During the last Witness Chat in The Ramble in May the topic of the next hardfork came up. The Steemit Inc. folks were pretty clear the next HF would be to implement the Steem Proposal System and some ‘minor’ tweaks to the chain.

Not long after they posted on @steemitblog the post Improving the Economics of Steem: A Community Proposal, a discussion about three steps they supported taking to supposedly improve the economics on Steem. In the post they stated:

We do not have any plans to begin working on any code relating to these economic changes. But we do believe that this is a conversation worth having and one that we would be happy to participate in. Ultimately, the decision of when to begin work on these improvements, and in which hardfork to include them, will be up to the Steem community and the Witnesses they elect to approve Hardforks.

And also:

Our plans have not changed. We are working to finish auditing the SPS Hardfork, release a testnet, and make a public announcement which gives everyone (including exchanges) 30 days to review that code.

Our hope with the EIP is just to highlight the conversation so that the Steem community has time to come to a consensus about whether they want these changes, and what they feel is the best timing as far as including the changes in a future hardfork.

So, why am I seeing so many posts claiming HF21 is going to include both? Did I miss a post where the plan has changed?

Now, I may have lost my ability to read effectively. I’m pretty sure that Steemit Inc has very clearly stated they are not looking to do the SPS and the proposed EIP in the same HF.

The Debates Are Underway

If Steemit Inc was wanting to evoke a discussion/debate about the platform, their coming out in support of the EIP has accomplished that. As often happens when groups of people gather, discussion will range across many topics depending on the bias of the person involved.

One of the mindsets I had to deal with when I first joined Steem almost 3 years ago was the one in which I expect there to be a top dog, a place for the buck to stop. That is the way things work in the world isn’t it? There is always someone in charge, someone responsible to keep order.

I remember how many times I’d see debates going on about behaviour on the platform and my first impulse was to ask why rules weren’t being made to correct the behaviour. It took getting the answer of “by who, no one owns the chain” a few times for me to realize, Steem is a whole different beast.

Steemit Inc brought Steem into life. They then released it some what into the wild by opening it up to people joining and participating on the platform. They stood back from the impulse to control behaviour and left it up to the community to come to some consensus on what is acceptable behaviour.

Consensus is not the same as majority rules. With majority rules, there are votes organized, people presenting their case for and against and then the vote decides. With consensus, discussions and debates rage on and gradually standards emerge of what is considered acceptable.

Thus is the nature of a decentralized platform. Everyone is in charge — and no one is in charge.

Is Steem a Blogging Platform?

The answer to that is yes — and no. While many dismiss the blogging aspect of the platform or lump it in with content creation (which are not mutually exclusive) as irrelevant, it’s not.

Blogging is one form of content creation, as is those who produce podcasts, videos, games etc. Content on the internet is what drives the commerce that follows it. Without content to attract consumers, businesses don’t have a foothold to reach their customers.

All the forms of content has value on the platform. Without it there is no need for investors or developers.

Content Rules, Right?

Once again, the answer to that is yes — and no. Let me repeat what I just said, without content there is no need for investors or developers.

To take that a bit further, without investors there is no platform to put the content on and without developers there are no ways to deliver that content. It’s a symbiotic relationship here. We forget that at our peril.

How Do We Make Everyone Happy?

Well, first off. Not everyone is going to be happy. People are people and some just love being pissed off at everything. That’s a fact we have to live with.

Cynicism aside, on this platform, it’s a bit of a delicate balancing act. It is on most other platforms too but, places like Reddit, Twitter and Facebook hire developers to grow their platform because they own it.

With the exception of those who work at Steemit Inc., on Steem, developers work because they believe in the platform. That’s great for the platform, but that doesn’t support them in the real world. Thus the need for entities like SPS and the future Steem Foundation (or whatever the final name ends up being).

Like the developers, both of those entities need funding.

So Why Doesn’t Steemit Inc. Just Pay?

This is the point where I do have to smile. This is supposed to be a decentralized platform. There are many here who yell long and hard about Steemit Inc being the main developers who do the hardfork coding. They point to that as one of their arguments that the platform is not decentralized.

