Moats and Walls, and compromises: A perspective on Power Down Time and a compromise through Savings
There's no doubt in my mind that Steem needs more investors. We need content creators investing their time, we need wealthy people investing their money in steem and steem projects, we need devs investing their skillset/time, and we need business people running the whole show so the talent can stay focused on their specialty.
One major form of investment we need is to get more people buying and powering up Steem! That's how we all moon!
When it comes to Steem Power it's not as simple as rewards and earning though. Steem Power is tied to governance and security. When you power up you are given power over the direction of the chain. When the power down time is long it means you have to stay focused on long term objectives of the chain. If the power down time is short you don't have to care about the long term survival of the chain. You can be interested in just a quick profit rather than sustainable development!
Short Power Down Threats
One obvious one is phished accounts. When it's too short people won't have time to recover funds. Gandalf and others have done a better job than I could explaining that use case on the steemitblog post and I wholeheartedly agree.
Additionally, groups like exchanges don't pose a threat now, but under different circumstances they could. Right now they are kept from powering up a crap ton of steem because if the unstable crypto market happens to go berserk and they have to give everyone Steem back a 13 week waiting period will put them out of business. If it's a day they can power up, vote witnesses with other people's money, and hard fork whatever suits their purpose. This would be bad. It's also crypto, so I wouldn't be shocked if it happened!!!
I could see a hedge fund or just some rich btc whale coming in, buying up a bunch of stake, making bullshit changes or voting themselves in to rape the sps, the content rewards, witness rewards, or whatever else they can manage.
So, I'm not a fan at all of making on chain governance as simple as spend money for a day and do whatever you want. That's why I don't support the proposal as it stands now.
Benefits of a shorter time
That said, the point that the proponents are making it a good and valid point!
I understand and agree that long power down times decrease the liklihood of investors coming into the space. Crypto is risky enough and 3 months has already had an 80% loss. I get that's unacceptable, and it's a little terrifying to hold Steem that long in a market like this. So, I'm open to exploring something that suits investors better.
Compromise
So, a better compromise to me than shortening the power down time to 4 weeks is to give Steem in a savings account the ability to participate in rewards but not governance. (I was reminded of this by the @joshman comment on the last steemitblog post). The recharge time is 5 days now. So, I would increase the powerdown time in savings to a minimum of 5 days so there aren't voting exploits. There is a small percentage of inflation that goes to accounts that stake steem rather than have it unstaked. I would make the savings account eligible to receive a normal or slightly weaker inflation rate.
In this way it would act a little closer to delegated steem power rather than your own steem power. You could vote. You could apply rewards. You could retrieve it quickly. You can influence trending, so you can essentially buy advertising influence on the chain with it. But!!! when you vote for witnesses or SPS proposals it's not counted because they aren't full voting vests.
I think this would offer the investors and speculators more incentive to Save Up rather than Power Up, which still locks coins up, but also doesn't come with the inherent risks of having people with no long term interests in the platform able to buy up stake and mess with the core of the chain and leave. It's also a faster power down time than the 4 weeks proposed so hopefully it has a greater impact on the problem they're trying to solve.
Analogies
While I hear that forcing people to stay invested is a prison sentence I like to think of it more like a defensive mechanism. It's a safety precaution for the chain. It's like a moat or a big wall. Yes, it could be breached or crossed. It's not impenetrable, but it does provide a reasonable measure of safety that the people who are powering up are doing so for the long term viability of the project rather than any scam or quick payout especially at the expense of all other token holders.
The moat does prevent people from getting in and spending money to gain influence on the network, which is equivalent to purchasing advertising influence, but again I think that could be relieved by treating savings account steem the same way we do delegated steem.
Burning to power down
I also support the idea that you could power down your stake to get it faster. I wouldn't say instantly, but maybe a 1 week powerdown if you're willing to burn 5-10%. It's optional. So, no one is forced to do it. Right now I doubt anyone would, but when you're at the top of the next bull run and seeing how bears take the elevator rather than the stairs you might be willing to pay 5-10%. Or maybe you have a family emergency and grandma needs some surgery. Ok, take your steem out immediately.
This again provides some of the relief that an investor may need to see without the threat caused by super short power down times.
Anyway, I support the intent, here's a compromise approach, and let's see where it goes
I still don't think we should jam this into the SMT hardfork, but maybe 3-12 months later we can put this in that hardfork. To me it doesn't look like an obvious winner especially with some of the largest platform whales chiming in against it.
That doesn't mean the need isn't important. I agree it is important. I think there's a better way to do it. It doesn't have the same level of immediate gratification, but doesn't expose us to the same risks.
On many hardforks
The option has been raised to just do many smaller hardforks. I used to be a proponent of this. Then I watched an exchange go down for months due to a hardfork and stopped thinking rapid hardforks are a good plan. 6-12 months I think are ideal. Maybe 3 months if there's something super awesome and easy. Longer times between hardforks does require multiple things get shoved in, which I agree is less beneficial than testing individual variables, but to me it's not worth the exchange risk.
I'm not sure what comes after SMTs, but let's move powerdown and save up discussions to the one after it.
Witness
As a witness I'm doing whatever I can to make it easy for businesses and communities to form here and find tools to make them successful. Splinterlands is an amazing show case for how Steem can serve the needs of blockchain games. Steem-Engine is paving the way in regards to how token creation and NFT creation coupled with website creation can power your own digital publishing platform and soon you'll see how it can power your own digital storefront! I work on the Steem Foundation to help promote folks doing good work (more details soon). I support the development of keychain so we have common tools. I work on PALnet to help this community have a communication hub.
If that sounds good to you please vote for @aggroed. You can do that easily through Steem Keychain!
Seems like great changes to me (4 weeks is fair)!
