How to Solve the Reward Pool Abuse Problem Once and For All
UPDATE Feb 21, 2018: I've published an updated version of this solution proposal taking into account the feedback I received: A Solution Proposal to the Reward Pool Abuse Problem on Steemit [Updated Version]
After discussing a few solution proposals to the reward pool abuse problem with @biophil, I figured out the reason of the reward pool abuse problem and came up with a solution proposal.
The Cause of the Problem
The reason behind the problem is that not all Steem Power owners cast ten votes every day. If every Steem Power owner did that, reward pool abuse problem wouldn't be profitable.
But let's face it. Not all of us have the time to log in to Steemit every day and cast ten upvotes. Moreover, some of those tokens are probably held by passive investors and/or the system and not used in the voting process at all. This enables the reward pool abuse problem to be profitable.
So, if you cast at least ten votes every day, you're doing your job to prevent the problem. However, obviously not everybody can do that. How can we solve this problem then?
The Solution
Get rid of the reward pool altogether. As long as there is a reward pool and there are rules attached to its distribution, people will find ways to abuse it. There is no way around it.
Pay witnesses regularly to power the system, but no one else should receive any penny from the system. Minimize the inflation to a point that is sustainable for the witnesses, not any lower, not any higher.
Get rid of SBD and Steem Power. Have only one currency in the system, Steem. This is good to attract new users to the system, because the complexity of the current system is one of the obstacles that prevent new users from entering it.
Allow users to tip posts and comments. No rewards for curation whatsoever. Users will tip a post or a comment if they really like it. Let a person tip as much as they want to a post or comment. It will be their money anyway and they can do whatever they do with it.
Allow people to tip their own posts and comments. This will act as promotion as the posts and comments that receive more tips will bubble up higher in the system. Get rid of the promotion tab as well.
This way people will only tip the posts or comments they truly like or to promote their own content, and not to abuse the reward pool.
It's a clean, simple, sane system. It doesn't incentivize immoral behavior as the current one does.
What Do You Think About This System?
Would you like to see it implemented on Steemit? Do you have any questions or remarks? Let me know in the comments.
Disclosure and Disclaimer
At the moment of writing this post, I owned some Steem Power tokens. This post is for information purposes only and not intended to be business or investment advice.
I agree, the only way to stop reward abuse is to cancel rewards. In all likelihood, the only system that's truly abuse-proof is the system that doesn't do anything.
But I suspect that the objective of "minimize reward abuse at all costs" is often not going to give you anything worth having. In many ways, the whole point of Steem is the reward pool, right?
Anyway, resteemed because I think you make a good point. (Not that I'm a proponent of canceling rewards, by any means.)
Have to admit, this solution surprised me! Wasn't expecting that. lol But I think you're right @biophil that there isn't really any way to prevent abuse. As long as money exists, an incentive to steal it will exist alongside (to give the most basic example).
I was disappointed that this post didn't branch out into suggestions / ideas for increasing participation on the platform, to get those upvotes made each day. But yes, @bbilgin, this is very thought-provoking!
Thank you for your reply, @geke!
That's a valid point. I should have addressed that. I didn't do that for two reasons.
It's not feasible for most of the users except maybe for retired people or for people hired by wealthier members as editors. The life of the average person is already filled with all kinds tasks, taking care of their jobs, family, homes, and so on. I think we can't simply expect from everyone to vote ten times every day.
To my best understanding, correct me if I'm wrong, most of the Steem Power is held by the system or in whale accounts. I believe that the system administrators have other tasks than curating content. Also their huge voting power would result in favoring their own tastes over everyone else. Talking about whales, I can imagine that there are more interesting things to do than logging into Steemit to curate content every day if you're a multimillionaire. Oops, I'm sorry.
In summary, this would be an upstream effort that would be destined to fail for sure. And frankly, I believe that the tipping system is superior to the reward system, so I don't feel motivated to try to fix the current system. The current system will fail by design. I'll go into the mathematics of it in a separate post later.
Again, thank you for your reply and if this idea resonates with you, please share it so that we have a chance in turning around this platform, because it really has a huge upside potential, if we can turn it around!
Not that way, bbilgin, you'd stop it dead in its tracks. You'd kill it.
