Reminder: 50% curation rewards also go to bid bots, self-voters and other non-curators
This seems like a common misconception. I have ranted quite a bit in the last few days (my initial thoughts were posted here), but this particular issue kept popping up, and I feel it's important to clarify this matter in a dedicated post.
Many are telling me that by making it 50% curation rewards, this will be a 33% disincentive to bid-bots, self-voters, etc; all the while the delegators will see a 100% increase in curation rewards. That'll lead to a lot of people undelegating to bidbots, some self-voters will stop self-voting etc.
I'll consider all situations in detail and explain why this is not going to be as massive a shift as some are expecting. Obviously, I'll make plenty of assumptions for illustrative purposes, but the general concept applies overall.
The most obvious thing I see people ignoring is that bid-bots and self-voters will also receive the 50% curation rewards.
Consider the scenarios:
The self-voters
Today, the self-voter who gives out a $100 vote earns $75 in author rewards + $25 in curation rewards. In fact, they could earn even more, but let's assume the best case scenario that no one else votes for the self-voter. Total profit = $100.
With 50:50, the self-vote who gives out a $100 vote earns $50 in author rewards + $50 in curation rewards. Total profit? You guessed it, $100. Absolutely nothing has changed.
But wait, this is the best case scenario. What happens if there are people that actually vote after the self-vote? They are actually doubling up on curation rewards generated post self-vote. What about those voting before the self-vote? Yeah, this is where they lose out, and in realising that, self-voters will probably be incentivized to vote earlier than before. I'm just not able to conjure a positive outcome for self-voting.
Except, it is likely some selfish voters will give out a few more non self-votes because they are now earning more from it. But do you think this change will cause them to stop self voting? Not a chance.
The bidbots
A bidbot offering a $100 vote. Let's assume the author is going to pay $70 for that vote, and cash in $75 in author rewards. Meanwhile, the bid bot is going to cash in the $70 + some share of the curation rewards. Let's be realistic, for posts with bid bots, a vast majority of the rewards generated are by the bid bots themselves, so they'll also pocket a vast majority of the curation rewards the post generates. Some bid bots will see higher curation rewards, some will see lower, but for the $100 reward generated, it's fair to say that on average, the bid bots will earn well over $20 curation rewards. But let's be pessimistic and call it $20. Bid-bot's total income = $90.
With a move to 50:50; the bidbot offering a $100 vote will mean the author is now going to pay only $47, and cash in $50. However, the bidbot is now going to double their curation rewards, cashing in $40. Bid-bot's total income = $87.
Now, the curation rewards will be less predictable, so some bidbots will definitely lose out. This is definitely a net gain. However, where some bid bots lose out, others will gain. The key, though, is that on average, all bid-bots needs to earn less than $50 (as that's what the delegators will earn with perfect curation) income from each $100 vote given out for them to go out of business. Do you see any scenario where that happens? I do not.
Given that, those who are delegating to bidbots for the profits will continue doing so. I estimate a curation rewards ratio of approximately 70% is required before bidbots start going under and losing their delegations. To be clear, I'm not making that recommendation for a number of reasons.
Edit: I'm aware that bid-bots don't actually share much of their curation rewards with their delegators, so their effective profits actually stand to increase. The point is, they can share more of their curation rewards, they just need to offer delegators a better return than $50.
The delegation receipents, curators etc.
You know, the @misterdelegation, curation projects, friends & family beneficiaries. This one's pretty straightforward. They themselves see a straight up 100% increase in earnings, whilst allocating 33% less to authors they are supposed to be supporting. This is not a negative change, per se, but think about those who have the greatest delegations, and think about how you stand to gain from them getting richer (better services?) and what you stand to lose.
Summing up
To be clear, I do feel that a greater percentage of curation rewards may ultimately lead to marginal gains as a whole. However, I am not convinced that this is going to the significant shift some are claiming.
I’m not going to disagree with the numbers, because what you’ve presented is probably accurate. I just don’t necessarily agree with the notion that behavior won’t change.
In my opinion, the idea behind 50/50 has more to do with demand for STEEM and powering it up (what we might call “investing”). Making it more lucrative to hold SP for added “profits” on curation rewards is something that we really need to focus on, considering the fact that most social media users are not “authors” - they are consumers of content. The ability to earn a larger percentage of rewards for discovery and ranking of content not only benefits the consumer earning the curation rewards, but it benefits those who are truly “authors” of popular content.
This isn’t about bid-bots and self-voters. It’s about attracting and rewarding the massive number of non-authors into the ecosystem to do the work of actually curating the authors. If done properly, this would be a boon to authors, as the potential increased adoption and buying of STEEM would be reflected on STEEM prices and the profits that the authors would receive when cashing out.
And to that point - the authors who are blogging in order to “get paid” (and cash out to realize their gains) need more buyers on the other side in order to maintain their profits. Who’s going to continue buying the perpetual cashout? If increasing rewards for content consumers (SP holders) is attractive enough, we potentially receive a much larger increase in consumers (SP holders) that may entirely counteract the selling authors.
Of course, this is not THE solution to bid-bots, self-voters, and a long list of other problems, but it certainly points things in a better direction. If bid-bots are a concern, there’s one solution that could effectively kill or greatly reduce their existence and profitability:
Remove the delegation protocols.
