Guardian of the steem universe: A different perspective on the role of whales within steem ecosystem.
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
Although I'm unsure about all the ramifications, this idea has merit. Thanks for proposing it. You touch on some important psychological issues, like expectation that are unmet, and the disillusionment and disenfranchisement from not being able to get rewarded or make an impact early on. It's a different system/model.
The way the power of voting is distributed is definitely an issue that has long been recognized. I believe the plan was for people to slowly move up over time through gaining SP, but that may not be feasible if other expectations (like keeping users) demand something else to be done instead.
I'm still not sure how viable this is at this point, but I agree on most of the benefits you stated. I'll have to think about it more I guess. One thing is how after you get to a certain point you can't support other's work anymore through your own upvotes.
It would be no different than how the system works now, you have a certain amount of voting power per 24 hours and when you used all that power you have to wait for it to reload. Thanks for your comment!
very interesting discussion !
Of course nobody knows how this will turn out.
But i think the current system can work.
Even if I wouldn't reject some changes it wouldn't feel good for curators to only be able to distribute penalties. (in any case for me)
But It could be wise to modify the voting system to motivate big curators to act as kind of guardians.
I would like to see more delegating processes to enable a better powerdistribution in a different layer.
With great power comes great responsibility...
the people with great power are very likely to have good intentions for steemit...
@snowflake, looking at your account on steemwahles.com I see that you mostly curate posts. That means you are following two paths for increasing your net value. One is through a speculation strategy, hoping for an increase in value. The second is increasing your value through curation. The rational curation player must play by trying to reduce the influence of the "Whales" and all other curators. The curation strategy can be very decisive, since it is very selfish. Following authoring/curation strategy is more beneficial for the network because it allows for a more tit-for-tat strategy. Please see this, Increase Your Steem Net Worth. BTW, thanks for a new idea for creating a simulation. Is authoring/curation strategy resilient to attacks from Curation only strategies?
@gutzofter I think you are reading a little too deep into this lol
I have no particular strategy. I have invested some of my bitcoins because I believe steem has the best shot at reaching a mainstream audience and that it is highly undervalued considering the tech and current developement.
If I had to chose I would take profit from the price increase over curation rewards any day of the week :)
The price is directly correlated to the capacity of steem to scale. What I see today is a broken system with incentives that don't work and I believe my proposal or something like it will benefits everyone including the whales. Thanks for your input
Too strident huh? I too agree that the incentives "don't work". I sit here in my bubble with my ideas about steem and when somebody mentions something that I'm passionate about, I get a little overly excited. Sorry about that. What channels do you hang out on?
I was trying to find the connexion of your post with my article, about whales influence,etc..maybe it's me that's reading too deep actually lol
You can reach me on steemit.chat @snowflake or on busy.org @snowflake
A lot of Steemians are under the impression Steemit is like Anarchy. Which it's not really, maybe a little only because of the chaos factor, it's actually more like a Corporation.
Sounds like you want it to be more like Communism.
I've pointed out before the system is not working in a way that attracts big investors. I'm powering down as I have learned my SP is worthless. Like you said unless I put in thousands of dollars I am worthless as a voter.
I have high school students here in China that carry at least 3,000RMB cash on them at all times, not including their bank account. I teach some pretty rich kids. They would throw lots of money at Steemit if they could sign up.
Imagine the kind of money their parents and their parents friends have to toss around. The idea that buying $10,000US of SP is expensive is not true for many people in the world, it's less than their monthly food bill.
I have access to hundreds of wealthy business peoples attention. they pay my to do presentations in English to the executives once a week. I seriously make over $150US for 1.5 hour PPT on any topic I want. They just want my western opinion on everything.
Without a doubt they have millions invested in the Markets around the world. They could easily drop $20,000US on SP and just use a curation trail to do the voting for them.
I had written a post about how I nearly doubled my money using Steemit and Poloniex, as a rookie. I had hoped it would be a hit, and should have been, to brag to some potential investors. But the post failed due the powers here not wanting to it to be a success.
It could not be used to attract new investors because it proved that the system was rigged rather than fair.
Not sure why they don't.
What @snowflake has proposed is nothing like communism. He is merely suggesting that more users should hold influence, not that every piece of content should be rewarded equally regardless of quality.
The best content would still get the highest payouts, more so than under the current system of rewards.
Based on your closing paragraph, it sounds like you could really benefit from @snowflake's proposal.
