Shared Bootstrapping Tool - How SteemPower Will Influence SMTs
Introduction
Today, I would like to share with you my thoughts regarding the different ways SMTs can be bootstrapped, the pros and cons of each option, etc.
Please let me know if I overlooked something. I'll do my best to upvote your comment with a generous % if you are able to add something that I've overlooked in my analysis.
What the whitepaper says...
Shared Bootstrap Tools
SMTs may be created with reward pool parameters tuned for “Shared Influence” between Steem Power and other vesting SMTs, which means a SMT creator may specify that Steem Power can control a portion of the SMT’s rewards pool for an unlimited or limited amount of time, with increasing or decreasing influence. Altogether, Shared Influence may allow SMTs to be wholly or partially bootstrapped by the interest of existing and active Steem or other SMT community members. Through these tools, community managers and entrepreneurs launching a token may leverage existing user bases to accelerate the distribution of the SMT to a target market.
So basically, what it says is that entrepreneurs who launch a coin will be able to decide how much SteemPower or other tokens may influence the distribution of their SMT reward pool.
Different Settings, Different Goals - Distribution is Tricky
When Steemit.com started it had to solve a problem. How do we initially distribute our coins so that a maximum of people are able to curate and affect the reward pool. Witnesses and early adopters like myself, created content and worked hard at upvoting as many people as possible everyday.
But just like any human creative endeavor, we are bound by the power law of 80/20. There is no way around it. Different people can be a part of it at different times but the same distribution remain. This one is the distribution of author rewards in the last 30 days:
No amount of mingling on the algorithm will or can change that fact. What SMTs allow us to do is to potentially have multiple of those curve happening simultaneously. (That's what gets me excited)
Here are the different options that I see for SMTs bootstrapping setup:
Note: Mind you that I'm not able to cover all the different options such as % of reward power or multiple tokens influencing a particular reward pool.
Option 1: Shared Influence On SteemPower Holders Indefinitely
Giving holders of Steempower the power to dictate the curation reward within your community/app/website will be a form of "sharedrop" on Steem users. It is an incentive to the existing user base to join and participate to the project associated with your token.
Doing so also, gives the big holders of STEEM, the similar power in your project than they have on the STEEM token. This can be mitigated by saying: 50% SP / 50% my token or any other combination of shared influence.
PRO: STEEM is constantly being distributed from big holders to smaller holders at this moment. We have more dolphins and big fish than we had 1 year ago in absolute number(although the percentage remain quite stable)
By programming your token that way, it might help you get it distributed faster and more widely than if you were the only one affecting the reward pool.
CON: As I mentioned yesterday in this post, by not creating an independent reward pool, we reproduce the same hierarchy of power that we have on steemit.com. That doesnt mean that the same people will be receiving the author reward but nonetheless, we won't have competing dominance hierarchy.
There is also the issue of self-voting or autovote on your own suckpuppet account.
Option 2: Shared Influence On SteemPower Holders For A Limited Time
This second option is interesting. It gives for a limited time the ability for SteemPower holders to affect the reward pool of the app/community.
PRO: This might create some Fear Of Missing Out on the part of SP Holders. It could be used in the same way as a "Free Trial", sending the message of people to test it out and see if they like it...without giving SP holders a free lunch forever.
CON: The incentives to cheat the system (self vote, suck puppet self-vote, etc.) remains on the part of the current big holders but it is mitigated by the limited time offered.
Option 3: No Shared Influence On SteemPower Holders
To be honest, this is my favorite but also probably the most difficult to implement. Other methods of early distribution will be necessary in order to compensate.
PRO: It's a new dawn and a new day! None of the existing power hierarchy will affect the reward pool and a new one will take it's place.
CON: So you and your team are the only one with all the tokens. You are the only one who can affect the reward pool. What now? Well, you better get your legal in place and start an ICO because otherwise, you might not be able to get your app/community off the ground.
In this particular case, I don't see any other way than starting an ICO. You need your token to be in the hands of as many people as possible. ICOs, apart from shared influence, are a great way to do that. It's also a superb marketing tactic to get people excited, create a price for your token, etc.
Conclusion
Please let me know if I overlooked something about Pro and Cons. I'll do my best to upvote that kind of comment with a generous %.
I find the last option to be the best as well. Gives for an opportunity to start different projects apart from Steemit. When I first came to Steemit I expected it to be more of a democratized place than I found it out to be. I think this option gives potential investors and communities the chance to build something similar like that. Not everyone likes the Steemit platform as much either, so the more of these different options are avaible, the more potential it has to find investors.
This is also exactly the point where a lot of criticism has been directed at. People tend to form opinions based on first glance. Some very outspoken people have said that the total distribution of Steem and the self-rewarding factors for large stakeholders are precisely what is not optimal on Steemit (for example there are, and have been, posts on this platform with very high rewards, but not necessarily excellent content). However time will tell. The ultimate goal is for Steem to completely transform the internet, how we look at it and how we think about it, at least that's what I hear Ned say. If Steemit succeeds in this quest, the solutions chosen at the time for the dillemma of how to distribute the tokens will prove to have been wise.
But, going forward, I expect to see many different solutions for distributing tokens, for algorithms to define how rewards are distributed in the rewards pool and depending on their successes or failures we will see what works best.
