Concerns about reward capping

Introduction

Several posters @innuendo and others, have decided that it's in the interest of Steemit to utilize and enhance the ability to downgrade posts which are perceived by some to have excessive rewards. In this post I will discuss my concerns about this particular view. I will also go one step further and offer a solution.

My list of concerns

• Reward caps give a bad image for Steemit.
• Unfairness, earlier Steemians including some who are now whales did not have reward caps.
• Reward caps may actually make it much harder or perhaps even impossible for a minnow to grow into a whale.
• Ethical concerns, is it a good thing to directly interfere with market forces?

Reward caps give a bad image for Steemit

The reason being that most of the marketing which is driving ordinary people to Steemit is the lottery effect. When you "bring the rewards down to earth" then you lose the marketing effect that a person can hit it big on a post. It's this lottery effect that makes people all around the world want to live and work in Silicon Valley because they know it's possible with some luck, combined with hard work, to become the next billionaire, or multi-millionaire. When you put in place a cap on that then you remove the drive of some people to ever bother trying to become big, or to become a whale in our ecosystem.

To put this into perspective, imagine if in Silicon Valley the local government decided to put in place a cap on wages. No worker can make more in any profession than the amounts within certain ranges. A carpenter for example could never make too much more money than the other carpenters because the other carpenters might look at it as unfair. An athlete or programmer can never make too much more than the other programmers else it might be deemed unfair. In the case of artists and athletes, they would have to get paid within certain ranges too.

In my opinion this could work sure but it would take away the dream effect. People who have the American dream or the similar dream of making it big can now forget about that because in the end everyone is in a tight range. This isn't to say that Steemit would go as far as to publish a set of culturally acceptable ranges for payouts but it's certainly not illogical to expect that after enough downvotes for excessive rewards a pattern will emerge and people will discover that there are enforced ranges even if nothing is published. In my opinion anything which would make content producers feel that the machine is rigged is not going to have a good psychological effect if you want a lottery or slot machine effect and it's that slot machine effect which makes Steemit fun.

The whole point behind a slot machine is that you have variable ratio reinforcement. When people play a slot machine or go to a casino the reason they keep playing is with the hope that they can get a big score. It's not guaranteed that they will, but it's the fact that they see other people just like them winning big which keeps them trying. When you put a cap on the jackpot if I may use that language, then you turn something which is fun into just a job. For this reason, the fun aspect, I believe it's very important to Steemit early in it's development to not only allow "excessive payouts" but to highlight them as "success stories" of Steemit.

It's unfair for new arrivals to Steemit

New arrivals to Steemit will see that now that the early users of the platform have had huge payouts relative to Steem Power in the first few months that now those early users want to change the rules to make it harder for them. Is it fair for instance that when many of us were posting on Steemit, the price of Steem was less than 20 cents, and yet some of us were getting rewards in the $5000 range, some which added up, and now at least one person went from minnow to whale. If instead of celebrating that, we decide instead to start downvoting newcomers for "excessive rewards", then how do we look to them? The fact is that people who arrive early have unfair advantages and this goes back to the whales who mined in the very beginning, posted in the very beginning, and so on. If it's never was going to be completely fair and wasn't about equality in the beginning, why change it now? It may be better to embrace the fact that in these kinds of systems there is some unfairness but that there is opportunity in that unfairness.

Reward caps may make going from minnow to whale impossible

This is one of the more dangerous side effects. It may become impossible for people coming in now to gain enough Steem Power to become a whale. By whale I'm talking over 100,000 Steem Power.

So far we have one example of a person who came into Steemit not long ago and who is now a whale . Stellabelle is a great success story of Steemit. She went from being a minnow to being a whale within a period of weeks. Would she have been able to achieve something like that if she were downvoted for excessive rewards? If we want people to be able to go from minnow to whale by earning it then a cap in rewards in terms of Steem Dollars is not the answer. Steem Dollars do not have the same meaning that they had when the price of Steem Power was cheaper so this means the amount of work to become a whale could continuously rise as the price of Steem rises until it becomes infeasible for anyone.

