RE: Improving the Economics of Steem: A Community Proposal

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RE: Improving the Economics of Steem: A Community Proposal

trafalgar in #steem • 7 years ago

I did look through your suggestions and some of your other replies

The primary economic problem we have is that 70% (rough guess) and ever increasing amount of active SP are just clawing back their own voting rewards in content indifferent voting schemes (self voting or vote selling).

We're stuck here not because stakeholders are mostly bad or stupid but because it pays us 4x to engage in these activities that negatively impact the platform than to curate honestly. That has lead to the failure of us as a content discovery platform, as one glance at trending would show.

So right now, not much of that 75% author rewards is getting into the pockets of actual non staking content creators.

All the suggestions within the EIP are designed to either directly make it more profitable to vote honestly (increased curation) or directly make it less profitable to act otherwise (separate downvotes).

Every measure within our EIP admittedly has downsides that increase as you tune up the dial. We want to leave as much possible on the table to encourage content creators to participate while sufficiently compelling most of the active SP to take part in voting that honestly reflects their appraisal of content appeal.

I can't see this being done without costs. If anyone has a realistic way of giving authors 100% of the post rewards, have no downvotes at all, no level of inequality while still somehow keeping the stakeholders honest, I'm all ears. Obviously I'm open to ideas with less costs that are effective to this cause.

The major shortcoming I see in your proposal is that I think they're either irrelevant or grossly insufficient in compelling stakeholders to vote honestly, which I view as the predominant economic problem right now. Maybe they're sound in fixing other problems, but they still mean stakers are only going to be paid 4x as much undermining the system so that's what will continue to happen.

For example I'm not sure 2. (reputation) is on the blockchain lvl or UI, and 3. (ad splitting) is certainly not a blockchain issue. Reputation is pretty useless right now, it can definitely improve or we can get rid of it until we come up with a better version. Splitting ad revenue of the front end is a business decision that's entirely up to Steemit Inc, not really a blockchain issue. It might not be a bad business decision, but from their last video, they're getting maybe $3k a month and have financial problems of their own. Dividing it up really won't do much for now, maybe in the future they can play with ideas of ad revenue splitting among posts that can have their individual ads etc.

Again, I don't think your ideas are bad, they're just not addressing the core issue of content indifferent voting being paid 4x more than honest content reflective voting that has lead to the dump of a front page and a failure as a content discovery platform. The vast majority of active SP is contributing to this due to a poor economic system and that's what I intend to fix. I'm aware of the trade offs and intend to minimize them while still having a realistic chance of turning overall voting behavior around.

7 years ago in #steem by trafalgar

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mattockfs 7 years ago (edited)

I think you are absolutely right that "content indifferent voting being paid 4x more than honest content reflective voting" isn't really addressed by my proposal. But that is because I don't view that part as being most directly causal to problems with the current economic model. STEEM is two economies folded into one, and that creates a number of challenges where these two economies touch.

One aspect of the economy is made up of content providers whose contribution is increasing the intrinsic value of the platform with top content. An other aspect of the economy is made up of big investors whose primary contributions are not selling off their stake and, optionally, create incentive for top content providers to choose the platform.

A healthy economy would

draw in top content providers
allow investors who care about the intrinsic value of their investments to further incentivy top content.
allow investors who only care about short term returns to do so without disrupting the content platform.

From where I am standing, my proposal would improve all three of these things where yours addresses some of these aspects while frustrating other.

To illustrate, lets consider two scenarios:

Stakeholder out to make a quick profit runs a powerful bid bot that never posts anything (nothing to flag). Crap content provider uses the bidbot to post crap content. He ends up with a massive reputation (bullet proof from flags) and huts the content economy.
The stakeholder makes one root post. Then ten times a day he comments on his own post with a 100% upvote of his own comment.

I want to argue that:

Scenario 2 is the most desirable behavior as it does in no way disrupt the content economy.
Your proposal favors scenario 1
My proposal favors scenario 2.

With respect to Steemit Inc only making about $3k a month, that only underlines the need to draw in top content providers with advertising revenues. Advertising should be a blockchain wide economy capable of drawing in top content providers who would miss out on hundreds, and for some thousands, of euros per month if they switched to STEEM today. Given that an advertising economy would be a huge new user boost for the STEEM economy, implement it would balance against your reward curve or my fish-size bonus. Something I feel is very important from a social equality point of view.

Hope I am making sense with all of this.

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trafalgar 7 years ago (edited)

I think you are absolutely right that "content indifferent voting being paid 4x more than honest content reflective voting" isn't really addressed by my proposal.

We strongly disagree here. I view this as of paramount importance and absence this, we have a completely dysfunctional social media platform due to its inability to discover and reward content. (and it's a complete failure right now). I strongly believe that a working platform with respect to the above vision would in turn greatly attract users, interest, businesses and ultimately investors would benefit far more than being forced to mindlessly defecate in public to obtain their staking returns.

There's no real distinction between an economy that favors vote selling (bid botting) and self voting. You're describing the current one, they're both content indifferent behavior. If your proposal favors 10x self voting, that would eventually be nearly the total equilibrium of staking behavior (it's already like 70%), which means you can't possibly 'draw in content creators' as soon there will be literally no rewards for them left on the table.

My proposal does not favor bid botting over self voting. It's an attempt to overturn the norm of content indifferent voting which they both are. A combination of higher curation and a certain amount of free downvotes is likely enough to actually turn the dominant form of profitable voting behavior here to become a content reflective voting behavior, either directly or through use of a curation bot. Because curation is a zero sum game and there's a 15 minute tax timer, it pretty much forces fair play as long as the other incentives compel us to play at all. The hard part is optimizing the numbers around curation and amount of free downvotes to maximize effectiveness over costs.

Intentionally designing a platform that encourages stakers to vote 10x on their own posts a day and to view voting rewards as staking rewards is a bad idea. It's exactly what we have today (albeit unintentionally), it's a flaw, not a feature. The current price is indicative of investor interest in a broken platform that encourages this behavior. This is the most obvious redundant use of inflation. Why have an inflation if it's just to make investors spam on a garbage platform just to get their staking returns? Why not just remove the inflation and internalize that value into the currency itself? The only justification for having an inflation is if that inflation is distributed in a way that brings in more value than having the inflation itself, for example, steadily passing currency from the stakers to the talented content creators to incentivize them and expand into a robust social media discovery and rewards ecosystem.

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mattockfs 7 years ago

I feel you really underestimate the importance of social pressure and of the potential of an advertising economy. The important distinction is that providing a functioning advertising system and removing the reputation benefits from bot up votes together removes the incentive to use bid bots and shifts the most viable business model for bid bot owners to either the 10x up vote of their own posts, or the I believe preferable 10x up vote of their own comments (as this won't affect trending and won't undermine the content part of the platform).

Your proposals taken together, especially the down vote pool make the opposite move more likely to occur. Remember, bid bots don't need to post and down voting bid bot users just for being bid bot users misses the actual abusers. So by implementing features likely to hit the own-comment up voters that leave bid bot owners bullet proof in all ways that count do in the end promote bid bots over comment up votes.

From a short term money flow perspective both may be equivalent, comment up votes don't disrupt trending and don't disrupt the reputation system and are thus by far preferable. And if you end up discouraging both, in the end this would likely lead to the big players without an intent to curate powering down and selling their stake, driving down prices.

I feel we want to keep as many big players on board for market risk sake, but in the meantime add an advertising economy that makes us less dependent on inflation all together and that can help us make abusing the voting system something that people do become socially accountable for.

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