RE: Steemit Reward Pool Abuse, Myth or Fact?
In either case, they lose money on their investments in Steem terms.
Don't you mean in USD terms? In Steem terms, anybody with SP has a growing balance.
I think you're making an assumption somewhere that the market cap (in USD terms) of STEEM is constant? Thus, it would seem to follow that people who sit on their SP and never vote are taking a loss due to dilution. People who do nothing but cast self-votes are taking a small loss due to dilution (since not all of the printed Steem goes to the reward pool).
If 100% of the total stake were voting actively, those conclusions might make sense. One issue is that much less than 100% of the total stake is voting actively -- probably less than 60% (though I haven't checked the number myself). Thus, 60% (or possibly much less) of the stake is allocating the entire reward pool, so depending on exactly how full the reward pool is and what these numbers actually are, you can easily beat dilution by self-voting.
And you can do the math yourself to verify it: I self-voted a comment at 47% voting power and full slider power and it gave me $0.16. So 0.16/0.47*10 gives me the total author reward I can allocate myself per day if I vote on nobody but myself. That comes to $3.404. STEEM is worth about $4 right now, so call that 0.85 STEEM. I have about 1200 SP, so that's 0.07% daily return, and to compute a lower bound we can ignore compounding and multiply that by 365 to get a whopping 25% annual ROI in STEEM terms. That's quite a bit higher than the 9.2% (or whatever) inflation that we currently have.
Or have I misunderstood you somewhere?
Oh, and since SBD is trading so high right now, the numbers I wrote violently underestimate the real return you could get in STEEM terms if you take your author rewards at 50/50.
Thank you for your feedback, @biophil. You found a mistake and explained the issue much better than me. So, corrections are in order.
Yes, I mean in fiat terms. I'm going to correct this.
Yes, I make that assumption to keep the calculations simple. I've mentioned it in the post: "If the amount of fiat investment in Steem remains constant" I will update this also.
Yes, the assumption that 100% of the total stake voting actively was implicit in the calculations. Do we have a reference handy where this percentage data can be verified? If not, I can google this later.
I believe the solution to this problem is to get everybody to use their voting rights every day. If they can't do that, they should delegate it to someone they trust who would work as an "editor" on Steemit.
No, you have understood me correctly.
I need to update the post, because the thesis here won't hold if less than 100% of the stake is voting actively.
After running the numbers a few more times, I came to the conclusion that as long as there is reward money, it's impossible to prevent abuse. That's why I came up with another solution proposal, which I explained in the post: How to Solve the Reward Pool Abuse Problem Once and For All.