What are incentives?
Incentives encompass rewards or consequences that sway the behaviors and choices of individuals engaged in a blockchain network. These participants may include transaction validators, block creators, token senders or receivers, app developers, or any other entity involved in network interactions. These incentives can take the form of financial rewards like fees, subsidies, or tokens, as well as non-financial ones such as reputation, acknowledgment, or impact. Crafting these incentives hinges on factors like the network's objectives, the consensus algorithm employed, the degree of decentralization, and the attributes of the participants involved.
Why are incentives important in blockchain networks?
Incentives play a pivotal role in blockchain networks by ensuring that the actions of participants are in harmony with the network's objectives. For instance, on the HIVE blockchain, if the aim is to uphold security, decentralization and deter attacks, incentives should dissuade nodes from engaging in collusion, censorship, or transaction falsification. Similarly, if the goal is to enhance efficiency and scalability, incentives should motivate nodes to swiftly process transactions, prevent congestion, and utilize resources efficiently. Furthermore, in pursuit of fairness and egalitarianism, incentives should strive to equitably distribute rewards and influence among participants.
What are the incentives on HIVE?
For block producers
Hive operates on a delegated proof of stake (DPoS) consensus mechanism, which means we, the community members, or token holders, delegate our voting power to a selected group of nodes that validate transactions and earn rewards. These witnesses are incentivized to run their nodes consistently and also maintain their servers so that they’re constantly processing blocks, in return for processing blocks they will get $HIVE tokens.
For content creators
The first incentive for creators is economic. Community members are said to be rewarded with a percentage of the rewards pool for our creation of high-quality, educational, insightful and engaging content. What constitutes “good” content is, of course, largely subjective.
I’m of the opinion that a lot of content I consider to be “good content”, flies under the radar of individual curators and curation guilds. Since there is currently no incentive to give your out-of-pocket rewards to content that was published outside of the 7 day reward window, older content rarely gets rewards.
The inleo team has mentioned that content published from the inleo front end is eligible for evergreen rewards based on the number of page views it gets, I still think this is an area the Hive blockchain could improve on.
It could also be argued that in a blogging ecosystem where everybody is a creator and nobody is a consumer, the incentive is to write as many blog posts as possible with catchy headlines and good looking thumbnails. Not too many though, as to not alert the Hive spam police. This is up for debate.
Aside from the rewards pool, there are other incentives on HIVE such as reputation and the fact that text can be stored in an immutable, decentralized way, meaning you own your data and your community potentially forever.
For users of the Hive and $HBD tokens
As users or “spenders” of any one of the native tokens of the Hive blockchain, the incentive is to have non-KYC, decentralized and fee-less form of sending value to other users. In the case of $HBD, you can hold a crypto asset without exposure to price volatility, which is useful for folks that are risk off mode.
Not only can you send it from your desktop and sign the transaction with Keychain, you can also use keychain on mobile and send HBD/HIVE from there OR use v4Vapp to pay Bitcoin Lightning invoices. This last use case has huge potential in my opinion, because it gives anybody that is earning $HIVE or $HBD in one way or another, options to use it in every day transactions such as paying for lunch or even buying items at a convenience store.
I've made a few videos using Hive Keychain and v4vapp to pay for food and drinks.
Please check out some of my videos here:
https://peakd.com/hive-151961/@alex-rourke/dlqfdnft
https://peakd.com/hive-151961/@alex-rourke/dbzxyzkg
https://peakd.com/hive-151961/@alex-rourke/wbqphjpp
https://peakd.com/hive-151961/@alex-rourke/nsxqczdc
https://peakd.com/hive-151961/@alex-rourke/xhnhspef
For developers
Now, because I’m not a developer myself, I don’t have a full understanding of the reasons for which developers might chose to build on HIVE as opposed to other blockchains. I will gladly update this part when I get more information. But from what I’ve heard from the likes of Blocktrades, the Hive Application Framework (HAF) allows developers to build using common programming like SQL Database programming which can be done with common languages such as Python as opposed to specialized languages like Solidity which is largely used to write smart contracts on blockchain networks like Ethereum and could be considered a difficult programming language to learn depending on the programmers prior experience.
