By now most everyone has looked at the Worker Proposals put forth by @blocktrades.
My answer: they both are bad.
Let us look at the two options presented.
Donations
Steemit Inc already has stated it will donate STEEM to the cause but the hypothesis is they do not want to be the only ones. Fair enough. But who else is going to donate? Are the Whales going to fork over hundreds of thousands of STEEM to the cause? Not likely. So that leaves the rest of the community to do it.
Okay, so you expect someone who scratched and clawed his/her way to Dolphin to fork over, what, a hundred STEEM? Really? And even if you did that with every Dolphin, you would get 190K STEEM. That is not getting us very far.
Thus, the donation option is completely unrealistic.
Take From The Author Reward Pool
This one is a beauty.
On Steem we talk about two things; more users and a better distributed token. Ironically, one of the things that is happening is the token is reaching more wallets and the holding of SP is flattening out. Each month I produce a post detailing the changes. It is slow but it is taking place and this is only happening because of the reward pool. And now the process is going to be slowed because the proposal is to cut the rewards by 20%?
I can see why @blocktrades thinks this is a good idea; it does not post much. How much of the STEEM or SP coming in each month is from penning articles? In fact, most of the Whales do not write much, if anything, at all.
No offense to Blocktrades but these are not the accounts who depend upon the reward pool for account growth. So proposal number 2 screws the small to medium sized accounts.
Not exactly a great idea in my view.
Welcome To The New World
I am think we are overlooking one of the simplest of solutions.
Here is the basis of it all: What is the price of STEEM based upon?
Is it supply and demand? The inflation rate? No and No.
The truth is that the price of STEEM is based upon Bitcoin. That is all. It can be dressed up all we want but the price is going to basically move in tandem with Bitcoin. It is how this market works. Sure STEEM can fall in comparison to other alt-coins but that mostly has to do with marketing and pumps.
We all have seen this:
Therefore, why do we not use crypto-economics like it is meant to be. Under this system, we are granted the ability to create our own money. We are not obligated to play by the same scarcity rules.
I hear a lot about people mention the inflation rate and that people do not buy because of STEEM's inflation rate. I do not think that is the case. The rate is 8.5% annually right now. Yes, if someone put $10,000 in, they would lose $850 by the end of the first year.
In the stock market that is a big hit. However, in the world of crypto, that can happen before your second cup of coffee.
We conservatively talk about $10 STEEM. That is 30 times what the price is at now. When you are look at a 30 bagger, do you think 8.5% really matters? It does not.
The Worker Proposal is a great idea because it is focusing upon what is going to enable STEEM to take the rightful place in the top 10 blockchains. We need development and that is what ultimately will attract users. That said, we do not need to screw up the system that is working, especially at the expense of the smaller accounts
So why not use crypto-economics to our advantage? You want to invest in the blockchain, create the money.
I propose adding 5% inflation for one year.
That is about 15M STEEM or $5M at the present price. It would jack the inflation rate up to 13.5%.
I can hear the screams now. But people won't buy the token with that high an inflation rate. I have news for everyone, they are not buying it now. So it really doesn't matter.
Besides, what 5% of the price of STEEM? About 1.4 cents. Again, a move like that happens regularly.
What we are doing is investing in the ecosystem. Using the inflation rate essentially is getting everyone to contribute. We are all giving evenly based upon our stake, if you want to look at it that way.
I prefer to view it this way: if investing in the development of our ecosystem doesn't make this place more than 5% valuable in a year, then we all might as well pack up shop. Imagine the applications that can be churned out over a year with $5M.
Personally I think we will see a much greater return than that based upon what took place on here the last year and a half.
The best part is this does not have to be forever. If we want, we can always opt to burn some STEEM in the future.
At the end of the day, the development rate is much more important than the inflation rate.
It is time to use the powers granted by crypto-economics to our benefit.
If you found this article informative, please give an upvote and resteem.
My original proposal was to increase inflation (pretty much for the same reasons you mention above), but most people that commented at the time were strongly opposed to this option.
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Yes, sadly that does not surprise me. It is something people are so afraid to embrace.
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Why not just take a equal cut from 5% of all the reward mechanism at an "equal" rate so that way we dont have to increase inflation and everyone on the platform is invested in the success. Either way is essentially doing the same thing, but skimming from current rewards has less external ramifications.
