This version of the blockchain protocol will make some changes to how rewards are distributed to mitigate rewards earned by spammers. What follows is a brief summary of changes that will go into effect on July 26th at 11AM EST.

Removing Liquidity Rewards

It is apparent that the liquidity reward systems are not achieving their desired effect. We have disabled these rewards until a better solution can be found. This should reduce the amount of liquid STEEM on the market.

Posting Reward Rate Limiting

Each account can post up to 4 top-level posts per day before a new algorithm will kick in. The new algorithm will start taxing any rewards you earn on additional posts in the same day. Here is a chart that shows how your posting rewards will fall in percentage terms for each additional consecutive post.

This algorithm is designed to penalize those who post 100 things with the hope that 1 will go viral and earn votes.

If you post at most 4 times per day then you will never really hit this penalty. If you wish to post more than 4 times per day, then you can still earn more money so long as all of your posts are of equal quality. There will simply be diminishing returns.

If you post 10 low value posts in one day and only 1 of them “hits it big” then that one popular post will only get to keep about 15% of what it would have earned it it was the only post posted that day.

Comments are not affected by the posting reward rate limiting algorithm.

Preventing Sybil Attacks

The primary thing that will prevent sybil attacks on this algorithm is that users will eventually discover most of their content from their feed. Their feed will be produced by the people they follow. Users will be limited in the number of people they can and will follow.

A spammer using multiple accounts to bypass the posting reward rate limiting will find that most users will not see their post.

Changing Payout Periods

Originally posts would pay out a stake-weighted 24 hours after each vote. We are changing this to a stake-weighted 12 hours after each vote. The result of this change is to cause content on the “trending” page to rotate faster. Most content will still take over 24 hours to payout from the time it is posted.

We are changing the process for secondary rewards. For 30 days after the first payout a post may still accumulate new votes and at the end of 30 days one last and final payout is made. After this time, additional votes have no impact.

Preventing Edits after First Payout

To secure posts against defacement, it will not be possible to edit any post after the first payout. Future features via custom operations will allow authors to amend posts.

Preventing Replies after Second Payout

After the second payout on a discussion, the thread will be locked and no further comments may be posted.

Justification for Limits

Steem is growing rapidly and the amount of content being created and added to the blockchain is growing. It is critical for us to carefully manage the amount of data that is relevant to the blockchain consensus process. By making posts and discussions immutable we can remove them from the consensus state.

Power of Custom Operations

While the payout algorithms will prevent posts and comments from being created after the second payout, it is still possible for custom operations to enable authors to make adjustments to their posts. These adjustments will be made / interpreted separate from the payout process.

We fully recognize the value of having posts that can be edited at any time, discussions that can go on for ever, etc. These kinds of features can be implemented, but because they do not impact the distribution of rewards they do not need to be part of the current consensus state.

Misc Bug Fixes

This release also contains a number of bug fixes that impact accuracy of transaction history. This should hopefully reduce some of the issues facing exchanges at this time.

More information can be found here: https://github.com/steemit/steem/releases/tag/v0.12.0