Reward pool abuse should be fought. First step in that direction is to acknowledge that in the whitepaper. But fighting it by cancelling the reward pool altogether is throwing away the baby with the bathwater
Thank you for your reply and the resteem, @biophil! I appreciate it.
I argue that the abuse can be eliminated altogether and it would result in a much more successful social platform for readers, content providers, investors, and all kind of other stake holders. Let me explain.
Suppose that you were the sole owner of Steemit.
How would you behave? How would you distribute the rewards/tips?
I would distribute the rewards/tips to the best content I come across every day. I would reward contributors that post regularly quality content.
Why? I want to attract those capable contributors and their quality content, because I want to attract more readers to the platform, because with more readers, more people, companies, and institutions are going to come to the platform to advertise and promote their own products, services, and agendas.
That will result in more purchase of Steem to do all of those things. That in turn will result in increased Steem price, which will benefit me and attract even more investors, which will result in even more Steem purchases from regular investors.
All of this becomes a self-feeding circle. The better it becomes, the better it becomes. Everybody is benefited, investors, content providers, content consumers, and all the other stake holders.
Am I missing something here?
Think about in projects like @utopian-io. If all economy is based on tips then this type of developments will disappear. I'm considering to open source some of my projects because this is a good and sane way to get good rewards for your work.
Think about important projects (sane for steemit) like @curie. If steemit is based on tips, what is the incentive to create a curation project? All curation projects will disappear, because there is no incentive to read content.
It is easy to give a vote with good value, but difficult to give a tip because it is your money. Then, with tips, the posts will be less rewarded than the actual system. In conclusion, less content creation.
It is a different model in all ways. Give a look to LBRY (https://lbry.io/), it is like steemit but uses tips.
With your posts, you are opening an interesting discussion. Followed.
I don't know @utopian-io at the moment. I'm going to check what it is first and then mention it in a follow up post or comment.
The Steem holders are shareholders of Steemit. They have all the incentive that good content is curated on Steemit. For that purpose, they can directly pay editors to curate good content for the platform, like Medium does.
Moreover, some users can act as publications in Medium. Instead of posting their own content, they can resteem valuable content by other users. They can cut a deal with those writers to share the tip revenue.
The problem with distributing other people's money is that you eventually run out of other people's money. This is exactly what's going to happen with Steemit if they don't stop wasting $80 million USD a year in reward money.
Thank you, I will check it out.
Thank you for the feedback and follow. I appreciate it. I followed you back.
I have checked LBRY and I couldn't see a reference to a tipping system. It looks like content providers can provide their content either for free or paid for streaming. This looks pretty standard to me.
This will not be the case. In the current system, accounts like @utopian-io are giving away 6.5% of their investment away to the developers every year. This is what voting for the content of others means.
You can check my latest post for an explanation of this. The post is title Can Steemit Survive Burning $65 Million USD in Author and Curator Rewards Every Year?
In the new system, accounts like @utopian-io can tip as much of their Steem as they want.
There will be a difference though. In the current system, accounts like @utopian-io not only give away 6.5% of their own investment, but also 6.5% of the investment of other accounts that do not vote actively.
So, there's no need to worry about this.
If only the Witnesses got rewarded, and everything you proposed was implemented, the only demand for STEEM would come from people buying it to affect the board of witnesses.
STEEM will lose its attraction as shares of control over the reward pool.
I once saw a proposal to create an image of STEEM, a hard fork which will delete all preminers and their effects, which is impossible, because the vast majority of notable accounts was affected by preminers by delegation, votes, transfers, etc, so a deletion of preminers and their recursive effects meant deletion of all 3 accounts of the issuer of the proposal himself, as I noted then and deletion of all of the witnesses and most notable posters.
STEEM is based on sins and doomed to fail.
Every cryptocurrency is based on sins but I am not as sure about every cryptocurrency's destiny.
Most of them including bitcoin are either unsustainable, or uneconomical.
Spam and corrupt preminers have been failing this experiment since its get to.
This comment has received a 25.00 % upvote from @steemdiffuser thanks to: @stimialiti. Steem on my friend!
Above average bids may get additional upvotes from our trail members!
