Seven different ways how HF21 could backfire

In this post, @justineh eloquently described what HF21 is all about and what, if all goes well, HF21 should bring us. For me as both a tech geek (data engineering, cryptography, computer forensics, statistics, software engineering, information security) and a fiction author (alt history, mythpunk, sci-fi), explaining highly technical subjects and writing for a broad audience have always very much been separate worlds, and I greatly admire people who can truly combine the two without either dumbing things down too much or getting overly verbose.

While I'm not sure I can succeed, in this post I want to try and follow @justineh's luminous example in this post.
@justineh wrote about what HF21 is supposed to do. What it is designed to do. What the happy path would look like if all goes as projected.

But what if it doesn't? What if the happy path doesn't play out and parts of HF21 backfire? What could be the consequences? In this post that I hope will complement @justineh's post by looking at just that.

Seven ways how HF21 could backfire.

1) Killing social interaction

One place where the separate parts of the EIP really stack up is the place where much of the platforms social interaction lives. Comments and comment up-votes. There are many smaller accounts whose main contribution to the platform is valuable social interaction and for who the $0.02 .. $1.00 up-votes by minnows and dolphins are the sole source of income. Adding up the effects of SPS funding, the 50/50 split and the convergent linear reward curve and keeping in mind that there is a so called dust-level threshold below what payout does not occur, the sum of it all is quite a blow to the commenting realm. A $0.10 up-vote on a comment that used to bring in 0.075 to the commenter, will only bring in 0.021 after HF21. Only a fraction above the $0.02 dust level threshold. A $0.09 up-vote on a comment that currently would bring in $0.067, after HF21 will yield no reward at all. Will the 71% cut in revenues from comments currently making $0.10 and up, and the dustification of the up-votes on all comments currently making $0.02..0.09, dissuade a large portion of the current social interaction on the platform? It could. Both commenting and up-voting of comments are very much disincentified by the combination of SPS funding, the 50/50 reward split, the convergent linear reward curve and the $0.02 dust level threshold.

2) Hindering onboarding and driving away smaller fish

It is not just social interaction that could suffer from the stacking up of the combination of SPS funding, the 50/50 reward split, the convergent linear reward curve and the $0.02 dust level threshold. New accounts as well should find it harder to grow from redfish accounts with zero followers and a mere dozen SP delegated to it to minnow level and above. Many smaller accounts will see their revenues go down. If we consider that STEEM competes with add revenue sharing platforms for content creators, it could be expected that HF21 not only would hinder the potential for onboarding content creators currently making money from ad revenue sharing, but could also drive newer and smaller content creators to add revenue sharing platforms.

3) A flourishing bid-bot economy

A third way in what HF21 could backfire would be if it ended up promoting the bid-bot economy beyond its current shape and size. There are several ways how the bid-bot economy could end up being stimulated by HF21.

• The convergent lineair reward curve could stimulate the use of bid-bots in order to beat the curve.
• The 50/50 reduces ROI for bid bot users and increases it for bid-bot owners. This could result in a downward price correction for bids, what in turn frees up funds currently being pumped around through bid bots and create demand for more bid bot delegated SP.
• The down-vote pool with free down votes makes self votes an easy and fully designating target for policing initiatives, this could drive passive stake holders to delegate more of their stake to bid bots.

The combination of these incentives could potentially create a boost to the bid-bot economy and as such increase rather than decrease the level of false curation on the platform.

4) Passive stake holders selling

The EIP assumes passive stake holders can be incentified to become active stake holders. But what if they can't and all the EIP does is incentify passive stake holders to move their stake to other investments. A massive sell off could result and this could potentially dramatically drive down the price of STEEM.

5) Escalating flag wars

A fifth way that HF21 could backfire would be escalating would be if the new free down-votes would end up to escalating flag wars. Today a sizable percentage of down votes can be attributed to retribution. It is hoped the pool will create incentive to act against undesired behavior, but what if larger stake holders who have invested in a specific less desirable business model won't go down without a fight? The flag wars could quickly escalate and valuable accounts could get decimated in the process.

6) Bad behavior shifting up-curve

The convergent linear reward curve is aimed at specific types of bad behavior taking place at a specific range of post value. But as the curve doesn't scale incentive across the post value spectrum, it is quite possible for poor behavior to simply shift up the curve. So while the curve might dissuade a dolphin from acting badly at scale X, because it doesn't do the same for an orca at scale Y, it might end up just shifting bad behavior to next fish size accounts.

7) Traders losing faith

Finally, with the EIP claiming to address the economic system of the platform, and with exactly zero measures working against inflation, the one property of the STEEM blockchain that really touches the economics of the world traders live in, the seventh way how HF21 could backfire would be by making traders lose faith in a coin that fails to address what they believe to be the prime economic shortcomings the STEEM coin. If this happens, this could potentially result in a huge drop in price of STEEM.

Push EIP to HF21 or have an EIP kill-switch?

Please note that this is meant to be an objective iteration of seven possible ways in what HF21 in its proposed form could potentially backfire. I am not saying HF21 will backfire in any of the above ways. I am saying it might backfire in one or more of the ways above and possibly in ways that I didn't think of. The important thing to realize is, I think, that any of the above scenarios is a viable way in what things could play out after HF21 happens, and we should probably consider what should happen if it does.

One way to deal with the potential of the above seven scenarios would be putting in a kill switch into the hard fork. Just roll out HF21 with proposed features and put in a kill switch for the witnesses to use at their discretion if things end up going south in any of the above ways.

Alternatively, the EIP could be delayed to HF22 while ways are examined to minimize the probability of any of the above doom scenarios playing out.

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