RE: Locking stake for 100% passive income, improving content, helping apps
I like the general idea, and an "investor class" is something I have brought up and petitioned for several times before. Unfortunately, where it gets stuck is that the math never works out in a way that is feasible. It either doesn't offer sufficient rewards for it to be "worth it" for investors to be passive, or it takes way too much of the rewards away from the active users in order to pay for the program.
One thing I would be curious on (I don't know the numbers off hand) is how much "inactive" stake there currently is compared to the active voting stake (excluding the Steemit, Inc. accounts).
This is important, because if a large percentage of stakeholders who are currently not participating in the voting process would like a part of the passive income rewards too, it starts taking a significantly larger chunk of the "pie" out of the active stakes' rewards pool.
The maths might not work in theory, but in practice, would passive investors be willing to take a haircut on returns in exchange for the flagproofing?
If this was rolled out and became the expectation, I could see people heavily flagging bidbotters to make sure their returns were less than they'd get by going passive.
Flagging is drop-in-the-ocean stuff at the moment, but if passive offered 90% of bitbotting's returns, an 11% downvote would be sufficient incentive to go passive.
We currently have about 0.1% downvoting. For anything close to 11% downvoting to become realistic (or even just 11% against the 30% that is allegedly involved specifically with bid bot schemes, ignoring other forms of self-voting) would require a revamp of downvoting as well.
Downvoting hasn't been the same since we moved to linear rewards.
When your vote can add 5c to your mate, or remove $5 from a piece of rubbish; you're going to roll up your sleeves and get yo' flag on.
When your vote can add 50c to your mate, or remove 50c from a piece of rubbish; you're going to look after your mate. We don't need a revamp of downvoting, we need an unrevamp.
Fair point, although there is no current appetite to move strongly away from linear (perhaps small tweaks are possible). So it is either the status quo or downvote revamp. I don't think the status quo is very good.
I don’t think passive will offer anything close to 90% the returns of bid bots though.
This idea actually offers more - 100% of self voting. Can't get more than that.
A small cut of up to 10% going to brains from stakes might work too though, I'd Iike that. Can't predict where investors prefer to sell their votes again, maybe this cut could be set by the witnesses to adjust when vote selling takes over again.
It would only be 50% of current self voting if 2x the amount of stake started participating though. 25% if 4x did, and so on.. If you end up with 10x as much stake jumping in the pool as is currently voting, then pretty much everyone is getting 10% of the current rewards pool, and 90% is going to passive stake.
Don’t get me wrong.. I am not arguing against an investor class proposal, or even this one. I’m just saying it needs to be more thought out and calculated if it is going to have any chance of going anywhere.
Key word there is current self voting. Current values don't matter then any more. Nobody has a right to a certain ROI.
Lower ceiling for passive investors ROI (only those @mattclarke talked about) would obviously be the inflation less witness rewards (less a possible cut) .
And if only 10% of investors want to participate in PoB, that's what it is. At least for those the term PoB would be valid again.
I'm not buying it. There may be some investors who want to participate via passive staking, and others who still want to 'participate' in PoB while distorting and circumventing it. Offering another choice does not guarantee that the choice will be used the way you intend or hope.
It could work, but I don't agree with your suggestion here that PoB necessarily would be valid again.
Yes, I got carried away a bit there. Most certainly there would still be issues, and the idea of having the "best" content getting the highest rewards might never be achievable. Thanks for chiming in!
Yes, it can leave the pool a little dry but at the same time that will also put scarcity on the markets and push prices upward (hopefully) and encourage new users in. While they might not be getting rewarded in Steem, they can be rewarded in SMTs that are powered by that Steem. Isn't that the eventual goal anyway? This should essentially force new users onto the applications and games to earn and give a kickstart of users to all the apps as they transition to SMT distribution instead of Steem.
I think... :)
"also put scarcity on the markets" I don't know if that is going to be true. The overall inflation will be the same regardless of who it goes to. I don't think it is valid to assume that passive investors won't cash out what they earn, which would put the same downward pressure on the market as if a content creator or curator did the same.
If we are bringing SMTs into the picture, why not just eliminate STEEM rewards altogether? @clayop has brought up a proposal along these lines. It is an interesting idea.
I would tend to agree. Inflation is inflation with much the same effect unless it is actually and effectively directed to pay for activities which add value to Steem. Very little current author and curator rewards fall into this category (it would be nice to try to improve that, but unless we do I think you are right).
That would be my preference. My proposal on this was to airdrop a STEEMIT (or some other name) SMT onto all STEEM/SP holders and the latter would take over the rewarding function. Everyone can then hold or buy/sell the token or combination of tokens that they desire: the native/core low-inflation bandwidth and governance token (STEEM) or the inflationary rewards token (STEEMIT).
I’m in favor of that proposal.