They also point to the holdings Steemit Inc has as further proof because they (and other early adopters) ninjamined their stake. The fact they don’t use that stake to control who does what on the platform doesn’t factor into the complaints. The fact they don’t use that stake to vote for witnesses also doesn’t.

I know, many believe @freedom and/or @pumpkin are Steemit Inc people.

But, when it comes to development and marketing (or lack of it) people are quick to point at Steemit Inc and complain about them not doing any. That is our centralized brains following our first impulse to look at a central entity to guide, direct and act for us.

We’re supposed to be decentralized remember? That does mean we ALL need to contribute to getting this done. I would expect Steemit Inc to contribute. Expecting them to foot the bill entirely is an indirect demand to centralize Steem.

Which way do you want it folks? Centralized or decentralized?

Which Brings Me to The SPS

Other than a brief flurry when the SPS was first talked about, how it is going to be funded hasn’t been talked about much. That is likely because it was decided in the face of opposition over the content creators taking a hit to fund it that, at least initially, it would be funded through donations.

Some seemed to think that Steemit Inc. was going to toss a few million into the pot to get it going. Interest in talking about the longterm quickly died. The perception likely came from off the cuff comments that @ned had been heard to say in online chats.

Because @ned has been so much the face of Steem, we tend to take as gospel that what he says should be honoured. Guess what? There is a board at Steemit Inc and @ned is just one of those even as CEO. Without the board approving what he may want to do, it doesn’t happen. Especially when it comes to spending a few million of their stake.

We seem to accept as a given that large stakeholders on the platform will do what is in their best interests with their stake but expect to have some level of control over Steemit Inc’s. Might not like it, but they are going to do what is in their best interest just like any other stakeholder.

Unless someone has some facts I’m unaware of, Steemit Inc did pay for the development of the SPS which was a six figure donation to the cause.

As we approach the hardfork that is going to bring the SPS into existence the reality that Steemit Inc is not tossing millions into the pot is settling in. That is along with the reality that the other stakeholders are not rushing to donate at any level to the cause.

So, How Does the SPS Get Funded?

Comes as no surprise that once again attention turns to funding it from areas like the reward pool. In particular, once again, the content creators are being eyed to take the hit to fund the SPS. The claim is the content creators are the biggest ‘drain’ on the pool

Using the term ‘drain’ implies they don’t actually earn what they are rewarded. Once again, I remind you dear reader, without one element like content creators, the other elements don’t exist.

The other group which receives income from a portion of the reward pool is the witnesses. When the SPS was first brought forward, many suggested that the hit be a percentage across the board of the reward pool including the witnesses.

There is still some discussion, even among witnesses, about it being a percentage off the top so to speak of the reward pool and then the usual distributions take place. That would see all taking a proportional hit. I’m actually okay with that.

But, there’s always a but, says the witnesses, that will hurt the witnesses outside the top 20. There is some truth to that in that until you get into the top 20, your income as a witness is drastically lower. The non-consensus witnesses used to receive more in the early days.

There was an outcry that they received too much and one of the hardforks changed the rate. So, now the top 20 point to the non-consensus witnesses and say how they need to protect them instead of considering maybe it’s time to return to a more equitable rate for them. OH, that would mean giving up some of their own. Those own best interests at play again.

When @blocktrades first proposed the SPS he suggested the possibility of allowing a small amount of inflation to be added to Steem each year. To be more specific he was suggesting allowing the supply of SBD to increase in the same way that SBD is created to pay for posts. So, it wasn’t inflation in the usual sense.

He used the example of 1% and estimated it would generate 1.2million SBD based on the current market cap of $121million. Of course, anyone willing to donate to the fund would be welcome.

My personal view on this is either take a portion from the total reward pool and, if needed, adjust the non-consensus witnesses income so they don’t get the brunt of the hit or return to @blocktrades suggestion. It’s not only the most equitable approach, it will avoid the anger that one segment will rightfully feel when they carry the load.

Some Thoughts on the EIP

As for the EIP, let’s first look at Steemit Inc’s comments:

We agreed on the nature of the problem, and more or less agreed with the proposal presented by the Steem user @trafalgar which we will refer to as the “Economic Improvement Proposal” or “EIP.”

People generally gravitate towards what is the most profitable thing for them to do when there is monetary incentive.

