Changes to Curation Reward Allocation

Another day and more ongoing discussions regarding the curation rewards.

We all want Steem to succeed and that means recognizing everyone's contributions and rewarding the behaviors that maximize the value of the platform. These are the behaviors that we want to reward:

1. Showing up every day
2. Identifying quality content first
3. Quality Discussions on high payout posts
4. Building Reputation on a Single Account

In addition to rewarding these behaviors we want the interaction with Steem to be fun.

Status Quo

Recent graphs of the current reward calculation system show that @ned is getting twice the rewards for curation as the highest earning authors. A total of 15 accounts are getting 99% of the curation rewards. This is not what we intended and therefore must change.

The top curve shows the concentration of curation rewards. The bottom curve shows a comparison to content rewards.

Smoothing the Curation Reward Curve

Thanks to feedback from many intelligent people we are going to smooth the curve for curation rewards to make sure that far more people get a meaningful payout. We have fixed the math such that the following statements should be true with respect to curation rewards on everything prior to July 4th.

1. those who vote early make the most when others follow them.
2. there is a small bias toward concentrating funds in a single account (n*log(n))
3. the more steam power you use, the bigger your rewards
4. 50% of the rewards on a post are distributed to curators.

The new curve weights curation rewards according to the following equation:

  W(R) =  (R) / (R+S)

S is a constant chosen to produce a reasonable distribution. More details on this equation and the values we pick for S will come in a future post.

Future Allocation of Rewards

Going into the future we would like to see greater engagement in the discussions. People should be rewarded for sharing and adding value to existing content. It is the comments that are most accessible to the most people and which are equal opportunity. Any new user can add an incredibly valuable bit of information to a comment.

Making meaningful money from curation depends upon having a larger balance than new users get. It doesn't matter the interest rate, the amount you earn on $3.00 will still be small in absolute terms. This means that existing curation rewards are a game for people with much larger balances who seek to maximize a return on their balance.

Discussion Rewards

25% of a post's payout will be distributed to the discussion on that post using an algorithm similar to how Steem allocates rewards among all top level posts. This means each popular post creates its own discussion bounty.

Curation Rewards

25% of a posts payout will be distributed to the curation rewards using the curve defined above.

Activity Rewards

In an earlier post we suggested rewarding activity as a means of balancing out our heavily biased n³ curve. Now that we have a curve that we believe is more fair. activity rewards should no longer be necessary. If you are actively curating then you should get an income from curation rewards similar to (or better than) what you would get from the original activity rewards.

Justification for Slight Bias in Curation Rewards

As a platform we want to encourage people to build a reputation under a single account. This will minimize sock puppets and maximize efficiency. This means we want there to be a greater incentive to combine the balances of two small accounts into one larger account. The bias in the old curation reward algorithm was way out of proportion, but the new bias of n log(n) is much softer than the old bias of n^3. This means account holders benefit the most by increasing their stake, but the benefit from increasing your stake decreases as your stake gets larger. In other words, increasing your account balance from $5 to $100 will have much more impact than going from $50,000 to $100,000.

Conclusion

We are actively trying to listen to all sides and make sure that we get the right mix of incentives to make Steem a rewarding place for everyone. We will have actual numbers to show you Monday.