Can Activist Investors Exist On Blockchains?

in LeoFinance4 years ago (edited)

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I read the following fabulous post by @steemmatt:

https://peakd.com/hive-148441/@steemmatt/the-cost-of-losing-hiveans-our-adoption-plateau-chinese-bamboo-tree-analogy-a-solution

His reply to me in the comments was particularly insightful, and really got me thinking:

For years I've tried to address the large lack in business understanding and people-are-capital awareness. That's to be expected, but it's inexcusable to not adapt for the betterment of the entire ecosystem, economy, and user base when it's abundantly clear that it's needed.

What makes people's mindsets different here? How does one person hold a bunch of stake, and uses it at the expense of everyone else, versus someone who uses theirs to attempt to enhance the value of their existing holdings? In my mind, it is a lack of common sense with regard to business that leads someone to take the former approach. They have a scarcity mindset, which is the antithesis of the world of abundance that cryptocurrency and blockchain is creating. The closest thing I can think of in the business world, to someone who buys stake in an enterprise and uses it to influence outcomes, is the activist investor.


What is an activist investor?

According to Investopedia, activist investors are:

"known for are buying large amounts of a company's stock and then pressuring the company to make significant changes in order to increase the stock's value." src

One recent example is the attempt of Elliot Management to oust Jack Dorsey as the CEO of Twitter. Despite that attempt ultimately being unsuccessful, Elliot was still able to get four board members appointed. src

One thing to keep in mind, being an activist investor doesn't automatically make you right. If you're not taking a long term view, or your ideas ultimately damage the enterprise, things can go very badly. The hostile takeover of STEEM by Justin Sun by purchasing the development fund is a very good study of what is possible if your ideas are bad. Leading to my next point...


Can there be activist investors in crypto and blockchain?

For most chains that is difficult. A whale buying a huge amount of bitcoin for example couldn't use that to directly influence the proof-of-work blockchain. He would need to use those funds to try to influence a widely dispersed set of individuals. But there is a type of blockchain where an activist investor could feel at home...


And then you have Delegated Proof of Stake (DPOS)

DPOS is paradise for an activist investor in the blockchain space. You can have activist investors large and small. The ultimate example for me on STEEM and now HIVE is @theycallmedan. He didn't build his stake by ninja mining, reward farming, or selling votes. He built it by taking his old fashioned fiat money and buying a boatload of stake. He didn't do that to farm the reward pool, and run away with a bunch of shitcoin to dump into bitcoin. From what I can tell, he genuinely wants to use his influence to grow his investment (prove me wrong). You only need to observe his actions to validate his mindset. Another one that comes to mind is @azircon. I am rather biased, but in this person I see a whale-sized stake who operates with very little regard to his own reward, only to do what he thinks is right to grow the value of his holdings. I have significantly less stake, but I still consider myself an activist investor with a similar mindset to these folks.

As I stated previously, using the example of the hostile takeover of Steem by Justin Sun, a bad actor can really do a lot of damage if his activism doesn't align with the needs of the greater community. As Uncle Ben said in Spiderman, "with great power comes great responsibility".


Why is DPOS so good for an activist investor?

First off, there are direct monetary incentives tied to votes. If a stakeholder feels like someone is abusing his investment by farming rewards, he or she can remove those rewards. If they don't like the contribution a developer or witness is making, they can simply remove their witness or proposal system vote. You have a direct line of communication to other investors, and users. You can get instant feedback on your initiatives.


How do you spot someone with an activist investor mindset?

There's opportunity cost to taking hard earned fiat or bitcoin and investing into an altcoin project. If you see someone who has bought any sized stake with their own money, and uses that stake, not to simply extract value, but to create it. That person has the mindset of an activist investor.


You don't need to invest a bunch of money to have the same mindset

What you do need to do, is take a long term view. To focus on creating value and not extracting it. It doesn't matter how many DPOS tokens you stack if they are worthless. Use what stake you have to create value for others, and that value will come back to you ten fold. Have a mindset of abundance, and don't play as if you're in a zero-sum game, because it is not. As a stakeholder, if I lose, we all lose. It is shared fate, and mutual self-interest.


Thanks for reading! As always, your engagement is appreciated.

courtesy of @thepeakstudio

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Well written post on an important topic @joshman! This sums it up, for me:

"What you do need to do, is take a long term view. To focus on creating value and not extracting it."

While I haven't written any more about it in a long time, some of my first posts were on the topic of adding value. And what that meant to me from my career, most of which was involved in building business relationships. Foundational to these are mutually beneficial transactions, i.e. win-win scenarios. Otherwise, you can kiss long-term good-bye ...

"As a stakeholder, if I lose, we all lose."

Absolutely. I hope to see the day when those of a similar mindset to yours and those you list are clearly present in much, much greater numbers ... Resulting in a corresponding (or greater!) decrease of those on the other side of the "ledger" ...


P.S. Downvoted your own post?! And, in so doing, reducing the payout to your chosen beneficiary? (@snoochieboochies?) None of my business I suppose, but did notice these details ...