Hey I really could. Im not knocking it. Just seems like an impossible task. It is a good a idea.
any input on my comment? :)
I'm going to sleep will make a post with posts :D and maybe about the 0.17 (still not implemented right :) )
Those topics are important
As it is relatively hard and costly to create an account I was thinking running a bot that upvote content relative to the amount of votes acquired after 24h, regardless of the SP behind it.
I really don't understand how you are surprised that people who created a free account and got given 5$ worth of SP don't have as much influence over the platform as those investing their lifetime savings into it. At least they have bandwidth and they can post, comment and get paid doing so.
Almost nobody is currently buying steem to have more influence on the platform. The platform is not popular enough, there is not enough people watching the top rated content to warrant throwing money at it. People are mostly investing for the long term expected value of their SP, the platform need development work on many front. Steemit UX, 3rd party clients, 3rd party apps, content creator, curation, advanced tool, development of good practice, documentation, strengthening the steem blockchain. This takes money but also lots of time, trial and error to get right.
I understand that you feel like people with lot of steem are not responsible with their SP and that the SP is not evenly distributed.
Every whale has the responsibility to improve the platform in many ways, abstaining from voting if not sure about the long term outcome of their action is one of them. That might be one of the reason why NED, Dan and @Steemit don't vote. They are long term investors not normal users.
I think this would be interesting experiment, but overall I don't think that it would be welcomed.
It feels good to give. If someone possesses the necessary influence to hand out rewards, then removing that opportunity from them and instead allowing them only to remove rewards would be unfair. Whales need to be able to reward posts that they find worthy of their support.
At the same time, the minnows also need to be able to feel like their vote counts for something. I have been working hard on here for at least 3 months, amounting almost 3000 STEEM power, and I still cannot award someone with a single cent through my upvote. I stopped powering up a while ago when I realised it would take years of doing so before my vote had any meaning.
I really like your line of thinking, and empowering the minnows would most definitely have a positive effect on the community. It must be so satisfying clicking the upvote button and seeing that you have given someone else a reward. I imagine that would get addictive before long, and people would want more and more STEEM power to increase how much of a reward they can give.
Give the minnows some power, some purpose, and they will give so much more back to the platform. More minnows will arrive wanting a piece of that power for themselves, and they will stay once they have had a taste of it. Many of them will love it so much that they will invest their own money into STEEM so that they can award people with a dollar, or two, or three, achieving a higher level of gratification each time.
People are sick of centralized power. It's all around society and people have had enough. If Steemit can find a way to decentralize the influence, then we will see people swarm in by the millions. That's what I think at least.
Only thing is, the more powerful the minnows are, the more susceptible the system is to abuse, so there would need to be some sort of mechanism in place to prevent such abuse, or to penalize abusers of the system.
On a secondary note, I feel that a couple of days without curation trails being used would also be a great experiment.
What is more unfair? Removing this ability for 0.2% of steemians or never give it to the other 99.8% of them.
Btw you are not really removing it because nothing prevents a whales to create a bunch of accounts under $8000 worth and upvote content with these. It just makes it more difficult and they would be better off moderating if they want to allocate funds to authors.
The proposal is aligned with the whales's interests as it will create a lot of demand for steem. It makes absolutely no sense for 99.8% of people to buy steem power now, if you align the incentives with these people the demand is guaranteed to increase and the site will be a lot more fun to be part of than it currently is. ( like you said)
I know right.
Someone gets it :) The demand increases, then the value of steem increases and the overall payouts increase.
The idea is that whales will moderate/downvote abusive minnows with their voting power. They will still have the same power that they have today so they will never be out-powered by minnows.
Thanks for your great comment, you get it man!
I'm with you on just about everything other than removing a whales right to upvote. I feel that rewarding others for hard work is one of the basic principles that Steemit was founded upon, and to take that away from someone, from anyone, is not going to be good for the community.
We already have enough animosity towards the whales. If their sole purpose became removing rewards, it would cause a huge divide, and everyone who gets their content downvoted will be out there making another post about whale hunting.
One other thing I would mention, is that it isn't 99.8% of users who lack incentive to buy STEEM power. The remaining 0.2% have so much of it that they don't need any more, and are much more inclined to be selling their STEEM rather than buying more of it. This means, it's technically 0% of informed users who have incentive to buy STEEM and power up.