I don't see the market scarcity manifesting in any good way. Anyone who is currently excessively self voting or delegating to bid bots is already locked up in SP which isn't trading on the markets. Adding an investor class lockup doesn't change any Steem scarcity as current users "flip the switch". It only could presumably influence Steem price by bringing in new investors who are coming in now on the prospect of sidestepping the original Proof of Brain mechanism of Steem. Essentially we'll be hoping for Steem price appreciation at the tradeoff of making 60-80% of Steem used exclusively for self voting. At that point I think the whole system fails.
Proof of brain as a standalone distribution mechanism has already failed. This idea suggests a hybrid approach to visibly distinguish the returns from PoB from passive income, so those who want to participate in the PoB don't get discouraged by drowning in the rest.
I don't think it's that important. Everyone will get a smaller part of the pie, but why shouldn't they receive some of it too for their investment. Right now passive investors have the choice between ~15% ROI for screwing the platform, or 0 for not doing it. And more and more decide to join the first group, because they're tired of watching the ones who don't care grow while they keep stagnant.
We need to focus on growing the pie.
The bid bot situation really keeps off a lot of people from the outside. While googling for the original post containing this idea I instead found tons of external links talking about how steem is completely broken. And at least regarding the intention it was created with, it undoubtedly is.
I don't really disagree with the overall theory. If (using made up numbers) it turns out that 75% of the "pie" (inflation) is going towards passive investors, and 10% is going to witnesses, and only 15% is left for content creators and authors - I think there is a valid argument to be made that it isn't working as intended. If passive investors can only make 10% compared to what they would get from bid-bots, then that also won't work. Basically the actual math behind the proposal is very important. All of the actual proposals that I have seen so far to implement an investor class have ended up on one of those two extremes.
This idea is not about by which percentages to distribute inflation, but who gets what from the reward pool. Under this model it could become bigger by removing the current interest on SP, but basically passive investors would get the exact percentage they decided to take out of the voting pool. No further math required.
What about all of the currently non-voting stakeholders who may also take a portion of the investor class rewards?
That's their right then, yes. It would probably lower everyone's ROI, be it investment by stake or by brain. That'd also mean broader distribution of the inflation, which isn't a bad thing in my eyes.
The issue isn't to judge 'right' or 'wrong', it is whether the incentives work out. I agree with @timcliff that the math is very important. If something like this gets implemented and not used by the large amount of stake that optimizes returns because the profit is less than some alternative the it will just add to the pile of technical debt of many, many half-thought-out Steem features that are never used, and also won't bring us any close to a better functioning system. Alternately, if it turns out that it is so heavily used that rewards all but disappear, that may be okay but it would be a careful choice that the Steem community would have to decide is what it wants.
I'd also note this is probably inferior to simply turning off the rewards because proof of stake with high inflation has the negative to inducing a (more than otherwise) negative price trend, which is terrible for PR. Also possibly lack of understanding from investors that the inflation is high but they can get back most/all of it via staking. The latter is essentially the original situation with hyperinflation which was a terrible miss in terms of market perception.
All that said I'm not broadly opposed to the concept and I've been one of the most consistent supporters of investor-class stake that doesn't participate in the social rewards scheme. Still, the details matter to whether it will work. Again, too many aspects of Steem's economy and consensus rules have been put in place without careful economic and game theory analysis. We need to do better going forward, not continue the same careless methods and wishful thinking that have gotten us to this point.
also, I'm not 100% sure if we were the original original, but here is my and @snowflake's posts on it from two years ago:
https://steemit.com/steem/@snowflake/guardian-of-the-steem-universe-a-different-perspective-on-the-role-of-whales-within-steem-ecosystem-part-2
https://steemit.com/steem/@timcliff/whales-can-the-community-buy-out-a-portion-of-your-influence
https://steemit.com/steem/@timcliff/update-on-the-whale-buyout-proposal
No, as stated in my reply in the previous comment, this suggestion is a lot simpler in nature.
Edit: found it with the help of @meno!
https://steemit.com/steem/@tcpolymath/a-simple-radical-change-to-steem-that-could-fix-most-of-our-problems
The current reward pool could be devided 50/50 into two PoS/PoB pools.
Let's say Bob is the only one who chooses PoS. He would alone get the 50% of the current reward pool then. Of course it will not really happen, Alice and others would join. At some point ROI in PoS pool would't satisfy Bob any more and he might decide to migrate back to PoB pool. So, some dinamic equilibrium will be found.
The idea is to not incentivize behavior in either way for maximizing profits, but let people choose freely if they care more about ROI or PoB
I didn't plan to intentivise anything, just proposing some solution for this dilemma :
If everyone loves all their stake to passive, we have a much bigger problem. The whole concept of rewarding good content would be wishful thinking then. I don't believe it is.
If everyone loves all their stake to passive- but you don't - then, under my proposal, you alone will distribute 50% of the current reward pool.
Which is a bad thing, because maximizers will switch their stake back and forth depending on profitability, and we wouldn't solve a single current issue.