Creating Capital Gains with Appropriate Incentives vs. Discouraging Capital Gains by Profiteering: A Proposal
@theycallmedan posted a poll on whether rewards should be fixed at 50/50. @edicted posted authors should set curation rewards themselves. I have long advocated for eliminating curation rewards as counterproductive altogether. Steem rewards are broken and the price of Steem is underperforming (we've dropped to the low 50s on Coinmarketcap) despite the fact that it's a superior currency, and may have the best use case of any crypto today. What do?
After reading @theycallmedan's post, and some comments there, means of creating incentives for investors to support development to drive capital gains, and all but eliminating votebots, self votes, and rewards pool rape occurred to me, which I commented extemporaneously to @kevinwong on that post.
Here's that comment:
I appreciate your substantive and informed comment, even though I strongly disagree.
"Voters will most likely just upvote themselves all the time."
It's been tried, and through socks it happens alla time. Remember @mindhunter though? He's just gone after his ploy was revealed. The community disapproves of self voting, and for good reason. Why have rewards at all? To create incentive to produce quality content that markets Steem and potentiates capital gains for stakeholders. While curation rewards were instituted to further create incentive to do that, they don't amount to much for insubstantial stakeholders, who in general just ignore them as a reason to upvote.
Curation rewards thus aren't any incentive for the majority of votes. For those with substantial stake, curation rewards are the end - not curation. Votes cast to attain curation rewards by those folks are cast without regard to content quality at all - contrary to the purpose of curation rewards - but solely and strategically to gain rewards.
Until vote bots arose self votes and similar mechanisms were roundly criticized as simple profiteering (and that censure has now included votebots), that at best did not create incentive to come here and buy some Steem and drive the price up. That's a good reason. So, let's admit that curation rewards don't work for the purpose they were instituted to achieve, and go on. @edicted proposed giving authors a slider, so they could set curation rewards to whatever they wanted, and despite my initial advocacy for eliminating curation rewards completely (as simply another vector for extracting rent with stake) I agree this is a better solution, as it becomes a means of attracting votes by letting voters attain to the rewards themselves - eliminating bidbots and enabling authors to promote their posts by eschewing rewards to the degree they are willing to.
As my goal for Steem is nothing short of world dominance, I want to see investors acting to create capital gains, and float every boat. Profiteering is contrary to that, despite lolbertarian freedom to do what one wants with one's stake. It isn't wise to drain the blood from a barnyard animal you'd like to sell at market for a good price, and that is analogous to profiteering and extracting rewards from the platform when you'd like to see Steem generate capital gains. Plus, it's gross, and the community does seem to dislike it.
Instead let's consider mechanisms that allow substantial stakeholders to get dividends by delegating to development projects that potentiate capital gains. Let's also limit potential rewards on posts, to eliminate that vector as suitable for profiteering. Huey Long proposed that no one should live on less than 3% of median income, nor attain to more than 300%, and I reckon that's not going to impact actual content quality negatively, as that's a significant range that allows incentive to be exerted, while also making bidbots useless for folks that abuse them just for rewards. Now, Long proposed that when he was very popular and no little ferment was ongoing in the US, and got assassinated for his trouble. I'd prefer not to get shot.
The rewards pool has been gamed to the point that Steem is suffering from poor enough optics that we underperform the market. Tweaking curation rewards isn't going to fix the problem of profiteering, as you acknowledge, and simply eliminating curation rewards won't either. Creating a vector for dividends from delegating to development projects, and limiting the extractive potential of votebots does make it possible to decrease financial incentive to abuse curation for profiteering, and enabling dividends from delegation presents a mechanism that will drive capital gains. Maximizing rewards at any cost isn't wise. You point this out:
"...not necessarily and straightforwardly all kinds of activities == incentives."
Maximizing rewards for improving development and driving capital gains is what actual investors should want. It sure is what the market wants to see, as well as most everyone on Steem today. If you got this far through my extemporaneous comment, I am grateful.
Thanks!
I note that @steemalliance has chosen The Merger as the foundation that will be born to fund development of Steem and it's ecosystem, and @blocktrades has completed their proposed mechansim for providing that funding to devs. The market shows signs of popping, and some have declared the end of the bear market. There may be no better time to improve rewards mechanisms and incentives to delegate to development than right now.
This is not a refined proposal, and will undoubtedly be bettered by criticism. Please rip it to shreds, so a better one can be born.
Fine post, sir.
Imagine if the intended model all along was never to dilute the rewards pool 'too much' - but instead, give it back to themselves, while at the same time sucking in user numbers to raise the awareness and price...
If you don't want to risk getting shot at -stop putting your head above the parpet.
User numbers are not rising much, and probably are declining presently, so if there's a trigger that will be pulled that will fire the extraction of their stakes, it's either pulled or will soon be. Perhaps the effort to double curation rewards is the equivalent of holding on target while the trigger is maintained just before the breaking point, to create a last minute burst of extraction of the remaining value in the platform before firing.
Regardless, that's a short term strategy, and not the world changing paradigm I hope Steem can be.
As to my head, it seems to always be above the parapets, making me an obvious target. Despite the hard knocks, I keep it in the learning zone =p
Thanks!
Maybe some 'creative destruction' is required if we are to see the paradigm shift.
One that can realize the potential of steem.
Well, as I note in my reply to @kevinwong, since 'code is law' which profiteers use to justify extracting funds which should be marketing Steem to generate ROI instead, I propose destroying the rewards mechanisms to create a dividend stream for such stakeholders as are negatively impacting Steem marketing, and also eliminate bidbots, self votes, and circle jerks at the same time, while maintaining incentive to produce good content that markets Steem.