Ethical concerns

The ethical concerns here are based on consequences. If a person is voted up then the reward in Steem Dollars they receive can immediately have a great impact on their lives. Going into the future if the excessive rewards are in place then it could be life changing amounts of money. This could be seen for example by @infovore who had his life changed by Steemit. In the case of caps then these situations would be less likely to happen in some parts of the world which have higher costs of living. In Africa where the cost of living is $1 a day then inherently anyone working from there is going to be satisfied with a lot lower reward payouts than a person living in Silicon Valley. To have the same life changing effect for a person in Silicon Valley you're talking $100,000 payouts but for someone in Africa you're talking $10,000.

For people who say a reward is excessive, what cultural standard are they using? Excessive for whom? Since I'm not in a position to know certain things, I would not try to determine what a fair reward is. In fact there is a subjective theory of value which is a direct contrast with the labor theory of value, and follows of the subjective theory of value would say that the market alone determines the prices. Who am I to interfere with the value bestowed upon a post by the market?

Conclusion and solution

A solution that I've come up with is to let the receiver of the rewards determine the ratio of their reward received in Steem Dollars vs Steem Power. We all win if more people converted more into Steem Power. Minnows win because the Steem Power would be more widely distributed which would increase the chances that their content would get rewarded. More whales would mean more meaningful payouts and how do you get more whales without high payouts?

Since Steem Power is the real issue, how do you distribute Steem Power if some people are looking at and feeling a certain way about the Steem Dollar payout? The Steem Dollars aren't the actual measure for how much stake they have long term in Steemit but the Steem Power is. $10,000 in Steem Power might be $100,000 in Steem Power in some months from now.

If the content producer receiver of the rewards opts to receive 100% Steem Power then there could there be no dollar Steem Dollar amount shown by the UI but the votes should still count toward Steem Power? If the content producer only wants to acquire Steem Power and is only concerned about Steem Power but does not care about the dollar values at all then the Steem Dollars being public will serve no good. In fact it may be that having wallet data and other financial information public is problematic and this may be why in most businesses the salaries of employees are not made public.

The reason I reached this conclusion and solution is that it is my understanding that reward caps are like maximum wages or salary caps. If we look at sports then it is like the difference between boxing and the UFC. If there are these sorts of caps then it may become impossible for a minnow to become a whale in the manner the posters such as Stellebelle did.

I would recommend a case study of @stellabelle because she is the only content producer on Steemit who worked her way up into being a whale. It is my understanding that people like @stellabelle are the best possible marketing for Steemit. It shows people that it's possible for anyone to become a whale if they make consistently good posts and have a bit of luck. In my analysis, I see that while she is very consistent, she also benefited from huge payouts, as have everyone else in the first few months, and because of these huge payouts she was able to acquire at this time over 100,000 Steem.

Would a success story like hers be possible if going into the future there are efforts to keep rewards from being excessive? Considering these same efforts didn't exist for the earlier participants, is it considered fair if new participants have maybe an impossibility of ever becoming a whale?

Additionally, it's not possible for future posters to know what the community consensus will be for how much certain posts will be worth or what is considered excessive. Will there be published lists which put different posts into categories with maximum fair rewards for each category? Makeup tutorials for example capped at $5000 by community consensus? Photographs capped at $1000 by community consensus? To me this would be both bad marketing for Steemit and unfair.

For these reasons I will continue to vote up content I think is under valued but will not be voting down any content for "excessive rewards". Any rewards which are huge will only be good for marketing and the worst case is that maybe there will be new whales but this would only distribute the Steem Power. Finally I want to note that this post is not to change anyone's mind but merely to express my concerns so as to progress a discussion around this.

References

1. https://en.wikipedia.org/wiki/Slot_machine
2. https://en.wikipedia.org/wiki/Subjective_theory_of_value
3. https://en.wikipedia.org/wiki/Labor_theory_of_value