Steem inflation: A tool to create demand
There was a lot of interesting discussion this week regarding many different aspect of steem. One thing that really caught my attention is that it seems a lot of users are not trying to increase the value of steem but they are trying to increase the number of steem in their wallet.
Apparently I am not the only one. Here is a quote from @dan-atstarlite
One thing this debate has revealed to me... is that lots of people seem to think the best way to increase the value of their account... is by behaving in ways that earn them more STEEM rather than by behaving in ways that raise the price of STEEM.
It's nothing new really, I remember before hard fork 16 a lot of users were complaining that after the fork they wouldn't receive their 'interest' anymore eventhough the proposal was a no brainer to move steem forward.
We have an environment where many users are not acting for the benefit of the whole platform but for their own personal interests.
If we want steem to succeed we will have to get rid of this mentality.
Rewarding users is not the endgame.
Like I said in the intro, the ultimate goal is to increase the value of steem. Steem can only scale if the value of the token increases. I often hear that we need more users, that more users equal success. This is absolutely no true. More users right now would be really bad for steem because all new users would just drain the reward pool without increasing demand for steem( I know some of you hate this term but its effectively what they will be doing). What makes a crypto successful is its ability to maintain its price not the number of users using it. ( dogecoin to me is a successful crypto, I know it sounds stupid but it's true) Dogecoin doesn't have a lot of new users but it's price is steady because those already using the currency keep trading it. It doesn't need more users to stay afloat.
Inflation should be allocated to those who create demand.
Currently most of the inflation is distributed to those who create the least demand, authors.
Authors earn steem from blogging, their goal is to make money. The large majority of them have no interest in buying steem because like I said they already earn it.
Users who create demand are investors, curators and users who power up to gain influence ( not yet a use case).
A lot of the inflation should be strategically allocated to those users.
In my proposal I have suggested completely removing curation rewards. The reason is that it was the most obvious and easy way to make the proposal practical ( more specifically removing these rewards would make a stronger case for moderators to stay moderators )
I didn't really expect the whole debate to shift focus on curation rewards. I think these rewards creates bad incentives and I would prefer to remove them entirely but they are not the main problem. The real issue is the huge power/influence disparity between whales and the average user. The problems created by curation rewards are enhanced by this disparity.
I'll admit that curation rewards are also an incentive to buy steem for some people. In my previous post I suggested removing them because I believe these rewards will create very little demand compared to users buying steem to gain more influence. So to me it was a good trade off to remove them in order to introduce a new system that will create a lot more demand. I still think curation rewards are too complexe and will definetely not be the main driver for demand in the future but my primary desire is not to remove them it is to solve the influence disparity issue.
Over the last few days I have been thinking how my proposal could work with curation rewards .
The solution is to reduce author rewards and use this inflation to reward curators and moderators. Like I said earlier most authors are not buying steem so it make sense to reduce funds allocated to authors and give it back to people who actually create demand.
So the proposal would be slightly modified https://steemit.com/steem/@snowflake/guardian-of-the-steem-universe-a-different-perspective-on-the-role-of-whales-within-steem-ecosystem-part-2
50% will be allocated to authors, 15% to curators and 35% to moderators.
Curators will receive approximately the same reward that they do today, the percentage will go from 25% down to 15% but all accounts above 250MV won't curate which is why the curation rewards won't actually go down.
Moderators will have a strong enough incentive to moderate.
The difference between moderators and curators is big enough to discourage moderators from curating.
This will align incentives with people who create demand:
- Curators will be able to curate and earn some rewards which will create demand for this particular use case.
- Moderators will be given a good portion of the inflation ( This will incentivize big investors to buy steem)
- Average users will have more influence which will incentivize them to buy more steem power.
I think this is a good compromise to keep curation reward. I still think the benefits of removing curation rewards outweight the benefits of keeping them unless incentives are modified in a way that makes manual curation more attractive than bots curation. ( For example if authors could specify the % that goes to curation before publishing, it would give an advantage to manual curators over robots because this parameter will be unpredictable and ever changing. I also think that the incentive to vote fast ( 30 min rule) is really the most terrible one as it forces even manual curators to blindly vote for content.
The discussion has also been focused a lot on the current reward curve and on the comment pool so I wanted to give my opinion on those 2.