Get Upvotes, Join Our Trail, or Delegate Some SP
https://steemit.com/steemit/@steemdiffuser/changes-to-our-trail-upvotes#@stimialiti/re-steemdiffuser-re-stimialiti-re-steemdiffuser-changes-to-our-trail-upvotes-20180313t013019479z
update: I got it worse than I expected.
Instead of a 100% vote I got a 25% shared with 3 spammers.
Today/yesterday another accident happened, but I keep it to later.
You got a 33.33% upvote from @greengrowth thanks to @stimialiti! You too can use @GreenGrowth by sending your post URL in the memo field to the bot. Minimum bid is 0.01.
If you feel this post is spammy or not worthy of @Greengrowth you can contact a moderator in our Discord Channel https://discord.gg/6DhnVTQ.
This comment has received a 24.39 % upvote from @steemdiffuser thanks to: @stimialiti. Steem on my friend!
Above average bids may get additional upvotes from our trail members!
Get Upvotes, Join Our Trail, or Delegate Some SP
You got a 100.00% upvote from @greengrowth thanks to @stimialiti! You too can use @GreenGrowth by sending your post URL in the memo field to the bot. Minimum bid is 0.01.
If you feel this post is spammy or not worthy of @Greengrowth you can contact a moderator in our Discord Channel https://discord.gg/6DhnVTQ.
You got a 5.26% upvote from @adriatik courtesy of @stimialiti!
the solution is worse than the problem in my opinion and shows a complete misunderstanding of how human groups work. This "solution" is convincingly refuted in the Steem whitepaper and if it was implemented it would live to the quick demise of steemit.
The first problem is explained in page 19 of the white paper under "Micropayments don't work" - the explanation quotes a very solid paper by Clay Shirky, "The Case against Micropayments". Tipping doesn't work "there is a certain amount of anxiety involved in any decision to buy - here, to tip - no matter how small, and it derives not from the interface used or the time required but from the very act of deciding". Tipping, with a proxy for money like Steem, require a comparison: "Is this article worth 0.1 or 0.01 steem ? I gave the first one 0.1 and this one is better and longer so should I give it 0.15 or 0.2 steem ? And what am I going to do, I'll have no more steem left afterwards, I either need to buy more or else I'm going to scrounge by reading artciles and not tipping the authors because my wallet is empty and I'm too lazy to go buy BTC, transfer it to Bittrex or Polo or Binance, buy Steem with it then transfer the steem to steemit".
Basically, tips will enter a downward spiral due to transaction friction, authors will make less and less so they'll feel discouraged and not incentivized to continue creating content and it would be the demise of Steemit.
Your "solution" will lead to the demise pure and simple. It is fundamental that by "creating new steem" the blockchain primes the pump.
It is also very important to have steem power to increase the financial friction when exiting the platform so "nudge" people to stay longer than they would have otherwise.
Cancelling the rewards means cancelling Steem itself. Rewards is what makes most people come here not to reddit or medium.
As for your suggestion of letting the users tip the content creators, a very good project has been working on just that: the Brave browser and the basic attention token (BAT). Give it a look.
I argue that the tipping system is a much superior system than the reward system to attract new users to the system. I explain the reason in my reply to @biophil's comment above and I'm going to publish a post about that, so please keep in touch.
I'll take a look into Brave. I can't say anything about it at the moment, because I don't know anything about it.
Followed!
Then, you will be surprised.
I took a look at the Brave browser and BAT. It looks like an interesting project. The only caveat is how to measure human engagement with the content. How to distinguish between bot consumption of content and human consumption of the same content. If they can solve that problem, it will be a big success.
They have a very good team behind it. If someone can do it, they are the ones.
I am happy to see any suggestions that eradicate abuse of the system (especially in ways that seem to be designed into the Steemit system).
Your suggestion to remove the rewards pool so that there is no pool to abuse is interesting... but it does leave questions.
Does this mean that in your modified version of Steemit the financial biology would be akin to the following?
Witnesses (are the ONLY ones who get "external" STEEM for their services).
Other Users (Posters and Commentators alike) will 'only' get STEEM from whatever STEEM is circulating from before the change happens - and from whatever the Witnesses decide to 'tip' into the system (in other words the Witnesses will, for all intents and purposes, become the faucet from which STEEM 'might' come forth (it is "their money" after all).
