inflation as well (by burning 50% of the STEEM paid for keeping posts votable after the 30 days limit) and it will also increase the reward pool (currently down by 20%, if I understood the numbers correctly). Basically, this "hosting feature" is just a particular case for advertising, when money will get burned by authors to keep their posts votable (and rewardable) for longer amounts of time.

Any feedback would be highly appreciated.

Thank you!

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Anybody could pump the price just to send a false message. Look over a period of months not a period of hours.

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It might be a false flag, totally agree.

Never for $500, make more zeros at the end!

You have a very great team with crazy skills working with you. This is insanly fast man! Great work. Looking forward to a bright future of Steemit.

I welcome any type of change that might help jump start where we are currently at.. Another method is to start seeing the steem logo more often around the web. I'm saddened to see a lot of key websites didn't post it yet. (I did write a post about it last night though -- so hopefully that will improve)

Dan, thanks to the team for your continued efforts.

Trying to grasp the implications of the SP change and how it will be viewed in comparison with SBD.
If SP is inflating by 15% of 9.5% (1.425%), then doesn't make SBD more attractive? Isn't there more of a danger of SBD holding increasing (not creating SBD, but reluctance to let it go)? Couldn't this influence the debt ratio negatively?

Q: Equihash will be added as main algo or maybe merge mining with ZEC?

Excellent news here Dan..!

I am downright impressed at how fast from proposal to implementation you're able to whip this stuff up. Great work man.

Thanks for the update @dantheman!

Looks good Dan. Glad to see some changes implemented for the long term success of the site. Investor confidence seems to reflect this new development with a raise in value for both steem/sbd. I look forward to the 16th!

Great news Dan, thank you. Please can you advice if the power-down time will be reduced as well. 2 years is too long.

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Thank you very much for confirming, much appreciated!

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Thank you for asking this question @tarekadan as it wasn't specified in the post. I'm glad we have an answer.

Awesome!

Does this mean all coding changes are to be done by the 9th, and then implemented into production by the 16th? Thanks for the clarification.

As someone who's been a miner, backup witness, and now fulltime witness I fully support a smoothing of the curve of SP rewards into the backup pool. I don't think the miner slot should get an equal piece of the pie however. Because they have stakeholder votes, backup witnesses are far more likely to be active and engaged in Steem compared to miners.

Also I'd still like to hear the rationale for the 9.5% number.

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9.5% APR works out to slightly less than 10% APY and was chosen for the same reason that $.99 seems much cheaper than $1.00.

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Haha, got it.

Awesome proposal @dantheman. Steemit go to the Moon.

Upvoted, Followed, Resteemed! Thank you again for your work please keep it up!

Upvoted/Reblogged/shared on SM accts for you. With thanks.

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Is the power down period three months now?