If the total affiliate rewards in a system are a "fixed constant" percentage of the token supply then referral programs can work
Geometric incentive mechanisms and the "fixed constant" (the affiliate reward tree requires a fixed % budget from the token supply)
If for example for the marketing budget there is always a fixed percentage of the value of the reward pool then this fixed percentage can be worth billions, or hundreds of millions, or millions, or thousands of dollars, because the USD value is separate from the amount of tokens in the pool. So just as with Steem where for each Steem Dollar there is a variable amount of Steem, for each affiliate marketing SMT token there would be variable amount of Steem locked up for referral rewards.
But because you can set the price in terms of a fixed USD value, this would mean you can put a limit to a certain range. Say the limit for the referral marketing budget is 5% of the market cap? Well if the market cap is 10 billion then it would be 5% of 10 billion which is 500 million. You could in the smart contract have a fixed budget to promise similar rewards to what you see in Bitconnect up until the algorithm determines it is outside of the range of the budget and then the referral commissions should automatically decrease. In other words just like with mining how there is the concept of difficulty, there would have to be a similar cap on the referral marketing to make sure the rewards always exist to pay for it. Steem Dollars offer a proof of concept and affiliate rewards can be priced in Steem Dollars or similar which would lock up Steem.
It seems the rule is, that if the total reward for marketing in the system is a fixed constant, then there will always be enough tokens to pay for it. If too many people join the affiliate program for the budget to support then the reward for each affiliate goes down, such as if it starts as an infinite "tree" where you refer your friends, they refer their friends, they theirs, for infinity, then this is not going to be sustainable. To guarantee that there is always enough rewards to pay out would require making the levels variable not constant, so infinite levels are not possible, but the amount of levels and commissions rate could adjust algorithmically according to market conditions.
Preliminary conclusion
Steem has the technological advantages over networks like Bitconnect as well as the advantage in network effect. This advantage in my opinion is being squandered because Steem doesn't have any effective marketing and affiliate marketing is not implemented. So the purpose of my post is to explore the potential of affiliate marketing over Steem, which is a topic I think deserves more discussion and thought. Steem Dollars exist, and smart contracts can be used to apply a fixed budget constraint on any affiliate marketing program so as to guarantee that the rewards exist on the blockchain. If for 50 million dollars Steem could reach a 1 billion dollar market cap is it worth it? If for 500 million Steem can reach a 10 billion dollar market cap is it worth it? Steem developers promised a decentralized marketing technology, where is it and what will market these SMTs?
Hey @dana-edwards,
This is a pretty great post, I do think that referral programs would help encourage the already existing user base to want to get their friends to join Steemit as well. If I am understanding correctly, the amount of tokens that people earn doing referrals would scale based on the STEEM or SBD market price, to always remain in the budget parameters?
This would get some people to the platform, who's aim is to promote and help Steemit provide other great on-boarding/ retention services. I agree with @fred777bear, that if everyone only could write or curate, the model would collapse at some point.
I feel like after reading your post, I understand a little more about SMTs now. This is pretty cool c:
With Love,
shello
It looks like we all agree yes, the purpose of my post was to figure out a way to add as much value to Steem as possible in the way proven to be effective. Referral marketing works and Steemit has a huge talent pool of people who could promote SMTs. Imagine of each SMT could have it's budget for it's referral program just like Bitconnect, where people can blog but also secure a passive income? This would spread opportunity and allow the newest bloggers on the site to find a niche of promoting SMTs. Passive income is very important because it allows for stability so people can continue to earn even during the recession period. It also allows a sort of 'retirement' from blogging, so once a person has enough levels under them and their passive income is enough to make them content then they can post for fun and community.
SMTs are smart media tokens, these are extra tokens for use in ICOs, or fundraising, or other purposes, and these tokens are backed by Steem. My idea is to allow referral marketing to drive the demand for these smart media tokens in the way proven effective in practice.
I wanted to make sure that I understood a little better before making a reply. I do know that referral marketing is a proven practice to reward already existing users for any service. I feel that implementing this practice would benefit established users by allowing a passive income outside of posting/curation, while also alleviating the pressure that sometimes comes with writing.
I didn't know what the bitconnect referral looked like so I went to check ot out. This is something that can work as referring people benefits the higher levels in the tree with lower rates the further down we go.
My concern with this system involves the abuse that could arise, but I do have a solution to suggest. There could be a hard lock added to the token rewards that not delay payment of these rewards, rather transfer them when the referred user reaches a certain reputation. I feel that by adding this parameter as validation of the referral would prevent people from trying to game or otherwise bot the new accounts being tracked.
