Surity Bonds - Decentralized Accountability for Actions that Harm Community

Steem suffers from a problem where rewards from voting abuse are privatized while the costs associated with the behavior are socialized. A sustainable system needs to have well balanced rules. For every negative action someone might take, the community must have an equally powerful reaction. Under the existing rules someone with Steem Power can use their voting behavior in ways that most people judge as negative. These could include:

1. Rage Flagging to punish others / all of Steem
2. Colluding with others to extract undeserved funds from reward pool without work
3. Colluding with others to flag those who would draw attention to abuse

There is currently a very weak incentive to vote rationally: its impact on the future value of Steem. 99.9% of the user’s own less than .1% of the STEEM which means that 99.9% of the cost of their bad behavior is born by the community. Any residual cost born by the bad actor is often perceived as less than the emotional or economic benefit they derive from their behavior. Often times they can inflict more harm on others than it costs them. People are spiteful and will often "burn the place down" even if it harms themselves equally. The problem is exasperated by the fact that only those who post have anything to lose. A misbehaving voter who never posts takes no risk and cannot be countered by flagging. Some bad behavior yields a positive return on Steem Power by generating more income than the price of Steem falls.

There is a real tragedy of the commons here. If only one person misbehaves then it will have little impact on Steem as a whole, but if many people start misbehaving the aggregate effect can be greater than any individual. What is worse is that no individual feels personally responsible for the outcome because their own contribution was so "small".

We can mitigate these problems by giving those with voting power something to lose personally. There are two options for things they can lose:

1. Voting Power (aka future influence)
2. Steem Power (aka future influence and value of account)

Lets imagine a system where any user can file a complaint about another user’s behavior by submitting a post in the proper category. This post will be voted upon using the same process of all other posts. After 24 hours the post will have either a positive or negative payout. If the complaint has a positive payout, the filer is rewarded with the payout and the offending user’s Steem Power is negated by 10x the payout received by the filer. SP cannot go below the account creation fee.

Now that Steem Power has a 3 month power down period and the inflation rate of STEEM is low enough that speculators no longer need to hold Steem Power, we can make Steem Power into a bond. In exchange for taking a risk these bonds pay interest that should more than offset any small losses from offending the community.