I mentioned on a post a couple months ago that if users who powered up over 'x amount' per month received some sort of premium service, then demand would surely see a rise, supposing those incentives were attractive enough. It would have to be things that offer an advantage worthy of their investment, so perhaps 10 tags per post and the ability to renew(make a post appear at the top of the new list for a second time) one post a day. Slower voting power depletion could also be an option.
I feel this type of incentive would increase STEEM power holdings as well as STEEM demand and have a dramatic effect on the value of STEEM.
I digressed somewhat there. My point was, you have made some excellent proposals. I would just try and find an alternative to the whales becoming little more than payout-police.
If whales have the ability to reward posts like they do today then the whole proposal is moot.
Like I said in my post there is 129 741 accounts or 99.8% that can not rewards others. So the principle you are talking about is more of a vague concept lol
The animosity towards the whales comes from the huge disparity in influence/power. Give people influence and you won't see a lot of post bragging about the whales this, the whales that.
Their purpose is not to remove rewards, it is to allocate rewards in a scalable way and make sure that the best content gets the best reward. The current system is totally not scalable, if we were to have a huge surge in participation there would be a ton of posts that would be left completely ignored.
That's an excellent point and you are absolutely right.
Supervising all the minnows and making sure they are voting for good content in order to increase the overall value of the platform has a lot of merit.
Basically I agree that current design is flawed on some points. However I don't think the proposed solution will solve the problem, or perhaps it will lead to new issues. For example, by capping the influence that whales have now, you're asking them to dump.
I still upvoted because the post leads to good discussions. I upvoted some of the replies as well.
@abit The proposal will not cap whales's influence, they would have the exact same influence but they will have to use it differently.
I see a lot of similarities with hard fork 16 in that the change in the design of the system looks very different but is in reality not different at all. Whales will still have the power to decide where funds are being allocated. I believe such design will be inevitable for a simple reason that the system as it is won't scale.
Using facebook for comparison, they have on average 40 000 posts every second, how are a bunch of whales going to handle this? It just isn't practical.
I believe they won't. Because 99.8% of users will finally have an incentive to buy steem power.
This quote perfectly describes the most likely scenario imo
Such proposal would benefit the whole ecosystem greatly.
Interested to hear if you personally would dump? and if so why?
An easy way to game the moderation reward is registering tons of asshole accounts to upvote shitty posts then use the whale account to downvote them; if the upvotes need to be stake-based, the whale can split some stake to the asshole accounts if the overall gain is attractive.
Do you mean whales splitting their account and upvoting themselves with sockpuppet accounts ? If so that would be no different than now, whales can upvote themselves if they wish.
I mean they down-vote their own sock puppets to get moderation rewards.
I see. It's not clear yet how moderation rewards would work. Curation rewards are easy to calculate, the higher the payout the more the curation rewards. I will have to think about a how to calculate moderation reward and prevent anyone from gaming the system.
It's basically the stake holders of a company deciding how to use its daily budget. It's not an issue that bigger holders have more weight in the decision making process. The "giving" part is great. However, when big holders put more % of the budget into her own pockets, simply because they have more weight, it's not ideal. It's worse when squared. From this point, I think
I admit that some people buy SP for more influence, however, some others hold SP for interests (before HF16) and curation rewards. I'm not sure how many percentages they are. With different designs there would be different equilibrium points. When high interest is gone, some people sold and some bought, although the price didn't change much, but it seems the down trending stopped somehow, so overall it's not bad. If we kill curation rewards or cap it, sure some will sell and some will buy, I'm just not sure where the new equilibrium point will be.
If I see there is an opportunity that I can buy back same stake at a lower price, or I think the price will go down and have little chance to come back in the future, I'll sell some for sure.
The main thing this proposal is trying to solve is not so much how whales use their vote, like I said whales are doing the job properly. The issue is that 99.8% of users are excluded from the "giving part is great" and this also create a problem to scale, if you have only 0.2% that can give to others.
The proposal won't really kill curation rewards. It would still be an option, basically you could split your account and earn curation with multiple small accounts. But the idea is to incentivize whales to moderate by giving them a moderation reward. If this reward is higher than curation rewards they would have no reason to not moderate.