But nobody wants to do that, let alone recognize it as the single largest cause of the current anti-social behavior on the platform (with low daily vote targets and linear rewards being the other contributing factors).
So...we have solutions for problems. But is anyone willing to actually address and change them? Not likely. I’ll support whatever changes get us closer to a better overall system and I believe 50/50 rewards does that - and is actually “fair” to both classes of users (producers and consumers). I would prefer even higher curation rewards, but 50/50 is where it should have been left back in 2016 when it was originally changed to 75/25...for what was likely horrible reasons at the time, when the user base was much smaller and nothing had a chance of working as intended due to that and some other issues.
I was addressing specific issues here, in response to some comments in a different thread. (I.e. The impact of the change in bid bots and self voters.) I agree with much of what you're saying, of course.
However, I'm afraid removing delegation protocols won't really help much. Before delegation existed, people would follow votes and run scripts to calculate how much curation rewards each follow vote was generating, and share rewards accordingly. That's what inspired the SP delegation feature in the first place (and account creation, which came later). Sure, it's not quite as simple as delegation, but for a bid bot it would be a trivial matter.
I was under the impression that delegation was only pushed, so ned wasn't losing so much SP for account creation.
Yes, true, and I mentioned account creation above. Do you remember that at some point in late 2016 their priority was having a "curation guilds" feature? They canceled that, and that's where SP delegation came from. Of course, they had the clever idea to also use that for account creation also.
Solid summary! I had been meaning to crunch the numbers for these various scenarios -- but I got tired so I'm glad you took a look. Not a very significant shakeup -- that's for sure.
Kinda makes me think that the original "Promote Post" button on Steemit that sent the paid STEEM to @null is a bit closer to figuring out a reasonable solution. I'd be surprised if someone suddenly figured out a minor tweak to the "formula" that suddenly makes things less desireable for bidbots to be operated.
Probably gonna have to be a front-end solution if/when userbase gets large enough to actually compete w/ bidbot owners.
Unfortunately, there's no simple formula. The whole Steem system needs a fundamental rethink and overhaul.
I suggested almost a year ago to make the promoted page the front page, removing the excuse for using bidbots for promotion. That single change would propel the promotion feature in the place it was always deserving for: the homepage of the most visited front end, it would increase the demand for SBD and make blasting bidbots and their customers with flags acceptable.
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The thing that bothers me most about the EIP supported by Steemit Inc is that they fail to realize that passive stake holders will script what they need to script to remain passive stake holders. The current set of proposals will drive self voters to become bid bod owners or delegate to bid not owners. This while bid bots are arguably more disruptive to the active stake holder economy than self votes are. Especially if those self votes aren't on posts but are on comments instead. Preferably comments on one's own post.
50/50 reduces insentive to produce good content and thus hurts the active stakeholder economy. Convergent lineair hurts new accounts, keeps the platform from growing and as such hurts the long term value of the platform. A separate pool of free down votes drives self voters from upvoting their own comments to getting involved with the poisonous bid not economy, hurting the active stakeholder economy.
Each of the three proposed measures contributes to making the active stakeholder economy worse, not better, and there are no signs of Steemit Inc even reading anything of the criticism these proposals receive.
I'm pretty sure all of these horrible proposals will end up getting implemented, and Steemit Inc will claim they did so with overwhelming support from the community.
I'm on the fence right now if I should be powering down and get ready to leave the platform when these "features" at implemented, or if I should continue to invest time and modest amounts of money into the platform and try to achieve dolphin status.
Looking at the total lack of anything resembling signs of even a modest course change by Steemit Inc as a result of criticism of these measures, I am really worried Steemit Inc is really going to continue steering this boat into the iceberg that we are trying to point out to them.
Maybe, just maybe, right now, the best thing active stake holders can do to keep this boat from hitting that iceberg would be simply down voting all "featured" posts.
Great explanation, still believe we should add a small "fee" for delegations instead and leave author/curation reward ratio as-is: https://steemit.com/steemit/@vikisecrets/hf21-eip-solution-proposal-for-bid-bots-and-delegation-abuse-add-a-small-fee-for-delegations
Not that i am trying to be but if I we're a Witness, i would eliminate Bots and Self Voting. I use both now, just recently but that'll never happen in this community.
Eliminating bots and self-voting is impossible with Steem as it is currently. It's not impossible, but it'll need new paradigms to be developed.
The thing that noone seems to want to face is that it would be better to drive bid bot owners to dismantle their bid bots and start self up voting, than doing it the other way around (as these EIP proposals are guaranteed to do)
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Yes. Very true. And obvious.
Apparently we don't need to worry.
Everything will be fine ;)
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Having the objective of eliminating abuse is unrealistic at best, all we should strive for is to dissuade it as eliminating it isn't only very difficult but will come with restrictions on everyone else. Like it has been mentioned, the curation change isn't in addressing bidbots or self voting, though like you said it might make people who self vote spread their votes out more. I think bidbots would suffer greatly if they couldn't calculate how much each delegation is supposed to receive if the curve wasn't convergent, which simply means they can round it, but if the curve was exponential it would be hard if not impossible to determine how much each delegation will receive since the order that the delegations come in changes how many vest they would have. That coupled with a handful of free votes, especially if they could be delegated so projects like SFR could use them, would make running bidbots or buying votes that much more risky. We can't hope to stop them, but we can dissuade them.