Regarding n^2 curve, I think it should be removed. I don't really see the point of this curve aside from reducing payout for a lot of good unpopular content on the platform and maximizing the effects of power disparity. I also don't see how this discourage self voting, because someone who want to vote for himself is by definition not going to vote for anyone else. The curve could be a lot steeper than it is today and that person will still be voting for himself. However I don't think removing it will improve the power distribution issue, it may spread out rewards a bit more but it won't incentivize people to buy more steem power, whales have so much steem compared to everyone else that it wouldn't matter. The vote of 99.8% of users will still be worth $0.
Regarding the comment reward pool, I think it's a bad idea. It will exacerbate the current flaws in the design and turn the site even more fake than it already is. Basically it will reproduce the same broken system that we have in the comment section.
Some comments will have huge payouts while others will have pennies, even more confusion for newbies. People will be fighting over this comment and that comment,etc...it will also create a lot of spam and fake comments
And if curation rewards were removed from comment pool it would also be bad as you would reduce reward for curators which is currently the only incentive to buy steem.
I agree with your opinion that authors don't create much demand, rather create supply. I also want to add a point that current curation reward is mixture of for-profit and for-content purposes, so I suggested to incentivize investors with separation from curation. (Here's my post)
But if there's any idea to only incentivize real curators(who actually read posts and evaluate them), I will fully support it.
I still think your plan overreaches to an extent... however, its getting much better. a couple observations:
If you used these numbers, curator rewards would actually go way up for the non-whales who remained in curation. Right now, whales dominate curation. The people with <250MV who currently earn money from curation probably don't get more than 10% of the 25% allocated for it (or a total of 2.5 percent).
Just a quick glance at 2-17's curation rewards 5500SP out of a possible 13,750 in curation rewards, go to the top 10 curators (all with >750MV). about 6800 out of a possible 13750, or nearly 50% go to the top curators with 500MV or more.
So just taking them out of play would double the curation rewards for the people remaining.
And even those numbers are somewhat underestimated. Because some of the 13750 is lost to the reverse auction.
Jesta estimated something like 32% of curation rewards are lost to the reverse auction, which means that we should really be looking at the above numbers as a percentage of 9350. So the top 500MV and above curators are actually taking something like 72% of existing curation rewards.
Which means that if you cut them out, the remaining rewards earners would be making just more than 3.5 times more given the same percentage. Alternatively, if you cut 25% curation rewards (as a percentage) by 72% (to make them 7 percent total) current <500Mv curators would expect to earn the same amount.
Using your 250MV cutoff, its something like 7300/9350 78% of curation rewards currently go to >250mv curators. The current 22% of 25% the <250mv curators get now would be around what they would get splitting up a 5.5% without whale competition.
This, of course, doesn't take into account whales breaking up their accounts to curate rather than earn SP passively.
Yes you are correct, curators would actually earn a lot more. The idea is to give everyone in the system a good incentive to buy steem power. We need to get the 99.8% to start investing. I've seen a lot of minnows/dolphins that were very enthusiastic about steem who where preaching powering up a few months back but are now powering down because it literally means nothing to them to power up. The whole dynamic needs to be changed.
^ agree with this sentiment
Upvoted for a great analysis and discussion item. I don't know the best solution with curation rewards; everyone seems to have a different view. I really like that you are focusing on creating demand. We need to include a measure of engagement, perhaps via reputation scores, and I think demand means engagement (user retention and activity on the site) and increasing users (bringing new people to the site). We should keep those in mind as we determine how to allocate money most effectively.
Good post has made me think differently with your analysis
So becoming a moderator would be like getting a promotion in the company?
Frank
kind of, it will give minnows an incentive to build their power in order to get those attractive 'interests'
But it will also be accessible to anyone and be a good incentives for large investors to buy steem.
Wow, this is Really a learning experience. A lot to grasp here on steemit. Enjoying it though. :)
Thanks,
Frank
What are you talking about? I'm PRAYING that the price of STEEM falls under DOGE again!
What you are seeing here is the "selfish mining syndrome" in a Subjective Proof of Stake community. It happens daily here and in all coins, but it looks more desperate and blatant when the fight for free money gets people to sell out publicly:
This common human reaction to obvious greed is pretty funny, but no different than greedy bitcoin miners who already have the advantage, and would not follow a fork to make it even the slightest bit more STEEM-like.
