RE: Steemit Inc Stake-Freezing Softfork Thoughts
I appreciate you honestly expressing your opinion, but so much of it is wrong that I wonder where to begin.
Let's start with the moral argument, then move on to the tightly related economic ones:
Steemit made a clear and unambiguous promise that the stake they mined would be used for onboarding and development of the blockchain, not for personal enrichment. Now, you probably are going to say, then how would they make any money from doing the development. Well, there's actually two ways in this case: 1) they are going to charge some overhead (e.g. salaries) for the work they do and 2) all the major devs and the larger shareholders were also "awarded" personal accounts from the ninja-mine. THIS was the stake that was supposed to represent their own interest in developing the blockchain and devoting the rest of the stake to development work.
Why did Steemit make this promise? Because they knew all the other stakeholders would have bailed out of the currency, driving the value of that huge stake to pretty much nothing. This almost happened anyways, because Ned and Dan were selling their personal stakes very rapidly at the beginning (such a sign of confidence in their coin) and the price was dropping fast until I convinced them to stop that practice for a while.
But from my point of view, even if they made the promise from the goodness of their hearts, I expect Steemit to live up to it's promise on this issue. If simple fundamental promises like this aren't going to be kept, then myself and like-minded people will stay on a chain where promises to the community matter. Other people who don't care about promises, and expect their interests are served better by baseless promotion and no integrity can leave for a fork where promise don't matter. This is OK, each group gets to operate under the rules they like best.
Ok, that pretty much summarizes the moral argument for me, let's move on to the economic one. Here I'm talking about what will be best for the price of the coin.
By voting stake, it's clear that the large investors in Steem support the Soft Fork. I've spoken to several of the largest Steem investors, who've told me they will leave the chain if it becomes a chain dominated by the stake of someone whose primary interest is Tron and not Steem. One thing you seem to be ignoring is that it is investors that support the price of a cryptocurrency and if many of the large investors leave, the price of the coin will tank.
So when you suggest that Tron can just do a clean fork and just ignore the community, I think you're ignoring key issues.
First, even if we assume Tron can get that fork listed on exchanges without any problem, something I'm not convinced of except for the special case of Poloniex, there's still the strong likelihood that the price of the coins on that fork will tank when investors leave. This will translate to a large initial trading volume, followed by a huge drop in trading volume once these investors leave (several operate as market makers as well as investors). At this point, the listing for the fork could come under pressure, because exchanges generally only want to list a coin if there's enough volume to cover the cost. And trading volume comes from investors, not from Steemit (unless it just decides to do wash trading and treat the resulting fees as an expense). You could argue that Tron will buy up a large amount of Steem to support the price, but this seems unlikely on a fork where they already have the entire Steemit ninja-mine stake.
The next question is where all the non-investors go (e.g. people who use the blockchain but don't actively buy Steem for money). What they will do is hard to predict, but if they don't go to the Tron fork, it's begins to be difficult to see what the purchase of Steemit was even for, except to get developers experienced in the Steem code base.
The Steemit stake has been a huge weight holding back the value of Steem for ages. If it had operated as promised and been devoted to development, it would have done great things for the coin.
But instead, it actually worked against the price of the coin, because it was hard for other investors to be motivated to invest in base-level Steem technology when a single stakeholder was deriving much of the benefit, but not really pulling their own weight.
It has effectively stifled third party development of the common infrastructure like API servers and the blockchain code itself. Instead, you'll see that most Steem-related development has been on dapps and other tokens (i.e. SteemEngine tokens) which allowed those developers away to profit from their work. The SPS has improved this situation somewhat, but the funds available are still small relative to the Steemit stake.
I'm finding I don't really have the time right now to see if I've rebutted all your points, but maybe someone else can take a look and address them.
I guess my final point is this: I found your attitude surprisingly defeatist for someone I took to be a cryptocurrency enthusiast. If you think one rich guy can come along and just get his way in the cryptocurrency world, it feels like you should be searching for a new area to devote your efforts if you still think there are ideals worth fighting for.
Thank you for taking the time to reply. There is some information that is news to me here, but it does not change my overall stance.
Let's say we didn't soft fork. Let's say they are terrible, and we decided to do a clean fork. Would the large stakeholders not be dumping their coin and encouraging the adoption of the newer fork, based on your same analysis? The point I was trying to make is that the soft fork just seems to be unnecessary vs alternative scenarios. Am I mistaken here?
I suppose that's actually the crux of what I wanted to say.
