Witness Update: Two Killer Features for Steem! (Comments wanted)

thecryptodrive (70)in #steemit • 8 years ago

Today I was giving some thought about how Steem could catapult further and realised that users need incentives to buy Steem to achieve some sort of financial reward or benefit by holding Steem.

Feature One - Linear Voting Curve

"The Experiment" run by @smooth, @abit and others has proven to be successful in reviving interest in the old user base and people are coming back just to try out their newly-found voting strength because whales are abstaining from voting and the average user's vote thus carries more weight because it is not competing against whale votes redirecting funds to other posts.

I have seen it first hand where all of a sudden Steemians I had lost touch with are contacting me again in the chats. So basically users now have a near-direct correlation between their voting capabilities and how much Steem they hold, and are excited to test it out.

This scenario however is an artificial one and is more of a moderation approach than an actual feature of Steem, whales are also precluded from voting, under the threat of being downvoted and their reputation reduced which is not an ideal situation either, nor does it make for ideal free market attention economics, because some stakeholders are not voting as mentioned.

A flattening of the rewards curve to a linear or close to linear model is the only answer because that way it is an official feature of Steem that investors can use a guide in their decision making, the artificial model currently in place relies on a few moderators and not truly decentralised and only exist while the said moderators are still present in our ecosystem. With this implementation, whales and ordinary users will be able to vote and one's voting power is directly related to one's Steem holdings in a linear fashion, which is less of a cognitive load and makes for easier gamification and stimulates the desire to hold more Steem Power.

Feature Two - Tiered Steem Dollar Interest rates based on Steem Power holdings

Steem Dollars are back! With the rise in the price of Steem, Steem Dollars have started to be paid out again on post rewards. The existence of Steem Dollars however don't seem to have any direct benefit for the Steem price, so I propose a bit of gamification around Steem Dollar interest rates to help boost Steem Power acquisition.

As a backstory, you may have heard of a new Smart Coin called PIVX, they have a blog here on Steem @pivx and a website http://pivx.org , this project is a privacy coin which runs on a Proof of Stake and masternode consensus model; there is a very clear incentive to buy and hold this digital asset at the 10 000 units mark, which is what is required to run a masternode and earn rewards of around 4.25% APR interest paid daily (citation needed on the daily payout).

Investors are currently scrambling to buy Pivx and create masternodes, it's an easy carrot with a low cognitive reward perception... buy 10K Pivx, run a masternode, earn rewards ... simple! So what do people do ... buy 10 000 coins because that is what the optimum is to invest in this project.

Steem needs similar milestone incentives; Steem Dollars as is could be gamified a little. Why not introduce tiered interest rates based on how much Steem Power the investor holds? So the witnesses will set the base rate and then the tiers above will be base rate + 2%, base rate + 3% etc.

This is a example of what a tiered structure could be like, but obviously can be optimised after some discussion:

Tier 1: 0 to 1000 SP @ 0% interest applied to Steem Dollar holdings

Tier 2: 1001 to 10 000 SP @ base interest rate applied to Steem Dollar holdings

Tier 3: 10 001 to 50 000 SP @ base interest rate + 2% applied to Steem Dollar holdings

Tier 4: 50 001 SP and higher @ base interest rate + 3% applied to Steem Dollar holdings

This sets a clear target of how much Steem users must purchase and power up into Steem Power in order to take advantage of the various Steem Dollar interest rate tiers. I would also motion to take this a step further and suggest that interest can only be earned if the funds are placed into savings, right now savings is only used as a security measure to prevent instant withdrawl by unauthorised parties, but why not treat it as a short-term savings account as well? This makes sense because it will give users a feel of traditional banking savings term accounts.

If Steem Dollars are kept out of savings they will be treated as if in a transactional/cheque or current account depending on the terminology you are used to and earn zero interest, when transferred into savings, the Steem Dollars accrue interest, compounded daily, based on the tier you qualify for.

With more Steem Dollars in savings, it will take some strain off the Steem Dollar to US Dollar peg because of the delay in the release of the savings and witnesses won't have to work so hard to adjust policies to balance the peg.

I would like your comments, feedback and improvements on the above proposals.

Keep Steemin'!

Please vote thecryptodrive witness if you would like to help support me to do more great things and come up with ideas!

#steem #steemdollars #hardfork #money

8 years ago in #steemit by thecryptodrive (70)

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personz (66) 8 years ago

How do you see the original justification of the n^2 vote power curve as disinsentivising self voting, and sock puppet voting? This still seems relevant.

I'll reproduce a section here from a great post by @bitcoindoom which supports the n^2 curve, reshared on @dantheman 's blog so I presume it has his endorsement also, for what's it's worth:

Under a linear reward model the logical choice is to vote on your own posts as often as you can. This is the other half of sybil only with "fake posts". To prevent this Steem introduced voting power which rate-limits how often someone can vote.

After eliminating fake posts we are still left with the fact that the logical choice (to maximize personal return) is to vote only on your own content as often as the rate limiting will allow you. This is almost identical to paying people interest which in turn would not redistribute funds and therefore would be pointless. Some people may choose to vote for others, but in this case the incentives are identical to a tipping model and subject to similar mental costs as micro payment systems.

So we need to discourage people from voting on their "own" content and encourage them to vote on other people's content. Unfortunately, we have no way of knowing whether two accounts really belong to the same person. The more STEEM POWER an account has the more unique it is and the less likely it is to be fake. Likewise, the more collective votes a post receives the less likely it is to be fake.

Steem introduced the super-linear (n^2) reward system as a natural way of ensuring rewards only go to posts that have strong consensus. Some people may vote for themselves, but the rate of return will be low enough due to being low on the n^2 curve that it is an acceptable cost of doing business. To put it in terms of "micro payments", imagine that you were given the choice to pay yourself $0.01 or to tip someone $1.00. For most people it isn't worth it to work for $0.01, but it would be worth it to them to see someone else receive $1.00. The value of giving $1.00 is much greater than the opportunity cost of $0.01. This is especially true for smaller stakeholders whose vote is unable to climb above the $0.02 threshold for payout. In these cases the cost is $0.00.

The post then goes on to justify down votes to deal with supposed "mining-pools" of voters, i.e. whale collusion.

But anyway, on the curves, do you this this argument is no longer relevant or never was?

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ender (52) 8 years ago

This works also with something between linear and exponential say n^1.1 and rewards are much flatter.

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personz (66) 8 years ago

Are you saying we'd be able to retain some self voting / collusion deterrence at n^1.1 while making it fairer (according to the argument anyway)?

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ender (52) 8 years ago

Yes exactly. Much better said

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nextgen622 (71) 8 years ago

I really like your tiered approach. I definitely think there needs to be more incentive in holding Steem. I'm wondering if there can be some other perks/incentives for reaching specific tiers of SP?

And great to hear from you again my friend.

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fyrstikken (75) 8 years ago

Feature One - Linear Voting Curve

No.

Feature Two - Tiered Steem Dollar Interest rates based on Steem Power holdings

No.

I could write seven pages why No. But I don t have the time. You can find me on @steemspeak if you want to debate.

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ender (52) 8 years ago

Great idea. I think the first has been discussed Ad Naseum but second it very creative.

Pivx actually allows all users to gain interest though the rates might be higher for master nodes. I think stem dollar is inder utilized
Marketing the platform as steem bank where you have savings and a good interest rate (5 percent annual) paid daily would be huge. We really could be first decentralized bank. Dash will be there in a year or so and has better marketing so we need to move fast.

If we are going to have the complexity of steem dollars let's market it!

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