Reputation has always been represented next to authors names, but can be used as a measuring parameter for many new systems.
Your concept helps tagret several aspects for not only growing Steemit, but bringing incentives and token use to forefront.
https://www.google.com/amp/s/maxinvest.blog/2017/07/10/earn-bitcoins-bitconnect-referral/amp/
That is a very good suggestion. My own opinion is that it should be decentralized. Each SMT should be it's own kingdom, and this means the creators of the SMT should be able to activate the suggestion you mention or not. Some people for instance could create an SMT to specifically do reputation in the form of a token system where the non-transferable token represents reputation. In fact this could be based on the design I contributed to, featured in the Bitnation whitepaper: https://github.com/Bit-Nation/Pangea-Docs/blob/master/BITNATION%20Pangea%20Whitepaper%202017.pdf
Reputation could be important for all trades. In fact, Bitconnect has a reputation system too if you were not aware. So they figured that part out and their reputation is a "collaborative filtering" Ebay or Amazon style system but it will work well from what I saw. Not only that but Bitconnect has the ability to remove abusers from their system, or cut suspend accounts.
In my opinion, I think we have to be careful giving the ability to remove rewards to the democratic process. People get jealous and will remove or attack others for petty reasons which have little to do with anything legitimate. So I think while a reputation feature should be an option, it should not be mandatory for all SMTs. This way people who aren't popular but who clearly can add value to Steem can do so through the SMTs which don't require it.
The goal is to get as many people to add value to Steem as possible and leverage different skills. Diversity of talent exists and if we find excuses to kick people out it does not increase the network effect (network effect is connection between the people) and this network effect is shown to be the true wealth of our network.
Keypoints:
Observe from Bitconnect that their mission is the exact same as Facebook, to connect the crypto community. Consider also that Bitconnect is willing to change or improve it's policies when they discover it doesn't work or is not sustainable: https://bitconnect.co/system-news/65/members-of-bitconnect-are-informed-about-policy-change-in-bitconnect-affiliate-program
And eventually to this:
The other thing they did really right, their website has some of the best marketing I've seen in the space. Well designed site, the pictures describe the programs so well even a 3rd grader could grasp it. Honestly Bitshares and Steemit are not anywhere near as well explained so a lot can be learned about explain a referral program in plain language from Bitconnect as well.
So the more we connect people together, and the more opportunities we give people to earn a profit by their unique talents, the more the economy will grow, the more people will join, the bigger the reward pool for all. In my opinion a permissive and welcoming community has an easier time growing than a heavily restrictive community.
On the topic of reputation, in terms of referrals I think Bitconnect has figured it out. The reputation for a successful promoter is how many levels they have and how many they refer, but most importantly at least in Bitconnect it is also how much each referral brings in by the loans.
So in my opinion you can track how much each promoter is bringing in, in terms of $ value, and display that on Steemit so everyone can see how much value each brings. That will allow for the world to see how much measurable value they bring. In other words, if you are a promoter and you get your group to sign up, and after they sign up they also begin buying tokens, then you could get rewarded based on some percentage value represented in Steem Dollars according to how many tokens they acquire.
Like for instance I am a writer, you referred me, I begin writing, I get upvoted and receive SMT tokens, well you should get 7% of every upvote indefinitely unless I choose a new sponsor after some locked in time period with you. After I get past a certain amount of SMT tokens in my locked in vesting account, then I can become a promoter, and you would get 3% of all who I refer. And this could go on and on for as many levels as the network can afford to pay at the time but probably 3 is optimal.
On the topic of bots, this can be solved in my opinion by giving a reputation to the bots as well. Bots can add value to the network in my opinion but this is debated. In Bitconnect you cannot game the system because you have to make a $100 loan before you can take part in the referral program and then you must unlock all the other programs by earning it, almost gamification style.
This can only work with SMT tokens because Steem and Steem Dollars are too limited. An SMT token could be designed specifically to do these sorts of affiliate rewards without implementing it across all of Steem. That way you can have communities and more diversity.
I hope you don't mind, I will reply to both comments in this one. -Also the picture is good, as sometimes I wonder if I'm a 3rd grader.
So in SMTs this referral system would be an optional feature to be enabled on the tokens, where this function is needed. Incentive being to bring more people to Steemit and communities, and the promoter to receive rewards up to a given point based on the new creator's contribution.
A referrers rep/rate/rank to display their competence at promoting service provided.
My issue involves people creating trees of fake accounts in place of real users. Looks good, as long as there is no initial bonus for referring. Offering too large of a reward would lead to this type of activity I feel.