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Because the benefits of SPS inure directly to stakeholders, and only indirectly to those whose work creating, curating, and witnessing create all value Steem possesses. Do you want VP to be based on rewards? That would be silly! VP is based on stake, and polls to effect application of SPS will apply VP. Improvements will produce price impacts on Steem, which is directly benefiting stake, not rewards.
Why dodge the reality that the authority to vote SPS is based on stake, and therefore the responsibility to fund SPS should be based on stake?
If rewards are taxed, the incentive to create benefits are reduced. Stake which does not create benefits then gets a free ride, which increases the relative power of stake which neither creates, curates, nor witnesses. Do you really want to provide incentive for stake to do that? Because that's how you do that: tax rewards to fund SPS.
The benefits of SPS inure directly to stake. VP which will determine SPS application is based directly on stake. Since both the authority to effect SPS and the benefits of SPS are determined by stake, so the responsibility for funding SPS should be based directly on stake.
Don't decrease incentive to create incentive for investors. Create clarity and control for investors to produce SPS funding that produces the gains they seek.
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That could be done although that proposal is not on the table.
Ned brought up a point the other day about the Witnesses. He took it from the security perspective although I see two problems.
A) there are already many of the lower ranked witnesses who are not making money with their node. It is a losing proposition and cutting their return could cause more to close down.
B) this was Ned's point. You want the witnesses making a lot of money to secure them from being bribed or taking outside money. This makes sense. If someone is borderline, they are open to be corrupted. Not a 100% level of protection but it is a barrier.
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Corrupt people are going to be corrupted regardless of if they are making money. Im ok with witnesses making a little less money along with everyone else.
I also dont see the deal with a few witnesses shutting down who arent making money. New witnesses will always come along and take their place.
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Yeah, we are break even at the moment with not a lot of hardware. I suspect any cuts will likely rule out profit (near term at least) for pretty much all witnesses outside the top 50. It's top 20 or not a lot at present.
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You should compare how much EOS BPs are making in comparison to Steem Witnesses.
https://eostracker.io/producers
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I am definitely in the wrong line of work.
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They're talking about 20% from the piece of the pie that is over half of the pie.
But I agree they should take a piece from all 4-5 sections witness, authors, interest ... I can't remember all the sections.
And then I think they add some extra inflation like suggested by the author
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I think the importance is that the worker proposal system get worked on and the funding can be settle afterwards as there is stil time given the development and deployment.
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We've already begun the work, because as you indicated, the decision for the funding source isn't a complete blocker for the project.
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I combed that opinion thread to see your opinion. I want to add a vote but as a basic user i really couldn't understand the opinions or the voting options. This makes a bit more sense to me. Thanks for you input @taskmaster4450. I wonder if @blocktrades will see this and chime in.
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My original suggestion was to add a new inflation source, as my thoughts ran along the same line as taskmaster's, and I also thought it would be the least controversial source for the funds:
"Our proposal is to add a small amount of inflation to Steem (e.g. 1% annually) that is paid into the funding account. This ensures long term funding for the blockchain and it also allows for that funding to grow as the blockchain itself becomes more valuable. If we assume that Steem’s market cap remained constant over a year’s period at its current value of $121 million, that would mean 1.2 million SBD would be generated over that period to potentially pay worker proposals."
But it rapidly became clear that this wasn't a popular choice for funding the SPS, so that option was taken off the table. The discussion surrounding this idea is here:
https://steemit.com/blocktrades/@blocktrades/proposing-a-worker-proposal-system-for-steem
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My mind keeps coming back to the question 'but why?' And, i am glad to see @exyle's vlog today as he helped me understand the question as he is having it too! I couldn't bring myself to vote for either funding model proposed with the question 'why' on my mind. It seems this idea may be to divide the communuties of developers and authors.... that's complicated!! Let's back up and understand Why the Steem community needs this platform? Shall we? Here's @exyle's vlog post. https://steemit.com/dtube/@exyle/jpvf87yx
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The purpose of worker proposals is to fund projects that benefit the stakeholders (people with powered up Steem).
An example of a project of this type would a change to improve performance of steemd (the software used by every Steem-related project) to make it more scalable (allow more users to use the system). This provides a tangible benefit to all the stakeholders, because it makes Steem more valuable, but there's no direct way to monetize the improvement.
Of course, you can rely on volunteers to make such changes, but on an economic level it makes more sense to have the payment come from the people who benefit (the stakeholders) rather than the guy who is willing to give up his time for free. In other words, it's more likely to happen with an economic incentive.
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I know this is coming a bit late in the day; here's something that may change the debate.