Maybe you can start an SMT for only 1 SBD, but without serious thought about the real value you can offer to a specific community, how you will distribute the initial tokens, how you will reward content creation vs curation and how exactly the system will calculate payouts (incorporating on portion of stake, time passed after post, amount of votes done per day, etc, etc) your token will be worthless. You must have a clear strategy on these matters, or not only your 1 SBD is lost, but you have also created a failed token. And the latter would reflect badly on SMT's as a disruptive technology.
I agree with the above but not on the last part. Let's draw a parallel with subreddits.
It's completely free to start a subreddit. There are more than a million of them today. But because of this low barrier to entry, a small percentage of them have been incredibly successful. The fact that there are many subreddits with only 1 or 2 users or the fact that most of them are complete failure doesn't reflect badly on the subreddit mechanism as a whole.
It only doesn't, because there are many very popular sub-reddits out there. So what we need, are successful SMT's launches. If there is a reasonable amount of success with them, I must concede to your point, the number of SMT's won't matter anymore.
Learning things and gaining nuances by discussion with you, I like it!
There is a great business opportunity there for someone to have an ICO launch consulting firm with legals and everything figured out. I would love to see a launch of ZAPPL as a token (if they can get their banking issues together). That would get the attention of the crypto world as a whole. Not just us.
@cryptoctopus,
Option 3 made a highlight! "No Shared Influence On SteemPower Holders"
Yeah you got correct points there! And personally I think SMT is a "Fresh Bloods" platforms! And by using this SMT concept ned also tried to bring STEEM to the future not to the present or past! So, I think this is a new era and we want to bring fresh funds in it!
But I can't disagree with your "cons" too! Due to this option, Whales will power down and it might again impact on STEEM and STEEMIT community as well!
Whatever it happens, I think SMT will lead STEEM to the moon! Sometimes STEEM might take the 2nd biggest market cap in future! Who knows...!
Cheers~
If they powerdown to buy the tokens, STEEM will be locked into the SMTs(via automated market maker)...which reduce the supply of STEEM and increases the price.
@cryptoctopus,
Oh I didn't get it at that time... Yeah you are correct low supply high demand will increase the STEEM price also! Such a big fool I am :D
Cheers~
It won't be easy for those who will be newcomers or those who are not doing well, this to me it seems like it benefits those that already have high Steem power. Honestly that's fine but what about the people that are lower ?
What won't be easy. I'm not sure to understand.
Tokens as power . Newcomers won't benefit or those struggling
Respectfully I don't agree. I started at the bottom and climbed up via authors rewards. If someone attach themselves to the right project, at the right time, I don't see why one can't become successful at it as I was.
Very true it's just if you're willing to put in effort and learn while climbing up , success is achieved
That's pretty much what the third option is about... Giving a new opportunity for newcomers to start their own application without the influence of Steem holders.
I don't think I can contribute to the Pros and Cons due to my lack of understanding, as much as I'm trying! However I do wonder about the recurring theme in cons for the first two points - people cheating the system. I think part of what needs to happen with Steem for it to grow through SMTs, with the view of multiplying and diversifying content further, is it also needs to create the chance for new author content to be surfaced to the relevant audience in order to spread the balance. If cheating occurs then this could reverse the effect, increasing the gains for those who cheat, and if the balance isn't right then it may not be adopted fluidly.
edit. I clicked post too early before
The ability to cheat the system took a bigger place when we went from a parabolic reward curve to a linear one. SMTs will be able to mitigate by choosing a different type of reward curve in their initial settings.
Ok, makes sense. I need to read more!
Everybody got really excited about the SMT's and about the ideea of having your own token. And it is great don't get me wrong!
But aftet reading the whitepaper and i have read all of it i realise that just few will be able to really generate some new tokens as it is really dificult honest to be... so many things to do and the whitepaper is very analitic so hard for most of us to understand.
I think the whitepaper should have some extensions where it can explain in non tehnical terms the procces...
One thing is for sure... In time SMT's will increase the value of Steem!
I am watching very carefull everything abouy SMT's as in time when i will have everything clear i will love to have my own token...
Keep up the good work and always Steem On!😉
I believe there will be a user interface for them when the new front-end will go online.
I really hope so! We have to wait for news and updates and we will see! Maybe in time slowly everything regarding SMT's will be very simple!
I'm most interested to see which one of these are most successful out the gate. I'm assuming distributing the tokens within the communities based on steempower will definitely be the most popular way at first.
However, I can see ICO's becoming the "BIG" thing once people in the steemit community figure out how to implement an ICO. I think this will eventually become the most popular/succesful method, but this way is also the steepest learning curve on how to implement it succesfully and replicate the way others handle succesful ICOs.
@cryptoctopus can I share this off-site? I'll run the first paragraph and link back to this article and your profile. Let me know.
Whould this be technically possible?:
Option 4: No one can vote for themselves. 10% reserved for creators. 10% of tokens are sold as ICO. The rest of 80% of tokens would be distributed as following: every month, limited user pool who wrote most trending articles get 1% of reserved tokens and 1% is for sale again. Continue that until all tokens are distributed or sold. Creators voting power is reduced until all tokens are distributed/sold. Users who recently purchased tokens power is reduced by half for a month. If a user gets rewarded reserved tokens for his/her contributions, he can't get rewards any time later from the reserved tokens pool again, only buy new ones every month as everyone else.
Thanks for share.