...right?
Well 'if' I have the picture more or less correctly framed then I do think that you will find that the STEEM will quickly dry up - it'll become an exclusive club of holders - with STEEM initially going up in value by virtue of its scarcity - with Witnesses towering over everybody else by virtue of monopolizing direct access to the STEEM - with everybody else languishing (let alone new users).
I feel that I might have missed something however.
"Allow people to tip their own posts and comments. This will act as promotion as the posts and comments that receive more tips will bubble up higher in the system." The main problem with this self-vote approach (which is already instrumental in pool-rape) is that again "good" content would be nothing more than those posts delivered by the highest self-tipping (highest STEEM-owning) users... which is 'not' a good indication of the true quality of such works.
I feel that this idea needs work - but I look forward to hearing version 2. Its better to hear suggestions than affirmations of allegiance to the status quo.
Exactly, you've got me right.
For the content providers, it doesn't matter how much Steem they receive. What matters is the fiat equivalent of the Steem they receive.
Suppose that Steem becomes scarce and valuable and it appreciates from $4 USD to $40 USD. There's a writer who used to average 10 Steems per post when it was $4 USD. When Steem becomes $40 USD, that writer might receive 1 Steem instead of 10, but in fiat terms their average might be the same.
That writer wouldn't mind going from 10 Steems 1 Steem, because they don't live in the Steemland. They live in a country where they have to pay their expenses in their own fiat currency.
Moreover, I believe the tipped amount would slightly increase as the people start to tip lower and lower amounts of Steem, such as 0.001 Steem. Such amounts would be easier to be tipped due to the psychological effect.
I don't believe we will end up with an exclusive class of holders. Think about Bitcoin. It goes up and it goes down. There will always be people who need to sell their holdings, for example in case of retirement.
Moreover, think about Steems as shares of Steemit. Shareholders of companies such as Apple issue stock options to motivate their employees. This will be exactly the same system. Steem holders are incentivized to tip for good content to increase the value of the platform, which will in turn benefit them.
New users can buy Steem from the free market, like I did, or they can earn Steem through posting and commenting. Steem is not a necessary component to use and experience the platform.
I see where you are coming from, but I see this differently. Self-tipping has no financial advantage whatsoever except for exposure. On the other hand, Steem holders, i.e. share holders of Steemit have all the incentive to tip great content to the trending and hot tabs to make Steemit an attractive platform for other users.
Great idea, but only one problem. Where will all the money go which is eventually made from advertisements on the site? We're already seeing ads from the search, where does money go?
What incentive would there be for the Steem price at all? It would have no value bc there'd be no "dividends" paid from owning it. Everyone would immediately dump the steem, and it would be as worthless as an upvote on Facebook, Reddit, or Twitter.
but overall, the idea is great one. also, traffic would dwindle to just about zero around here!
Would be great for us if Steemit went away, as it's SOMEWHAT a competitor to this little gem:
https://steemit.com/money/@harpooninvestor/snapchat-the-greatest-investment-in-the-stock-market-at-usd17-15
We haven't thought about it greatly, but here's another thought experiment:
Make all posts via subscription or "purchase-to-read" only. Posts still get measured based on money, but that money is given BEFORE you read the full post. So more like a magazine or newspaper. If you like a writer, you can subscribe for a small fee or per-article if you love the headline.
Not sure of how that would work, but just something for all you guys and gals to chew on...
That would be a solution, but it would also mean to completely rebuild Steemit. The changes you are proposing are so fundamental that effectively a new platform would come out.
Thank you for the feedback. Maybe, a new platform has to come out, because around 8% of the $1 billion USD market cap is redistributed every year. That makes more than $80 million USD each year. We can hardly say that that $80 million USD is spent wisely in the current system. How long can Steemit last this type of cash bleed before investors decide a mass exodus and Steemit and all of its currencies implode?
I agree with you that Steemit and therefore also Steem is standing on very thin ice. Currently, I wouldn't recommend to invest in Steem (or any other crypto for that matter), because it's ran by people who either don't understand or don't care for the implications of the site which especially counts for the monetary aspect. The developers and witnesses may be good programmers, but they are really lousy economists. But if you want to run such a blockchain and call it (and be a competitive) currency,then you have to act like a currency. Right now, we are incredibly far away from that and the ignorance towards this huge issue of the reward distribution is more than just telling about the interests and ambitions of the the platforms relevant players on.