The real inflation rate - the reward rate due to upvotes - is currently about 23%! Not the blockchain's approx 8.5%, but almost 3 times larger. The author-rewards rate is about 17% of SP.
The reason these numbers are so high is because not all STEEM is vested and upvoting.
So, instead of adding 1% to the 8.5%, why not take 1% from the existing creation rate? That is, from what I understand, what is currently on the table. This 1% amounts to just under 12% of the STEEM being created through inflation. So within a few days the reward pool will shrink by the same amount. That means the current 23% reward rate would drop to about 20%, with author-rewards going from 17% to about 15% - still double the creation rate.
You can play with the numbers, having either a flat rate across each earning category or weighted in different ways. (Late here and I don't wish to write a whole essay - though can do upon request tomorrow.)
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Not sure if I agree with your proposal, but you are right in your claim that monetary inflation does not need to have a big impact on price, if any.
We do have the perception against us of course, with the STEEM blockchain. But maybe this way we can put the 100% inflation history to rest?
I do recommend reading this book about the subject of inflation. I'm pretty sure you can find the PDF or ebook somewhere as a torrent too... That's how I read it before purchasing it.
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Book looks interesting, will have a go at it. you don't really say in which sense you would not agree, i guess the answer is in the book :-)
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What about every steemian buy steem and increase his or her SP for 5%. It would increase steem price and solve all problems?
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Every Steemian should be planning that. I know I am when I see the price hit my target.
I have a couple of buys planned.
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That's the biggest problem.
We all planning but no one buying.
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I am not a bitcoin bull at the moment, which means I am not a Steem bull either. I think we see another leg down in bitcoin which should pull everything else down. I would not be surprised at $2500 BTC which will put STEEM at about 20 cents..maybe a little lower.
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If all Steemians invested by buying some STEEM, the STEEM price would raise even when Bitcoin price is dropping.
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In that case we'll need to give up all the rewards to cover worker proposals and when even that is not enough developers will move to the next project.
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Everything on Steem is so rushed. Asking for feedback always happens after minds have been made up. That's not asking for feedback, that's trying to validate something after the fact.
Yes. Inflation is deadly - over time. That's why it will be closely watched and adapted in the future. Taking from the cookie jar of authors will not be policed as effectively.
I agree that an extra 5% of inflation for a limited time is superior.
Don't talk to me about inflation while the volatility of your crypto goes wild. Inflation is not the problem right now.
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100% agree, this is THE way and knowing that things would happen, i would be eager to invest more, inflation doesn't matter when money is reinvested.
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The problem is this is not a given when having big whales being able to decide/vote on proposals if they wanted to. Which could lead to those same whales holding even more.
This is the biggest reason why the WPS on EOS is likely to be discontinued. Probably for the best.
A worker proposal system certainly is not without risk.
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i agree but there is a difference between how to get the money (this post, inflation) and how shall it be used and how to reach consensus (your comment).
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Since there are only 354 whales in the entire Steem universe, it should not be impossible to get them to collectively make a course correction to ensure the survival of Steem. If Steem goes down, they are the ones losing a fortune. Vested self-interest would seem to dictate they need to sacrifice a little for the common good. Not out of altruism, but to ensure their own survival. $30 Steem would make them all multi millionaires. We will not get there stepping on the little guy. Just my two cents.
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There are less than 40 whales according to @arcange reports his does daily. This one just came out.
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Where are you getting that number? @arcange’s statistics charts show that we have 37 whales.
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Yes, 354 is way out. There looks to be about 190 accounts with more than 100,000 SP.
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MVests has always been the way I’ve seen it done.
1 MVest = Minnow, 10 MVests = Dolphin, 100 MVests = Orca, 1000 MVests = Whale.
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I added the purple (36) and the red (318) on Arcange's Steem Statistics. While the red is technically a huge dolphin as apposed to the green (a smaller dolphin), the disparity in voting power is enormous. In terms of influence and account size I think 354 represents the elite accounts on Steem. For the purists among us the number of whales would be 36. Sorry if I made things confusing by not showing the math.
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Red is Orca {{{hush}}}, not “huge dolphin”.
In the two years I’ve been here, there have always been five levels of Steemian:
Whale
Orca
Dolphin
Minnow
Plankton/Redfish
Yeah, maybe I’m a bit of a pedant.
Granted, for some reason I’ve never understood, orcas don’t get talked about much.
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So they are both whales? You mean I got it right the first time?