The goal of these economic changes would be to move Steem closer to delivering on the promises stated in the whitepaper of unearthing high quality content by making it more profitable for people to actively curate, and less profitable to self-vote and delegate one’s Steem Power to bid bots.

As stated earlier, I don’t think that their intent is to make this part of HF21 nor do I think it should be. The SPS is more than enough for a hardfork. Having seen a few disasters when HFs are too ambitious, let’s err on the side of caution. Especially when the rewards people earn is at stake.

1. Linear Rewards Curve to Convergent Linear Rewards.

I was initially not comfortable with the idea of changing the rewards curve from the linear. Then I took the time to give a good read through of @vandeberg’s Reward Curve Deep Dive.

Some of it was too techy for me but, he gave me enough to be able to make a reasonable conclusion. My conclusion is, the convergent linear rewards is a elegant compromise between the inequality of the super linear and the linear.

While the linear reward is equitable across the board, the convergent linear reward curve does give some greater return to the larger stakeholders before becoming linear. I think that is a fair compromise.

2. Increasing the percentage of rewards that are distributed to curators

The proposal here is to move from a 75/25 split in favour of the authors to a 50/50 split. The theory is that increasing curation rewards would lead to less incentive to self-vote.

It also suggests that manual curation, particularly by larger stakeholders, would increase and thus more quality content would become churned up on the site. Others claim it would reduce the incentive to use bidbots.

I’ve stated elsewhere and will state here. I reject the premises here. I don’t as a rule self-vote simply because as a content creator I am conscious of the fact I earn the greater portion in return for my work of creating.

When a curation trail I’m on upvotes a post of mine it is the only time a vote from me will appear on my work. Reduce the portion that authors receive and I see no value in not self-voting.

As for suggesting that stakeholders who are not currently manually curating would suddenly decide to start doing so, I have zero illusions that is going to happen.

That is simple logic, if the stakeholders can get the returns without spending the time seeking out content, they will. As for the bidbot argument, they will love the increased incentive to use them.

This move might induce current investors to increase their stake. That is a big might. Although one has stated that he’d buy more stake and then run curation bots if the rewards were at 50/50. So, no, he would not be spending time finding content, he’d be running a bot to find it. We know full well that bots don’t actually find good content.

As for attracting new investors. Really? In what world would an investor look at a platform, rub his hands together and salivate over the possibility of sinking some money into a platform where hours can be spent curating and earning more.

Yep, they will be lining up at the exchanges before you know it.

Reality is they are looking for improved price for the token. If they can gain ROI in other ways that are not time intensive, they will.

Turning up good content for consumers is a challenge on any site. When the frontends develop search algorithms which will find and display related content when a consumer looks at a post, we’ll start to gain some ground on that challenge.

While I’m deadset against the 50/50 proposed, IF there was a trade off where the content creators don’t take yet another main hit in the SPS, I could see 60/40. Would prefer if there was any change that it would be more like 65/35.

3 Create a separate “downvote pool.”

I don’t have a strong opinion either way on this one. It would not likely impact my own actions very much as I rarely downvote. I do know there are some on this platform who have forgone gaining upvote rewards in order to go after miscreants on this platform. So, this would give them a bit of a break and that is not a bad thing.

I’m not sure if this would have the desired effect. It’s not going to be an unlimited downvote pool, so it might be something worth giving a go to.

The biggest issue with downvotes is people forget, those rewards that you see displayed on your post are not yours until the post pays out. Until then they are subject to change both up and down. People react to being downvoted as though someone just reached into their pocket and stole money.

It’s not your rewards until they are paid into your wallet.

That’s a mindset that is hard to break.

Witness Chat in The Ramble June 12th

The next monthly Witness Chat is going to take place on June 12th at 1pm EDT / 5pm UTC. All witnesses and other members of the community are invited to attend. @elipowell and the team at Steemit Inc have been pretty good the last few months at being present.

Seems this month would be a great time to talk about HF21, what’s in, what’s not and some clarity if there is any intention of including the EIP this time or leave it for further discussion and a future HF which will give some time for us to see how the SPS works out. Especially if the SPS ends up getting funding from the reward pool.

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Until Next Time — Just Steem on

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