I apologize for the brief comment, will be revisiting later in the day.
Right, at least in my opinion, it is a design flaw to restrict flexibility as this restricts the ability of the system to evolve. So we would want to offer as many choices as we can to SMT token issuers if it were up to me anyway. The affiliate program is just the "decentralized marketing option" which SMT token issuers can utilize. Reputation options should be something they can activate to protect their community from the obvious sybil attack that you described, so I like your idea and I hope the Steem developers are reading our discussion.
This is true. The way Bitconnect solved it was requiring a lockup of value. So you had to lock up $100 worth of value to participate in the affiliate program. Then if you want to move up the ranks you have to prove you are good at bringing in loan $ and so on. Sure a person could bring themselves in but they would have to pay a lot of money.
This is a problem worth looking deeper into. The issue with a person creating 1000 fake accounts to fool the affiliate program is legitimate, so reputation scores do help but then what score do we use? The reputation from blogging doesn't tell us that much.
Some people use their real name, and video blog. In those cases it's pretty obvious. Perhaps require people to earn their way into certain programs, or to sign up to join and simply collect enough information to make sure it's not a bot, or fake person.
Not saying we need know your customer but this could be used and if that is used then it cannot be gamed at all. Perhaps leave it up to the SMT issuer. I actually like the idea of requiring a lock up in value as a means of filtering out sybil attacks better than KYC.
Hello @dana-edwards,
I apologize for my late reply. I feel that earning into a program through account qualification would be the best solution to ensure that people are genuinely participating and are not trying to deceive others. The MLM you describe that each SMT could do is pretty sound, along with the aforementioned lock up of investment/funds you've described above.
As long as there is no interest to be gained in referring, or having it capped out at a certain amount would ensure not to overrun budget. This is overall a pretty good idea to help bring more value to STEEM.
Great job!
shello
The commission rate needs to be dynamically adjusting by algorithm.
The rate is in dollars and this would have to be variable rate. The budget also would be in dollars and would be variable based on the token price. So just at 1 BTC isn't worth more or less than 1 BTC, but that 1 BTC is always changing in how much it is worth in dollars, the budget also would be tokens and those tokens would always change in how much they are worth in dollars if they choose to use a percentage of their SMTs as "budget". They could also use Steem Dollars as "budget" and have a fixed amount in dollars.
In this way the issuer of the SMT would have the flexibility to either have a fixed budget in dollars or a dynamically adjusting budget in tokens, but in any case the percentages of commissions should be determined by algorithm not by people.
In this way the humans never have to be concerned about managing the budget for marketing. The budget will be self managing and the percentages dynamically changing from week to week or day to day.
I've read your twice now, over my head.
Do you have the preamble article & / or an intro post link avail please?
We need SMTs to allow more people to earn. Not everyone should write or curate so we need profit making opportunities to be spread. Affiliate marketing opens passive income stream opportunities while growing the reward pool.
For more:
Thanks for the links. I'm not sure re MLM it is a bear trap IMHO. Will just bring scams etc IMHO
ICOs and SMT in general can bring scams. The community will have to filter them out. I think better marketing is the only way to bring people to SMTs. SMTs can exist but if no one uses them it wont matter. Someone or something has to market the SMTs.
What really steem provide a proof of the dollar concept and associated prizes can be priced in steam dollars or similar, which can lock steam.
Are you a bot? That is exactly what my post said summed in a sentence.
Great post!@dana-edwards.
I feel it so because I have been thinking of posting similar concept as a proposal. Now, your idea is just perfect. Thanks I don't have to write it myself.
But then I must say that if this is taken into account by the Steemit leadership and studied very well for its feasibility and sustainability, then we may be able to dominate the world as the major social media platform. Referral is one of the fast means of making the world know Steemit. Those 50 billion people that will get in is I think more than enough incentive for us all. And that will not be the terminal figure anyway.
I 'think"? i could follow ha ha no this is NOT my subject or anything i have experience in :P so ok please, im not serten here, ok? :P we should get steem AS that has a 'closed' market BUT why wouldent it be better to do bitcoins AS that has , as you state, have a better marketing scene & isent 'locked'???
nice
good publication
I am not a tech person but I get your point. As for writing, I noticed that so many get paid for low quality stuff just because they have connections and its like a you and I get a share. I hope editors are introduced to ensure quality posts. This would also reduce spam. Have a great day
A very informative post and very well explained. Keep the good work up! Thank you
I read somewhere that they will implement a referal program soon. Can't remember where tho.