Introduction

Recent advances in Blockchain and distributed ledger technologies are driving the ascent of boosted web-based media stages over Blockchains. Examples of such platforms include Steemit. Unique features of this blockchain-powered social media platform include decentralization of information created in the platform and a profound combination of social stages with the hidden digital money move networks on the blockchain. Steemit is the first blockchain-powered social media platform that incentivizes both creator of user-generated content and content curators. Steem has the highest market capitalization among all cryptocurrencies issued by blockchain-based social networking projects. Its market capitalization is estimated at over 141 million USD on 13/02/2021.

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Overview

In Steemit, users can create and share content like blog posts. Once posted, a blog can get replied to, reposted, or voted on by other users. Depending on the weight of received votes, posts get ranked and the top-ranked posts make them to the front page. All data generated by Steemit users are stored in the Steem-blockchain. Similar to other blockchains like Bitcoin and Ethereum, data stored in the Steem-blockchain is publicly accessible and it is hard to be manipulated. At the core of Steemit are its decentralization and its cryptocurrency-driven reward system used for rewarding the content creators and curators. Instead of operating as a single entity like Reddit and Quora, the Steemit platform is operated by a group of 21 witnesses elected by its shareholders (uses owning Steemit shares) through the Delegated Proof of Stake (DPoS) consensus protocol. Unlike traditional social media platforms that typically do not reward their users, Steemit issues three types of rewards to its users:

• Producer reward;
• Author reward;
• Curation reward.

The producer rewards are issued to the elected witnesses producing blocks. It incentivizes users of Steemit to compete for the top-21 witnesses. The author rewards and curation rewards are issued to users creating posts (authors) and users voting for posts (curators) respectively. These incentivize authors to produce posts that attract more votes and curators to vote for posts that have a higher potential to be voted by other users.¹

Background

In this section, we introduce the Steemit social media platform that runs over the Steem-blockchain. We present the key use cases of Steemit and discuss how Steemit leverages the underlying blockchain to function as a decentralized social site that incentivizes users with cryptocurrency-based rewards. ²

• Steemit: Users of Steemit can create and share content as blog posts. A blog post can get replied to, reposted, or voted on by other users. Based on the weights of received votes, posts get ranked and the top-ranked posts make them to the front page.
• Steem-blockchain: Steemit uses the Steem-blockchain to store the underlying data of the platform as a chain of blocks. Every three seconds, a new block is produced, which includes all confirmed operations performed by users during the last three seconds. Steemit allows its users to perform more than thirty different types of operations. In Figure 1, we display four categories of operations that are most relevant to the analysis presented in this paper. While post/vote and follower/following are common features offered by social sites (e.g., Reddit and Quora), operations such as witness election and cryptocurrency transfer are features specific to blockchains.
• Witness election and DPoS: Witnesses in Steemit are producers of blocks, who continuously collect data from the entire network, bundle data into blocks, and append the blocks to the Steemblockchain. The role of witnesses in Steemit is similar to that of miners in Bitcoin. In Bitcoin, miners keep solving Proof-of-Work (PoW) problems and winners have the right to produce blocks. With PoW, Bitcoin achieves a maximum throughput of 7 transactions/sec. However, transaction rates of typical mainstream social sites are substantially higher. For example, Twitter has an average throughput of more than 5000 tweets/sec. Hence, Steemit adopts the Delegated Proof of Stake (DPoS) consensus protocol to increase the speed and scalability of the platform without compromising the decentralized reward system of the blockchain. In DPoS systems, users vote to elect a number of witnesses as their delegates. In Steemit, each user can vote for at most 30 witnesses. The top-20 selected witnesses and a seat randomly assigned out of the top-20 witnesses produce the blocks. With DPoS, consensus only needs to be reached among the 21-member witness group, rather than the entire blockchain network like Bitcoin. This significantly improves the system throughout.
• Cryptocurrency - shares and rewards: In Steemit, each vote casting a post or electing a witness is associated with a weight that is proportional to the shares of Steemit held by the voter. Like most blockchains, the Steem blockchain issues its native cryptocurrencies called STEEM and Steem Dollars (SBD). To receive shares of Steemit, a user needs to ‘lock’ STEEM/SBD in Steemit to receive Steem Power (SP) at the rate of 1 Steem = 1 SP and each SP is assigned about 2000 vested shares (VESTS) of Steemit. A user may withdraw invested STEEM/SBD at any time, but the claimed fund will be automatically split into thirteen equal portions to be withdrawn in the next thirteen subsequent weeks. For example, on day 1, Alice may invest 13 STEEM to Steemit that makes her vote obtain a weight of 13 SP (about 26000 VESTS). Later, on day 8, Alice may decide to withdraw her 13 invested STEEM. Here, instead of seeing her 13 STEEM in her wallet immediately, her STEEM balance will increase by 1 STEEM each week from day 8, and during that period, her SP will decrease by 1 SP every week.

Reward System

A core feature of Steemit is its reward system. As a blockchain-based social media network that issues its own cryptocurrencies, Steemit leverages its native cryptocurrencies to incentivize authors and curators of posts for rewarding contributors to the platform, who either create good content or screen out good content. In this subsection, we theoretically analyze the reward system in Steemit and study the factors correlated with rewards earned by authors and curators. We also jointly investigate the value-transfer operations and vote operations understand if the reward system is being misused by Steemit users, such as buying votes from bots to promote their posts for the purpose of earning higher profits. Such misuse may deviate from the original intended goal of the Steemit reward system. ⁴

• Curation Rewards: A curation reward is when you receive when you vote on a post. At least 50% of the rewards of that post will go to the author (so it pays off the be a curator and an author. The other 50% is divided between the author, the curators (the people that vote), and the commenters. Good to know is that the curation rewards are paid out in Steem Power (not steem dollars, SBD). This Steem Power increases the power of your upvotes so you can help the authors of the post even more with greater rewards and help yourself in the process. ⁵ If Alice votes for a post one minute after the post creation time, she will only receive 30 of the curation rewards assigned to her while the rest 29 30 is again issued to the post author. Instead, if Alice casts her vote 30 minutes after the post creation time, she can completely earn the assigned curation rewards. Because of the second factor, a post author usually receives more than 75% of the post reward. In summary, the two factors in the curation reward equation make it hard to determine the best strategy of the voting time in the reward earning game. However, it is clear that voting for posts that are likely to be voted by more users in the future is certainly helpful. ⁶

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• Author Rewards: Regarding author rewards, there are three factors:
  (1) Number of followers owned by an author;
  (2) Number of posts created by an author;
  (3) Amount of vesting shares (VESTS) owned by an author.

From $10 worth of author rewards, the median points start to disperse. It is interesting to find that many authors earning rewards of more than $10 maintain very low VESTS, even lower than the suggested minimum line. However, beyond $10 worth of author rewards, the line of median still shows a positive trend. ⁷

Integration between TRX and Steemit

There was a pretty big move made on the steem blockchain and what they did is they integrated TRX into the steem blockchain. This means that when you are making posts or curating on whatever, you are going to get rewards back if you get It in the form of steem power. Actually, you are going to earn TRX "one to one" ratio. That's pretty exciting news. If you are posting, commenting, curating whatever you are doing on the steem blockchain over on steemit then you are going to earn that TRX. You can use that TRX for voting or stalking. With these options, you can earn an 8% Annual Percentage Yield per year from the Tron blockchain. I want to enjoy this good opportunity because this is not about division, this is not about the right timing and the best platform, This is about the people that do the content creating, It's for the people that do the content curating, It's for the people that do the community connections, That's what actually makes the platform much better ecosystem.