I understand what you mean but in the context of the proposal you said whales would probably dump if this was to pass, I was curious to know why you think so.. This proposal will create a lot of demand for steem. Like this user said currently there is near zero demand
If you give 99.8% of people finally a good incentive to buy, the demand will increase a lot as suddently there is a real use case for buying steem and the speculative demand will follow which could send the price very high, which whales wouldn't want this? Curation rewards will look like chump change when their account increases 10-20x in value.
A bigger demand for "moderation rewards" than "curation rewards" could be an elegant way to improve curation on steemit !
The proposal would improve curation a lot because posts would go through a lot more scrutiny. First they would be voted on by a lot more people ( wisdom of the crowd ), then some users would report and finally whales would determine if payout matches content quality.
@abit TRUE !!!
His proposal doesn't even do that. It restructures them so there is an incentive for larger accounts to moderate: "This reward could be replaced by a moderation reward." Obviously, that would require a lot of work to figure out a workable mechanism for that. I've always felt thought, that downvoting/moderating is under-rewarded and therefore the system will suffer from a deficit of this important function being performed. So I think there would be a gain from this anyway.
Anyway, as long as the amount of curation/moderation/whatever rewards being paid out to SP holders don't change, it wouldn't radically change the overall incentive to buy SP. It would just change what tasks you have to perform as an SP holder to earn those rewards.
thank you for addressing the biggest problem steemit has, a problem that has been ignored for months by those who have the power to fix it. Not fixing it makes steemit look like a scam
Definitely food for thought.... you make excellent points throughtout. The idea of beta testing ...to see what is beneficial to the whole, is the point.
You start getting into who moderates the moderators as well. Nice post
Thanks! Appreciate your input
It would be interesting to see this play out.
Yes. There is an easy way to test this. Every account worth more than $8000 all agree to not upvote any content for 24/hours. We would have a real idea of how people vote and how whales handle the moderation.
I question your definition of 'easy' ;)
@timcliff I'm serious man, there is only 259 accounts, some of them owned by the same person. I would say there is probably less than 200 persons to convince and made aware of.
Btw I'd appreciate a re-steem if you like the idea. As I said in my post I don't care about the upvotes, the visibility and opinions of devs matter more to me. Thanks
I did resteem. I think it is an interesting idea, and I would be in support of seeing it played out.
That said, convincing those 200 (or however many there are) people to give up their curation rewards and their power over the platform is not going to be an easy task (IMO).
might work for a day, but yeah they need to get on the same boat and reach a consensus as far as i know they are in different minds.
Whales will not really give up their power, they will have the same voting weight but will only be able to downvote.
I get what you are saying but if the community can't take action to align incentives with 99.8% of its users then it's pretty much doomed.
If the whales think the steem value will be able to sustain indefinitely while ignoring everyone in the system they will be in for a surprise.
I am actually part of these 200 (or however many there are) and I don't mind change because I understand that demand for steem is primordial.A proposal that could drastically improve demand should be a no brainer. It's common sense really. Thanks for the resteem.
Realistically that never works. Who owns many of those accounts isn't even widely known (possibly known by no one else), so who do you even talk to to negotiate this agreement? Others are not really that active in the community, have their voting run by bots on autopilot/trails. So again, this isn't feasible.
However, it might be workable to get a few major whale accounts to do this, starting with the dev accounts that are run by guilds.
But in reality we already ran this experiment, in part, when the guilds went on vacation for a week or two. Smaller account holders noticed a big increase in their influence.
Among top 50 accounts 34 have been online in the last 24 hours, 6 have been dormant with no curation rewards. There is only a few account that are offline with bots on autopilot.
I think it would be easy to just set up a "minnow day" in advance, steemit could display this on the interface for about a month and Im sure a very large majority of users would be aware and go along with it, we don't need everyone to stop voting to see the effect of this. The large majority would do.
Well good luck. Many times things like this have been discussed, but never has it actually happened.
better yet, program steemit to randomly pick 13 days out of each month when whale upvotes do not apply
So one day your upvote is not worth 1 cents and the next its worth $1. This is going to be too confusing for people
if they are aware of whats going on, it would be a ton of fun, and encourage them to buy steem power on the days when their votes are worth nothing
:D Purge day :D , I'm not sure I like your idea , you seem like a man who is fond of gambling and odds , I'm not sure that would be good for anyone, which whale will work for years/invest to have power of vote and then be welcomed into a slot machine :)
@j3dy
95% of the current whales did not buy their steem power, they mined it when only a select few knew about the steem blockchain and the steem token was worth nothing