Source: The Crypto Maniacs podcast ep 92 with Blocktrades.
These are some of the incentives I've identified on the Hive blockchain as well as my thoughts on the current rewards distribution system on Hive. As the title suggests, it's far from perfect, but it's achieving one of its goals which is distributing the token far and wide. Can it be improved? most definitely. Is it providing value as it is? absolutely.
What are some of the ways you think the rewards distribution system could be improved?
Posted Using InLeo Alpha
There's no perfect system, but Hive seems better than other options I've seen. Part of the issue with rewards distribution is that it is just such a small community of maybe a few thousand active users. The whales dominate when it comes to deciding who earns. If there were ever millions of users then the whales would have less influence. Of course most people are just trying to earn whatever they can, but there is some great content here. I follow musicians and artists who I really enjoy and all the votes I give them add up to more than I have given to others via schemes like Patreon. Of course I have a fairly large stake, but if someone could bring in a few thousand fans who each buy a stake then they could be getting a few bucks and the fans would earn too from curation. It would be a different place with far more users, but then it needs that to be really viable. For now it's just a small club.
I do accept that my earnings are pretty good really, but I am not against seeing others doing better. I can keep earning from curation anyway and I will try to curate well.
As a development platform Hive has advantages in speed, free transactions and lack of restrictions on how you can use it. It may just need more features to make more things possible.
Thank you for your thoughtful comment Steve! You are a hard core Hivean who lives and breathes the Hive way. I'm working on a blog post titled something along the lines of "Orcas work together" I got the idea from a BBC documentary on how Orca's work as groups to hunt in the wild. The analogy here being Orcas on HIVE should work as a unit to reduce the influence of whales and help identify (and incentivize) good quality content, and valuable community members that foster Hive culture. I expect to join the ranks sometime around Q4 2024.
I agree that there's great content here. For example this 4 year old piece which explains inflation on HIVE. Under-rewarded? I think so. Is that the reason she left HIVE? I couldn't say.
Plenty of good posts don't get the rewards they deserve whilst others get auto-votes regardless of the quality. That is a fact of life here, but not a reason to give up hope. At least peakd gives you the option to check for more recent posts by that person so they could still get something if they stay active. A lot of my early posts made nothing, but I was having fun anyway.
I manage to keep my enthusiasm up, but I get that it can feel like a slog for others. We each have to do what we can to improve that.
I agree with a lot of what you said. I also think that Hive's tokenomics is really great. I really like the voting system. It is beneficial to both the voter, and the author. Compared to other systems where it is every man for himself, Hive has a lot of things that promote helping one another. There is the delegation of HP and RC, curation trails, and I think it is one of the first to enable renting of NFTs (in Splinterlands).
Yeah, I think some of the aspects of the rewards distribution for authors and curators are OK in this early stage of the Hive blockchain, but is it sustainable with the development in AI, for example?
Would I be able to one day create 100,000 Hive accounts each with it's own personality and area of expertise and have them post 1,000 word blog posts twice a day?
I think incentives will have to shift away from content creation and more toward validation of transactions and providing liquidity on platforms like leodex.io
I agree. This scenario is definitely something that a lot of Hive users are afraid of. We still have accounts that continuously watch out for AI created content and downvote them. For now, the use of downvoting is enough to fight against that scenario, and it is possible to trace the ownership and do actions against it as well.
That is why I think taking care of one's reputation is important. I think humans are social creatures, so I don't think content creation will or should truly disappear from Hive. Validating transactions and providing liquidity are important. Hive has a lot of potential applications and it can handle more than just these two.
Since Hive has a text based database, some are even hoping it can replace most of what are offered in Web2. We have the possibility of replacing Instagram, Twitter, YT, FB, etc. Actual ownership and the earnings can help do that.
#hive #posh
sharing is caring
Thanks for sharing this with your Twitter audience.
ur welcome sir. promoting hive content is my passion.
You should also build up your audience though.
where? on twitter?
Yeah, I would say yes. Otherwise, who are you really sharing this content with? Who are you promoting it to?
My two cents.
Sure i am on it.
Well, I can’t add more to the payment system. It isn’t perfect but better than the payment system of other platforms…
Which ones do you know of?
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