Say what you want about greedy crypto shareholders/miners, but STEEM is no better or worse than any other.
I have 46000 Sp and I earn around 100 steem per week with curation, Do you think I would buy another 46000 to earn additional 100 per week ? No way !
I'm not sure how your comment relate to my post.. But why would you not?
The idea here is to increase the value of steem, so those 100 steem per week could be worth a lot more in the future.
My point is that so called big investors will not come for just idea to increase value of steem. They are not stupid. They know the math and know how to do business. They want ROI and don't care about moderation, curation, etc. They don't have time for this. But all those masses we waiting to come are broke anyway. So my question here is: who want to buy steem right now and why?
ROI in crypto is usually in the form of value increase.
Why do you think all these investors are buying bitcoin? What is the ROI?
Also in what I proposed, 50% of the pool's money would be redistributed to investors ( moderators and curators) which is a real ROI. Usually this goes to miners, there are basically no crypto where 50% of the inflation is redistributed to all share holders. As an investment steem could be made very attractive.
Thanks for your time to explain to me. I'm not familiar with technical points here. I'm just average Joe, so my opinions are more amateurish. Sorry . I can't argue with you. Thanks anyway. But 99% people on steemit are average Joes like me. Take that in account.
So a New Company being in the Crypto or Non Crypto field could use steemit as a marketing and advertisement campaign? Possibly buy Steem Dollars (SBD) to promote a product or message about there New Company. Now buying larger amounts of STEEM and SBD would generally keep that marketing and advertisement cost lower.
Am I the only seeing this?
Frank
Buying steem power to get visibility is a failed concept because you need so much of it to get a post trending that it would make no sense.
But a model like the promoted feature on steemit make sense. I also proposed a similar idea where advertiser would pay to have their ad on a specific user profil. https://steemit.com/steem/@snowflake/a-twitter-like-revenue-model-could-be-applied-to-steemit-busy
Thank you snowflake for the link.
So lets say all the people working for Nutella had steemit accounts which also has plenty of friends and family as followers that may or may not have steemit...yet.
Wouldn't that at some point start to trend even with not that much SteemPower (SP) needed and they all just voted, commented, resteemed, and possibly click the PROMOTE post tab? Eventually other steemit users who may happen to see it will chime in, vote, comment, tweet, fb, etc...
The reason why I feel this way is because I do not really use any other social media but steemit. This is a platform which maybe an idea is created underground and eventually hit mass adoption. Just my two cents worth.
Frank
The goal is mass adoption. The most difficult part is to bootstrap the platform so it becomes big enough for advertisers to be interested in it.
This is why it's so important to align incentive with people who will help bootstrap it ( early investors)
So start ups would benefit using steemit for their employees before they become massive with little investment?
the 30 min reverse auction is not an incentive to vote fast. Its a penalty for voting fast. Curataors voting in the first 30 minutes after a post is made forfiet a percentage of their curation reward back to the author.
The idea is to partially counterbalance the top heavy structure of curation rewards (which favors bots). Even though bots like wang frequently sacrifice 90%+ to the reverse auction, they stillas good or better than regular voters.
If the reverse auction were eliminated, bots like wang and recursive would be making 10 times as much as comparably sized normal curatiors.
Have you considered this? The comment pool may be strategically necessary for reasons that have nothing to do with the current user base.
The reason why people do not upvote for comments is that there is no curation rewards to be made as whales don't upvote for comments.
If you change the dynamics and give influence back to the people a lot of the comment would be voted for.
You raise a good point but a comment pool is a band aid solution. The problem is deeper than this, for example if we want steem to be like disqus, the influence/power disparity will have to be solved first as it wouldn't make sense for 99.9% of websites to integrate steem in its current form because users of these websites won't have any influence so there is no point to integrate steem.
I wrote a post about the challenges ahead for steem if you are interested https://steemit.com/steem/@snowflake/guardian-of-the-steem-universe-a-different-perspective-on-the-role-of-whales-within-steem-ecosystem-part-2
I had already read your post, but thanks for the link. As I understand, after hard fork 17, the influence curve for the comments pool is planned to have a smaller slope, and comments will have no curation rewards. I suspect that both of those changes will help grease the skids for a disqus-like service offering. We'll have to wait and see if the new influence curve also helps to reduce the perception of influence disparity.