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Now we’re going down the rabbit hole. 😅
Because of their sharp teeth, orcas are called “killer whales” but they’re also part of the class of “oceanic dolphins”:
https://en.m.wikipedia.org/wiki/Oceanic_dolphin
Mixing metaphors, they’re neither fish nor fowl.😜
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Without getting into a heady discussion about animalia (vertebra phylum if you will), can we just agree that 354 is a good number to describe the upper echelon of Steem for purposes of discussion? Hell, we could round off at 350 if that would help people to get with me on this. If a group needs to chip in to help maintain the infrastructure, I think they are a good place to start.
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Increasing inflation to fund SPS isn't improving incentives for content creators, curators, and witnesses, who are the backbone of value creation on Steem. While doing so makes the numbers bigger, it still drains the beneficial impact of those folks to fund improvements that inure directly to stakeholders.
Just as raising the minimum wage is pointless when industries raise their prices to compensate, raising inflation and still taxing rewards only obfuscates the drain on incentive to create benefits to investors in Steem.
I reckon that VP is based on stake, and funding SPS should be also. Those with authority to make a decision actually are responsible for it. Those that benefit from SPS should also fund it. Stake, not rewards, should be the basis for funding SPS, and as unpalatable as that may be for some, off-shoring costs isn't ethically acceptable, nor does it actually benefit stakeholders in the long run. It is too easy to look at this week's ROI and note that by off-shoring expenses to fund SPS one has prevented a decline in ROI today, when decreasing incentives to benefit investors over the long run but conceals the actual costs in unquantifiable ways.
Hiding a thing doesn't make it go away.
Forthrightly taking charge of it, however, potentiates careful application to results that can be of most benefit. I recommend the latter, rather than obfuscation, which typically also engenders increasing cost and reduced efficacy.
Thanks!
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Be aware that inactive delegating SP brings you some 17% nowadays so some 10% net; increasing the inflation brings the net return down;
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An interesting option for consideration. I like it but I can hear all the anti-inflation arguments flying thick and fast. I have similar concerns to you and have expressed my preference as taking 10% out of the total reward pool to begin with and then leaving the rest to be distributed exactly as it is now. Everyone takes a small but equally proportional reduction in payout, steem moons from all the awesome developments that should flow from this funding, everyone wins proportionally in the long run.
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Thanks for this beautiful proposal.
I haven't voted on either of those solutions because I don't like them. And I am not willing to go there and vote for the one I destest less.
That's how people are electing their leaders everywhere and it's not working.
Voting for the lesser of two evils is no option for me.
Thus, I fully agree with your proposal of increasing inflation for a while. And what better time to do that, than during a bear market? We're already going down anyway. It's not going to get any worse if we increase inflation for a while. 😉
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The original proposal was to increase inflation. But from the sheer number of nay votes, it was clear this wasn't a popular option.
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Hi @taskmaster4450!
Your post was upvoted by @steem-ua, new Steem dApp, using UserAuthority for algorithmic post curation!
Your UA account score is currently 6.284 which ranks you at #224 across all Steem accounts.
Your rank has not changed in the last three days.
In our last Algorithmic Curation Round, consisting of 187 contributions, your post is ranked at #5.
Evaluation of your UA score:
Feel free to join our @steem-ua Discord server
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Thank you so much for participating in the Partiko Delegation Plan Round 1! We really appreciate your support! As part of the delegation benefits, we just gave you a 3.00% upvote! Together, let’s change the world!
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You make quite the compelling case here. Only your proposal would effect all evenly!
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This post has been included in the latest edition of SoS Daily News - a digest of all you need to know about the State of Steem.
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I think you've got the right idea. Bitcoin really is the tail that wags the dog in this case. Bring on the added infation. It really is the same as everyone contributing in proportion to their stake.
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It is not the same as contributing proportional to stake at all. There are accounts that NEVER post or comment, that don't even curate at all, but only flag. There are accounts that do NONE of those things, but funding SPS on rewards will increase the benefits to those accounts and increase their power relative to all those accounts that effect the creation of value, because funding SPS through rewards will decrease the incentive to effect the creation of value, but it will not be paid for by accounts that don't create value.
Why do you want to give such stake a free ride on the coattails of those creating value?
Fund SPS via stake directly, as the benefits of SPS will inure directly to stake, not rewards. Doing so increases the incentive to invest in Steem by providing funding clarity and certainty, while not draining the beneficial impact of rewards generating activity that creates the value of Steem.
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