When you invest in a CD, (Certificate of Deposit), in a bank or a lending institute for a certain set APR, if you choose to withdraw your funds you do not get that rate, and there are penalties that are assessed if you close out before the set agreed upon time frame, generally 6 months to a year.
I think giving a well spelled out option for a shorter time frame may help with investors, but I think anything less than 4 weeks is defeating the entire purpose of why there is a power down cycle.
Also 100% agree this is not something that should be in the SMT HF. SMT's have been talked about for to long to have Oh, this would be nice to have in the HF also BS. Peoplehave been saying for over a year now that SMT will have it's own HardFork, we do not need to add anything to it that is not SMT related.
The fundamental difference here though, is that you are investing your time (labor), for rewards for content.
The creator is creating the asset.
Very different than entering into a financial loan.
The creators are not borrowing. (or lending).
but I think anything less than 4 weeks is defeating the entire purpose of why there is a power down cycle.
What was the purpose?
....to make the markets less volatile?
I am not sure why the power down cycle other than to prevent dump a lot in vote your self a lot, set your witnesses, take the funds out, wash rinse repeat cycle, at least that is what seems to be the reason.
There is no wait to take out rewards that people/curators/creators get, some of them only power up a little bit or only have the stuff that is powered up automatically and take the rest out. There is that wait for the 13 weeks if you are set at 100% stake option, but for the 50/50 option no wait at all for half of the rewards. If they want a shorter time for the creators, the curators, the non investors, to take out their rewards, then they could just add a few more staking options. A 25/75, a 10/90, or a 100% all liquid option.
However the main point of all this decreased time is to tie it to a popular or what appears to be a popular, HF. The next HF is supposed to be about SMT's, they, (lots of people), have been talking about SMT having it's own HF, this has nothing to do with that. It is just like a politician having a pet project that he knows will be vetoed inserting it into legislation that is popular and unlikely to be vetoed.
The investors are lending, expecting a set return, and that makes it a financial issue for them. Granted most people are investing their time for rewards and anyone that says otherwise unless they have selected the no payout option are lying to themselves as to why they are here and not somewhere else with a larger audience.
We no longer live in an era of one-size fits all, I think people just want to have options for those "life is a bitch" moments.
What if the burn option were added to the current 13 week cycle?
Great post, your solution is definitely a good compromise.
Another solution that I believe can suit both sides: Let's have a power-up period instead of a power-down period.
If someone wants to have influence on witness and SPS voting, then he will have to power up his steem and wait for 13 weeks to get a full power-up. The amount powered up will increase each week.
However, the power-down will be instant, so no one will feel like his steem is not liquid.
Whales will enjoy not being constrained, and the voting on steem won't be abused, because an abuser will have to hold Steem for a long time (or have minimal influence).
This also solves another IMPORTANT problem that is not being given a lot of consideration: This change will allow panic selling.
Panic selling is great for the price of steem as it gets rid of the weak hands at the bottom (the lowest price possible).
What we have currently is people panicking at the bottom, initiating powerdowns, and selling each week at higher prices. This create tons of sell pressure.
Other coins don't deal with that, and that's why they have higher market caps even though they are useless.
Don't agree with any of the suggestions. As the saying goes, if isn't broken, don't fix it. I'm quite happy with the 13 week power down. Anything shorter is going to flood the exchanges, and whoops! there goes the Steem to new lower lows.
I will remove my vote from any Witness that votes for this change, and will encourage others to do so.
This is @yabapmatt's approach. He dropped this comment on my last post and I think it is a great idea.
In addition maybe nobody should have voting rights for the SPS and witnesses until the have stayed powered up >= 13 weeks.
That's an interesting angle, and a notion that I would be more than willing to entertain. It's crazy enough it just might work!
Perfect solution . People only get boring rights on SP that's 13 weeks matured. That blows 90% of the above argument out of the water.
While I hear that forcing people to stay invested is a prison sentence I like to think of it more like a defensive mechanism. It's a safety precaution for the chain. It's like a moat or a big wall.
This is one of the reasons steem is failing, IMO.
One of several.
(I'm no longer bothered one way or another by the mechanics and time involved of powering down)
I'm not sure how you circle the square here.
On one hand Steem is selling decentrlaization and independence, then on the other hand expressing 'we will do what we think is best for you. It's for your own good'
It doesn't work that way.
Inconsistency in a philosophy is not a good.
You are a witness, and forgoing any possibility of corruption (which I also doubt, as I have never seen it NOT occur, not when money is involved), it still means 20 people have the ultimate decision making power over, lets say, 15,000 active users.
Its the way it is, but trying to attract investors (without any nepotism or anything), is a game best played with logical and philosophical consistency.
On that basis, you would have to say, the shorter powering down period the better.
Let adults be adults - grown ups have no wish for a nanny state to decide for them.
And adults do not want others to decide for them, on how to conduct their own finances.
(....which gets me close to the other fundamental flaws in steem...But I ain't going there).
Thread owned !
I couldn't resist.
Resteemed by @thethreehugs
This is enlightening. I have gained more knowledge after going through this piece of catchy rightup.
I love what you say about investors. The truth is that more powerful investors are needed to push the boat sailing in terms of steem.
I also think that the power down should be less than what you predicted. I think this will ginger up the investors to have more savings within a shorter period and in turn more investors would troop in.
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I agree brotha.. However I like the 13 weeks, because you still can get a payout In a week (just 1/13th of your stake) if you need funds quickly.
Also for people who need most of their STEEM liquid.. Don’t they have the option to lease Resource Credits if they need them??
I just think it’s fine the way it is, and like you said with a possible bull market just over the horizon, and with SMTs being released soon.. There is no reason to rock the boat or spook investors by changing things up.