Today I want to focus on reiterating a nice quote from the white paper:
The naive voting process creates a N-Person Prisoner’s Dilemma whereby each individual voter has incentive to vote for themselves at the expense of the larger community goal. If every voter defects by
voting for themselves then no currency will end up distributed and the currency as a whole will fail to gain network effect. On the other hand, if only one voter defects then that voter would win undeserved
profits while having minimal effect on the overall value of the currency.
I don't know why people have stopped talking about this and not seeing the larger picture here. This is still relevant, and talks specifically about selfish behavior and effects on the long term. The same applies to delegations and vote selling. If everyone does it, nobody would want to be here and we all lose, reflected in market value of the currency.
But deviations happen all the time, and as the quote hints, it results in larger gains for those that do, but we just all can't do it. Moreover, it's all weighted by stake, so it's not about individuals, but about how much stake is driving the behavior.
Even the little plankton stake being used to indulge in this behavior are part of it, because the stake of a million plankton still adds up. Although if my memory serves me right, still is nothing compared to larger stake holders due to the skewed distribution, so it's probably negligible.
An aside: Self voting, delegations to bid bots, and vote selling are all a problem, and are actually all forms of self voting in disguise. You need to treat the seller + bidder as one unit, and together they constitute a greedy self voting pair from the perspective of the rewards pool. And chase where the money ends up once the dust is settled. The answer may surprise you (aka not the bidders). We'll talk about the "promotion" aspect later though, as the single defining difference.
I want to take the time to address specific claims that I've heard thrown around.
(Not) Draining the Reward Pool
There have been some posts claiming that there is no "draining of reward pool", but they are simply wrong: votes control how the reward pool gets allocated, so of course bid bot voting behavior is affecting how much of the reward pool could otherwise be spread.
And not only that, the bots are voting in a way that optimizes the usage of voting power, a la haejin-ranchorelaxo. So you see, both systems extract from the rewards pool with ruthless efficiency. Well actually, there's a group that diminishes the efficiency of one of those systems with flags. The other can't actually be diminished because flagging can only affect the bidders, not the bot delegators / runners.
Many defending arguments seem to boil down to the claim that the funds in the rewards pool are already split in proportion of delegators, and that the state where everyone just self votes should be the baseline for measuring profit. They may even go as far as to claim they are doing us all a service by not self voting instead, and bidding allows for further distribution of wealth. Except that it doesn't. Not in a significant way. (Numbers post coming soon!)
In any case, I think when viewed through the Prisoner's Dilemma, it should be obvious why using self voting as a baseline is flawed. Because the market pricing of the network in that situation would not be the same.
Controlling the Investors
A question I've heard pop up repeatedly: "If you control what investors can or cannot do, why would they want to invest in the first place?"
A smart potential investor wants to be convinced that the platform will hold value and grow in the long term. This goes back to the network effect. The platform needs to attract new money; the money that's already in the platform matters little for growth. Sorry current whales, thanks for early investing or ninja mining the coin, but your current holdings aren't relevant. But your collective behavior has a large impact on outside perception. And now we are back to the Prisoner's Dilemma.
Think about that quote, and the situation in which everyone is just self voting. The dumb investors come in and follow suit. Guaranteed returns? Yeah right, congratulations you have invented a money printing machine with little else happening. Ok I'm pretty sure we're all in agreement on that one.
But the fun part about it: is even this state sustainable? If you believe it could be useful as a cryptocurrency itself, and the inflation is capped, then the answer may surprisingly be yes. Then it's a plain old vanilla staking cryptocurrency.
But yeah, we got 8% inflation used to pay the platform participants, and the problem of mass adoption. How do we get adoption? I know! Why don't we make it social? Wait... Why does this sound familiar....
Anyway, investors chasing maximum rewards extraction are not helping the long term prospects of the platform. But I'm not saying they shouldn't be profit seekers. My problem is that they are chasing a local minimum, and not seeing the global potential.
So am I telling them to just sit on their stake and do nothing? Absolutely not (but actually... it certainly could improve matters). But they really should have their game focused on initiatives that will get more on board, as many have already been talking about. Sure, we can do without them because we anyway have such initiatives going on, but imagine how much faster we could be going!
And nobody likes a freeloader. Speaking of which... Money whales might view platform users as freeloading off of money they injected into the platform, but in reality it's a symbiotic relationship. However, money sucking whales are absolutely freeloading off of value creating whales. Selfish people are freeloading off of the platform.
The single best argument in favor of bid bots is that they offer a way to do paid promotion. There should be no doubt that it works: the trending and hot pages do have a lot of eyeballs.
Those that say they don't use trending, that's great, and I'm with you. But it's like saying I don't bother looking at display advertisements on websites. Plenty of others do, enough for advertisers to take their fat wallets out.
But why should this service come out of the rewards pool? Why can't it be done by the platform, with the income of the bids going back into the platform to be distributed more widely, with higher impact?
When you view the bid bots from this angle, you can then see that if we simply got trending to work slightly differently, we can nullify the only real argument that bid bots have going for them.
If there's a witness that actually had this focus, I'd give them my vote, and frankly, so should the rest of you that claim to love the platform.
If you haven't gotten a chance to read the white paper around the section discussing voting, you absolutely should check it out (bonus: crab bucket story and flagging). It is well written and easy to follow.
It all boils down to the fact that we all can't be selfish or else the platform falls flat. And the intention of flags is to fight this behavior. Also, we aren't all being selfish, for a clear reason that even profit maximizing reasoning folks can't argue with. And why do the rest of us stay silent while the selfish ones act?
Oh wait, actually we aren't silent. We are actually annoyingly loud about it. For good reason.
For those of you already making noise about this, don't stop. Despite being repetitive and rehashing much of the same arguments time and time again, they aren't wrong, and they need to be voiced. For those that try to silence this voice and are getting annoyed, those aren't appropriate uses of the flag. Don't be childish and actually refute the arguments. Or agree to disagree and let the rest of us work it out.
Somebody (more people) think of the Prisoner's Children!