I do want to also address the thoughts concerning the stake since we are talking about it too. My perspective is as one that came late to the party, and already impressed with what was already built. I was okay without this promise, because as you say, if they violated it, things would go south pretty quickly. There was no reason for me to believe they would self-sabatoge the value of what they built. The fact that development was slow did reflect negatively on the price as well. In any case, I don't see the difference between this and existing corporate structure and stock investment, with the same implicit contract concerning that funds be used to further develop the company strategy.
Yes, there's a mistake in your thinking regarding the soft fork. There was a key reason to do the soft fork now instead of just a hard fork later, and that is because the soft fork enabled the chain to keep the fork listed on exchanges. If either side decides to do a hardfork, they have the additional challenge of getting exchanges to upgrade to the hardfork. This is often a somewhat painful process for exchanges to do for Steem. And if it's done in an atmosphere where there's a split in the community, it's going to leave exchanges scratching their heads as to whether to support both chains, support one, or just dump them both. The soft fork prevented this problem, at least for now. So this choice of timing was for practical economic reasons.
Most of the actual work on Steem and even the front-end was done pretty much at launch or shortly thereafter. The pace of development has been glacially slow since then, partly because of poor management and partly because most of the development funds were being hoarded (I presumed for a rainy day, until I got one big dividend payment as a minority shareholder, when the proceeds of most of those Steem sales were just passed on to Steemit shareholders instead of being used for development). This is generally recognized by most people in the Steem community, and the many failed technology promises from Steemit are another of the big drags on the coin's valuation. The most recent tech manager at Steemit has done better than past tech management, but he's also been forced to operate under a very restricted budget (see below for why).
I get what you're saying about the implicit contract, but here's my take on that: Steemit shareholders != Steem investors. This opened up both a potential and ultimately real misalignment of interests.
Now, if Steemit management had been good at managing marketing and software development, it was possible that the interests of these two groups could have been roughly aligned, since both groups benefited from Steem price appreciation.
And initially, I think Steemit did try to spend more on development. But due to failures in execution, they were getting less of a return in the form of Steem price appreciation than they were spending in Steem coins, and it began to look like the best thing to do from their perspective, was to sell off the coins and pocket the results as dividends (and ultimately just sell the remaining stake at a discount to a third party for cash).
Ah okay, I underestimated the effort on the side of exchange adoption when it comes to forks, as well as assumptions about how they would choose. I may also have wrongly assumed that Steemit Inc would have more influence on the exchanges themselves.
About the implicit contract, I see the distinction between the two groups, but I don't see that this is all that different from the relationship between Steemit management and Steemit shareholders, the relationship between Steemit management and Steem investors. Or say, the relationship within some hierarchy in terms of shareholders of some other large company.
Ned's Steemit made those promises not Justin Sun's Steemit. I think its wrong to expect Justin Sun to maintain promises he never made. Even with that aside, promises can get broken and that still doesn't make it right to freeze a man's stake in which he attained honestly via purchasing it. The time to fork out the ninja mine stake was long ago, its not right to fork it out after someone paid millions for it.
When you buy a company as a whole, you buy its assets and its liabilities. It's why you should do something called "due diligence" when you buy a company. By your logic, Justin could buy the company for $10, sell it back to ned for $10, and Steemit would still have no liability for the promise it made.
Also, there's plenty of evidence that Justin's team was aware of potential liabilities of this sort: they purchased Steemit inc for much less than half the asset value of the Steemit stake.
I'd like to see the legal document that your claim is based on. I keep seeing these debates with some on one side of the debate claiming Ned promised to never use the mined stake for voting ect. but I have yet to see a legal document that makes that claim true or enforceable.
Even if the claim was legally binding to the best of my knowledge Justin Sun didn't use his bought stake yet so he never broke any contract but still had his stake forked. To go even further, Justin Sun didn't mine the stake he bought it fairly and honestly. If the mined stake is getting soft forked then soft fork it all not just one persons. To soft fork someone stake directly after they bought it is a shitty thing to do. I think this was a short sighted move and I hope in the end everything works out for the best.
Wrong, you may want to reread what I put again. I said Justin Sun isn't responsable for another man's promises. Ned promises would still be his own no matter how many times he sold/rebought Steemit. A legal document would obviously change my opinion on some of these things.
I saw someone try to do an analysis based on contract law in a post here recently, maybe because the term "social contract" that was thrown around back then in graphene-based chains. But a legal claim would be more reasonably be based on fraud than breach-of-contract, I think. There's no need for a "legal document" in that case.
It's an interesting situation. For myself (legally) I would think Justin Sun has more on his side.
Thanks for all the back and forth.
Hopefully everything works out for the best for everyone.