I've been pondering long and hard about steem, the incentives, the future,etc..and the question I find myself asking over and over again is :
Why does steem has one of the lowest volumes when it has the highest utility of pretty much all altcoins?
So I dug a bit deeper and the answer is very simple actually. The incentive structure is flawed and completely out of touch with the reality. Let me explain:
Currently someone would need roughly $8000 worth of steem power to add only 1 tiny cents to a post at full voting weight . There are only 259 accounts out of 130 000 worth $8000 or more. This means that 99.8 % of steemians or 129741 steemians have a voting influence of $0 ( that’s right not even 1 cents). Allow me to repeat this one.
129 741 or 99.8% of all steemians have a voting influence of $0. Do you understand now why people are not buying steem power?
The current set up is totally meaningless to the average user. The incentive to buy steem and power up in order to gain more influence is clearly not working. Why would someone buy more steem power when his/her voting power influence will go from $0 to $0 regardless? (s)he won't.
It's nice and all that the steem developers want to KISS ( keep it simple stupid) but they've ignored the elephant in the room which is that the steem power voting system makes absolutely no sense for 99.8% of the users.
Gaining voting influence within the platform should be accessible to be appealing to users. There is a big reality gap here.
The solution: Whales should downvote content instead of upvoting it.
That's correct. Whales should act as moderators within the platform. They should use their power only to counter abusive voting or to simply reduce payout on certain posts so that other posts could be better rewarded.
If you want to know how to best build the incentives you need to look at how steem compare to how humans organize and work together in real life. I am going to give you a basic example. On a construction site there are workers and supervisors. The workers ( the curators) are doing the work ( curating) and the supervisors ( whales) are checking that the work ( curation) is done properly. If a certain worker ( curator) do not do the job (curating) properly then the supervisors ( whales) can take swift action against him ( moderate/downvote ) The problem today is that the supervisors ( the whales) are effectively doing all the work ( curating). In real life a situation like this would be a disaster, not because the supervisors ( whales) aren't doing the job properly but because the workers vastly outnumber them.
Curation guilds attempt to put the workers back to work but there is a big problems with them. They don't incentivize people to buy steem power at all. Remember, author rewards are directy dependant to the demand for steem, it is extremely important that we get the incentive right for people to buy steem power. Curation guilds are also not easily scalable, if we suddently had tens or hundreds of thousands of sign ups per day the guilds would be totally overwhelmed and pretty useless.
The solution to scale is very simple, it is the one I mentionned above. Let the workers do the work and supervisors supervise. ( moderate).
If every accounts worth more than $8000 ( 0.2% of steemians) would stop upvoting for content and instead only moderate and supervise what all the workers ( 99.8% of steemians) are doing then we would have numbers that look similar to this.
An account worth $8 would be able to add 1 cents per vote , an account worth $80 would be able to add 10 cents per vote, an account worth $800 would be able to add 1$ per vote and an account worth $8000 would be able to add $10 per vote.
Remember everything that happens beyond $8000 is irrelevant to users as 99.8% of them don't have more than $8000.
So how do you prevent whales from splitting their account and creating dozens of $8000 accounts ? MODERATION. Honest whales that are moderating content properly will downvote content that's overpaid which would prevent bad whales from creating multiples accounts and upvoting themselves. It doesn't really matter if a post is upvoted by 10 sockpuppets, what matters is if the post is worth the reward attached to it, if the content is overpaid then whales will downvote it. I also think that we need a system in place to reward moderation to make sure that we always have more honest whales than bad whales. This moderation reward system would effectively replace curation reward for account worth more than $8000 because these accounts would not upvote content they would downvote content only, which is why i believe some kind of moderation rewards would be good. However the biggest rewards of all is the price increase that would come out of this, with a system like this it means that you finally give 99.8% of the users a good reason to buy steem power and this will send the price soaring which will make the whales rich.
A set up like this is also extremely scalable. We would need a report button so that users can report articles where they think payout is too high or where they suspect malicious voting. Then whales would come and check, downvote if necessary and be paid for their moderation action.
We will also need a way to enforce this so that accounts worth more than $8000 are only able to moderate (downvote) content. Essentially we will have 2 categories of user, the curators ( workers) and the moderators ( supervisors)
Some whales may think this proposal is not beneficial for them I want to tell them that according to this proposal I myself fall into the category of a whale. That's right I have more than $8000 worth in my account and I would be very happy to only have the ability to moderate( downvote) content because I know that a system like this is going to create a lot of demand for steem and so increase the value of my account.
Let's see if such implementation would really undermine whales's current benefits.
Whales enjoy receiving inflation proportionally to their share.
This benefit will stay exactly the same
Whales enjoy their large curation rewards. This reward could be replaced by a moderation reward. As I said in my post though, which do you prefer your account value increasing 10-20x or a mere 20% Per/Ann from curation rewards?
Whales enjoy their strong influence and ability to give hefty rewards to good content.
That's essentially what they will do when moderating content, they will allow rewards to go where they deserve to go by downvoting shitty content. Their influence will remain, it's just a different way to look at it.
The influence/power issue is the main reason why steemit userbase is not growing and retention stats are poor, you can do all the marketing you want if you keep the system as it is this community is going to stay in a corner of the internet and die a slow death as demand for steem keeps shrinking. I was reading @stellabelle's article saying busy is the next facebook or something along those lines. Let me tell you, Busy is going nowhere if grandma needs to buy $8 000 worth of steem power to give 1 cents to her grand son's post.
This proposal would also solve a fundamental issue that I explained here https://steemit.com/steemit-ideas/@snowflake/what-if-i-told-you-i-ve-uncovered-a-top-secret-community-this-community-is-so-secretive-that-if-you-want-to-work-your-way-up-its