If that isn't creative destruction, I'm not capable of it.
The problem is that it isn't the animal's owner that is draining the blood...it is his neighbor climbing the fence, draining the blood, and saying "hey, we're all in this together" when it comes to reward pool rape
I don't think that it is the existence of curation rewards that is the problem, but rather that those rewards are time restricted...if you don't jump on a good post soon, then there is no reason to curate for returns.
This KILLS content as a long term resource for the platform.
Other than loons like me, who goes back and reads old Steem posts?
Regards, dear friend, @valued-customer.
How about concentrating on the quarters?
Start Q4 2018. The value of the STEEM was 0.8 usd approx.
End of Q4 2018. The value of STEEM is 0.2 usd approx.
What happened?
Certainly this bearish phenomenon affected almost all the cryptocurrency market, but what happened with steem, because it has cost so much to recover?
Just this low price caused the massive abandonment of accounts that were active producing material and receiving rewards that helped the distribution of capital and maintaining the inflationary balance of the blockchain steem policy.
Then we would need new accounts, new users.
I do not know the volume of new accounts created this year, but we would have to know the real activity of these accounts.
The truth is that the new game Dapps, are capturing the largest flow of active users.
Maybe this will help maintain the economy, but then the creation of original content would be lost.
I apologize if my comment is out of place. I would like to know if my approach is wrong.
Thank you for sharing this valuable information.
All best, Piotr.
Your comment is quite relevant to the issue at hand. The complexity of the factors involved in price of Steem in the evolving market preclude my possession of precise understanding, and beyond basic principles, I don't attempt it.
It is basic principles I do attempt to address in my OP. Including incentives to seek ROI by effecting improvements that in turn drive capital gains is a trait that Steem should obviously incorporate, and the extraction of rewards without driving capital gains is what Steem creates incentive to do instead. All kinds of rhetoric, including that from profiteers that would prefer to continue their parasitic extraction of funds without additional expense, has been forthcoming, but none of it actually acknowledges this basic principle, and therefore will not improve the situation regarding Steem's performance or generation of capital gains for investors.
This reflects that actual experienced investors are scarce as hen's teeth on Steem, and those that ninjamined the initial stake prior to Steemit being introduced have other skills, primarily mathematics heavy programming and technical computer development. Absent experience imbuing an investment vehicle with value to produce capital gains in real markets, the skills brought to bear by extant stakeholders seem to have developed the rudimentary grasp of extractive profiteering that seems to dominate Steem presently. Sadly, the consequences of such policies will only produce experience after mistakes are made, and the consequences eventuate, unless those folks educate themselves on investing practices, which is why I seek to promote that.
Losing users that are here is extremely expensive, as gaining new users is orders of magnitude more difficult than keeping those that have already shown such interest and undertaken the effort to sign up. Again, folks inexperienced in business just don't know that. Games may be more suitable a use case for their purposes, as the complexities of the social dynamics underlying social media are not known expertise of computer enthusiasts in general. This tends to prevent conservation of users and the pressure they put on price to create capital gains, exacerbating Steem's underperformance.
Social media is difficult to grasp the import of, particularly for folks whose expertise in technical matters, rather than social dynamics. I note the far more transformative potential of social media, and financial rewards that makes possible, than gaming. This is probably far less apparent to computer enthusiasts, whose personal interests are contrary to that reality. They are thus acting per their interests and skillsets, and creating a platform that avoids the most beneficial potential for capital gains in the real world, rather than the virtual.
Thanks!
Dear @valued-customer
I would like to thank you for your time and effort. Amazing comment buddy. Appreciate it a lot.
Yours
Piotr
Are you doubting the power of the free market? Maybe it's right where it belongs... Maybe it's overvalued...
This is why I have argued in the past that the price equilibrium is headed towards zero. There is very little incentive to produce a "quality product" that grows the base, most successful product is merely there to play the political game. Steem exists for the core userbase ("the community") to gain power and influence within the userbase ("the community") but such politics scares your ordinary content consumer. Whichs leads to...
I don't necessarily think that this is true. I think plenty of people on Steem are content with playing the political game or milking the system for profit. People tend to be self-interested before they care about more global ideas like the health of the network, long term sustainability, etc.
It is exactly self interest that causes them to consistently clamor for increase in the price of Steem, and once the connection is made between those features of the network and that source of capital gains, that self interest will drive clamor for those things that benefit us all.
No one with Steem wants the price to continue to fall. We are going to see more people leave right now as a result of this recent collapse of steem by ~20%. It will be those least committed to Steem, and least desirous of those very beneficial improvements you mentioned. As the community continues to fail to implement rational action to improve things, that will continue to be the result, and eventually only the most committed Steemers will be left to rule over the ashes. Sooner or later, rational action will be undertaken to induce capital gains, or the profiteers will move on to riper fruit, and then rational action will be undertaken absent their objections.
The sooner the better IMHO.
At that point, whenever it is reached, if it is reached, those folks will be faced with a decision. Whether it is worth it or not to try and reconstruct something with those "ashes" or whether or not it is no longer worth to them to continue the survival of the remaining community. They may be self-interested to quit. It might be rational to quit given certain circumstances. The effort to rebuild may be too much for the return to be worth it. At what point does the network collapse become too severe to be "worth" it to regrow is anyone's guess.
It may be awhile off, we might be past it. Who knows? We're in uncharted territory.
You are right. That's why I propose doing this now. The sooner the better, for all of us and our wallets. We yet demonstrably have a community that is intent on remaining a community, and that shows it's not yet too late, IMHO.
Time will tell.
Thanks!
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