RE: Improving the Economics of Steem: A Community Proposal

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RE: Improving the Economics of Steem: A Community Proposal

clayop in #steem • 7 years ago

I agree with you that we have misaligned incentive system, and think your suggestion would create better economic mechanism. However, it won't be the perfect system. There are still, while fewer, people to self vote in order to take all author and curation rewards.

Then, what do we answer to the new guys who seek maximum profit from the broken system saying they won't stop until the system fixes the hole? There will always be these sort of people.

The crux of problem is a mixture of rewards; investors want to maximize profits using contents rewards, and contents creators are competing with investors on the same resource.

I think we'd rather have to focus on SMT and separating the heterogeneous incentive system, and do experiments using different parameters with each SMT.

7 years ago in #steem by clayop

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donkeypong 7 years ago (edited)

I think Clayop is correct and that's my general conclusion as well. SMTs will give the opportunity to experiment. I happen to believe that stake-based voting has been proven a failure when it comes to content discovery. Trafalgar's well-intentioned proposal will make Steem/it a bit better, but in the end it will simply last slightly longer than what we have now. People want money more than they want to vote for good content. Eventually, downvoting will be abused also and all of those mechanisms the proposal creates will still end with the same outcome. Therefore, let STEEM be the investors' reward layer and create some SMTs that try to do a better job of creating a reward system.

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riseofth 7 years ago (edited)

Totally areed.

First of all, Steem's inflation should be removed for rewarding the content creators and rewarding should be delegated to front-end DApps. DApps can launch their own TOKEN and reward algorithm to discover contents. Current inflation is not keeping up with low demand. If Steem did not have relative high inflation, it would easily sit at top 30 in CMC.

Steem's Inflation should go to protocol developments, witness compensation and PoS interest (2-3% vs current 8.5%). Rewarding content creators should be done with SMTs. STINC can launch their own SMT and share profit from ads with celebrity creators by SMTs.

Steem Investors can earn TOKENs through RC/SP delegations. @steemhunt is already showing a good example. Creators and DApps will figure out optimum synergy with a token.

Bidbots are not evils. They have their own business model. They can host in a front-end DApp where they can succeed or thrive. Competition within front-ends with SMTs will spur innovations.

All the front-end DApps can try their own SMTs with different distribution technique. Finding a sweet algorithms to rewarding the best content is more than rocket science. A former founder, @dan is bragging that he can fix it, I totally disagree. It needs lots of trials and errors and should be the realm of DApps.

DApps with SMTs can try different algos. @steemhunt, @actifit, @dlike and others are already experimenting. Steem's inflation and broken rewarding is helping its price.

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3 votes

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richatvns 7 years ago

here here!

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trafalgar 7 years ago

The entire idea here is to align making more money with content discovery and making it more expensive to behave in a way that contradicts that (eg self voting or vote selling)

It's not inconceivable that with the right economic incentives, we'll reach a equilibrium of relatively good behavior that'll continue to serve the entire platform well over time. Behavior that deteriorates over time isn't necessarily an inevitable product of stake based voting. It all depends on how well we align individual profit maximization behavior with honest curation.

It's hard to abuse a modest level of free downvotes in the sense of profiting from them. They can be abused in the general sense to bully and harass people, sure, it's one of the downsides. The idea is to limit them as much as possible while still have a sufficient amount of them to turn this place around.

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deniskj 6 years ago

Just came across this reply and I fully agree with it. I can't believe just how disillusioned large holders including witnesses have become. We have been struggling to onboard people now, expect that to be 10 times harder when minnows see half their post rewards vanish. Reverse robinhoood.

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liberosist 7 years ago (edited)

Exactly this.

Investors maximising profits is not compatible with content creators seeking an audience. Throughout history, plutocracies have always ended in catastrophe. In the early days of Steem, I was optimistic because this is a new system, but the inherent greed of homo sapiens always wins, and giving them a platform that they are encouraged to dictate with their wealth was always going to end poorly.

For 3 years, we have made incremental improvements over a fundamentally flawed platform. It is about time for an overhaul. I'd vote for cancelling the common reward pool (over time) and focusing on SMTs. Who knows, maybe some SMT will come up with a new paradigm which makes this whole thing sustainable.

PS: That said, till SMTs are ready, I'd support the above proposal as an interim "lipstick-on-a-pig" solution. If it is proven that these can be implemented with relative ease. I believe it's going to make things slightly better. Maybe a 1.5/10 from a 1/10, and is thus worth the effort. I'm open to changing my mind if I see better data, evidence and simulations suggesting a better result.

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clayop 7 years ago

Throughout history

This tells a lot. Because it is about humane nature.

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liberosist 7 years ago

Yes, and Steem is no different.

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valued-customer 7 years ago (edited)

"...investors want to maximize profits..."

Indeed. Water flows downhill. This is not a problem, but the key to the solution. We need to provide a mechanism that promotes development of Steem and capital gains that is separate from the rewards intended to curate content and market Steem to new users and potential investors. We need to take advantage of gravity, not try to force water uphill.

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4 votes

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glenalbrethsen 7 years ago

Thank you. I've been thinking along those lines since this post came out. We need something that investors can actually do, especially if they're not inclined to curate or post and comment. Could it be RC delegation? I mean, I've never really understood what's in it for the strictly investor here other than the market, especially if they're not really aiming to participate in the social side of this platform because of less than desired returns.

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1 vote

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iflagtrash 7 years ago

I flag trash. You have received a flag.

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3 votes

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jga 7 years ago

The crux of problem is a mixture of rewards; investors want to maximize profits using contents rewards, and contents creators are competing with investors on the same resource.
I think we'd rather have to focus on SMT and separating the heterogeneous incentive system

Thanks to the investors the price goes up. By contrary, the inflation and rewards makes the price go down... I think is impossible to separate investors from content rewards without letting the steem price go down.

For this reason I think we have to deal with this "mixture of rewards" forever, and try to find a better distribution, like this proposal.

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1 vote

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trafalgar 7 years ago

Yes, the original post concedes there's probably no such thing as a perfect system. But what we can do it make it less profitable to engage in behavior we don't want (eg self voting, vote selling) and more profitable to engage in behavior we do want (eg honest curation.

The right incentives are probably more powerful and effective than you have you mind. If curation pays a lot more and a moderate amount of free downvotes are available, the threat to any obvious abuse is very real. If we get the numbers right, it should be sufficient to deter most misbehavior to the point where we have enough free downvotes to take care of the actual misbehavior that were not deterred.

Also, while I personally believe a functional base economy is more important and essential for SMTs to really take off, I don't really think SMTs vs Economic Improvement is a dichotomy. Realistically, even if it took priority, it doesn't require a lot of work from a coding standpoint. It's only a small exaggeration to say that @vandeberg could knock it out in an afternoon (well maybe like a week :p). Think about how easy these changes are to implement and how important they are compared to the complexity and uncertainty of an undertaking like SMTs built on a broken economy system. If we're half right about these economic changes, then it'll represent the greatest value for cost and time investment than any other undertaking.

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4 votes