What I find even more hazardous than the reward distribution is the big upvote bots. There are maybe 10 relevant ones and they are ran by a few whales who make thousands of $ every day. I looked it up for buildawhale and he made 1200 SBD on Monday a week ago. That is imo much more immoral because it massively drains the platform, distorts the prices, creates an all-mighty oligarchy and in exchange, the owners of the bot owners do virtually nothing to better the platform. All they do is suck in the minnow $$. (and in exchange, the upvote bottom line is near zero, but the fewest realize that because of the huge sums involved. This needs to become public.
I'm considering to create a witness control account that is supposed to collevt votes for witnesses and puts the witnesses under scrutiny to force some sort of a quality selection. This process (of professionalization) is already going, but it's far to slow. I'd say about 80% of the witnesses are nothing but incompetent or scammers. That needs to change soon - or there will be no future for Steem/Steemit.
I will follow you now.
Glad to see such discussions underway. A daily reward cap on the percentage of the reward pool that any one account could receive may help the problem.
If you are interested to form a voting block to lobby such issues with the Witnesses then have a look at a recent post of mine. Your feedback would be most welcome.
I'm not a proponent of this approach, @novacadian. Once you put a daily cap on what an account could receive, you are introducing two problems.
Guaranteed abuse. People will circumvent the cap by creating multiple fake accounts. You will be punishing only the honest users.
Loss of talent. People who value their time more than your daily cap will simply not participate in Steemit or limit their time on it. I guess the original idea was $250 USD / day. I strongly believe that there shouldn't be any cap on the daily rewards, so that everybody does their best, because they think the sky is the limit and they can make thousands of dollars every day if they did their best. The challenge is how to incentivize people to do that in an ethical, moral way. I think the tipping system is a way to do that.
Thank you for the link. I'm going to check it.
I like the idea of tipping, but I'm not entirely sure it will work. Would that mean people need to convert $10 USD into STEEM, then slowly tip that balance away? Wouldn't that be almost like a subscription model? Or am I missing something?
That is basically how the Brave BAT token works. You buy the token, then Brave browser splits up the amount (e.g. 10 BAT) each month across the sites you visited (if the sites registered with Brave). When you run out of the BAT balance, you have to buy more.
The trouble I have with BAT is will people continue to see it as having any value. Right now cryptos are hot. BAT benefited from superb timing of the ICO gold rush. People will hodl and prop up the price for now. But it's fundamentally tied to people depositing money into their browser so it can then be spent...and a browser that very few people use (I'm one of them). In the end, I just don't see people doing that. I did it to try the experiment out. But it's a hassle ... When my BAT deposit in the Brave browser runs out in 10 months, I'll probably stop (in all honesty). I just don't need another thing to do and keep track of.
So how does STEEM in a tipping context work? Would people ever put money into reddit or Medium so they could give it away to everyone else? What characteristics would STEEM have that make it worthwhile? What would maintain its store of value over time?
(I'm guessing that's a future post ... I'm definitely tuning in.)
Or would people simply refuse to dump money into a Steemit account each month because they'd be spending it right away. After all, that's what the rewards pool essentially tried to solve in the beginning -- it gave a way to attach financial value to people's participation without them having to buy in (although, buying in increases the ROI with Steem Power when used in upvoting, etc..).
I'm really curious about the tipping because I think the rewards pool creates a lot of complexity that has a bunch of side effects. On that particularly bothers me lately is the 7 days to $0, where upvotes after 7 days are worthless -- $0 to the author. Plus no one else can resteem (share) that post with others. It's a real hit to residual income on a post and makes it difficult to justify providing quality content that is effectively a donation to the Steem blockchain after 7 days.
7 days also makes a joke of curation -- where else in the real world do people stop curating content older than 7 days? Most of the time it takes at least that long to find the good stuff.
Without a reward pool, tipping greatly simplifies the math and authors could continue to make money off their older work if the work stands the test of time.
So I'm all ears. 👍
Very good @bbilgin