P.P.S. An edit assist (unless I am missing something ...):

"In my mind, it is a lack of common sense with regard to business that leads someone to take the latter former approach."

THE EDITORIAL BOUNTY GOES TO @ROLEEROB!

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@snoochieboochies is my tertiary alt. I try not to put all my eggs in one basket, so once my account gets orca-sized I spin up another. Just putting some of those rewards up for grabs for more worthy posts. A vanity move? You can decide for yourself! :-D

"Back in" for a bit to close out a long day @joshman, you have provided me a blessing to end it with a pleasant surprise. Lots of surprises these days, but pleasant ones are in short supply ... Thank you!

Not claiming humor to be my "strong suit," I was nonetheless tempted to have a little fun and joke about refreshing your memory that upvoting comments was "outlawed" with the EIP changes in HF 21 / 22 ...😉

Seriously, with whatever pull you have with the "big boys upstairs," you may choose to use your influence to convince them of the need to make additional changes in HF 24, whenever that is done. I think encouraging engagement on our posts is undervalued "in here." And changes should be made to the EIP to set that right ...

As a key focus of your post is on adding value to our blockchain, I think good exchanges on our posts really increase the value of them. Particularly when they generate civil and respectful exchanges "in the market place of ideas" ...

With the EIP changes in HF 21 / 22, every indicator I have seen indicates they actually reduced this valuable aspect of engagement, rather than improve it.


P.S. Thanks for the input on your alternative accounts. And your thoughts behind creating them. While I have many "free" accounts I could create, I have never yet decided what I would do with more than one. Except the possibility crossing my mind occasionally about a new community. We don't have nearly enough ... 😉

 4 years ago  Reveal Comment

I think activist Investors can exists in crypto and blockchain This is because anyone is particularly free to bring in a huge amount of money into a blockchain project, @theycallmedan is an example and he's influencing with @3speak quite positively too. it can be advantageous as well as oligarch in nature too. However it's very much likely possible infact in future that's basically what we'd see in crypto and blockchain

Thanks for your comment. Social pressure can be very important too!

I also got a nice reply from him who made me settle for a while and think about it, how could we all help more and get involved into productive activities for the blockchain?

Thanks a lot. While everyone's views can feel right to them, sometimes it just takes time or enough exposure to alternative views before they realize that things may not be as ideal as they thought. Change isn't easy.
Some of us see the need/opportunity sooner, yet don't have the influence to do much about it. For me, my best tool is trying to speak to those who can more efficiently do something if anything resonates with them.

I really hope we manage to take this somewhere, he's definitely a great person with lots to learn from! 😃

A wise dude to be sure!

DPoS might seem vulnerable -in the case of steem it was- here it is more difficult for one to takeover the chain, but we've seen what the community can achieve when they rally together, but also when they have to do with bad actors.

Which reminds me that we need to make an in depth discussion all over again so that the chain will be bulletproof against any kind of threat.

Which reminds me that we need to make an in depth discussion all over again so that the chain will be bulletproof against any kind of threat.

I feel like time and distribution of stake will be the ultimate answer. As much as this is uncomfortable for some people, the large holders who only extract value, need to have that rate of extraction minimized, so that value creating stakeholders of the future can grow their relative stake.

Activist = Activity

We have a unique opportunity. We can help to maximize our holdings through the activity we take. This includes posting, commenting, and upvoting.

Each of these activities adds to the overall value of the ecosystem. Unlike stocks where we do not have enough influence, here we can all contribute to the success of the overall system.

This is a great post @joshman and filters through to all the different applications and tribes.

Posted Using LeoFinance

Much appreciated. It does create a great opportunity to both serve our own interests, as well as the interests of others. It is up to all of us to ensure that a good balance is maintained.

Totally agree with @theycallmedan's mention. Aside from him, I can vouch @roelandp as one of the top leading activist investors in Hive. Their dedication to push Hive to its limits is impeccable.

A worthy edition to our Mount Rushmore!

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Yes indeed! Thanks maestro for this amazing piece!

Judging by this line

"What you do need to do, is take a long term view. To focus on creating value and not extracting " I think should I say steemit or hive has lost a lot of people who should be regarded as activist investors.

What people did not understand is that the value you create will benefit you ten times in the future. It is not about you curiuous about how to manipulate for your gain but think how to imapct for others gain and to be surprised you will see that those value you created will turn out to benefit you ten times.

Those people you mentioned like @theycallmedan now benefit ten times why because of the value they have created.

Appreciate your input. It's a tried and true strategy to reap huge rewards by providing huge value to other people. Unfortunately, that isn't so obvious to some people.

This post earned a total payout of 0.068$ and 0.034$ worth of author reward that was liquified using @likwid.
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I'm learning again a new term and a new concept (for me) through this post. As far as I have observed, those investors who came in late can generally be categorized as activist investors. I mean I could be wrong, but those you mentioned as examples were relatively new compared to those whales who have been here since the beginning.

Since it is now proven that having an activist mindset is beneficial to everyone in the long run, I guess the challenge is to pressure those old whales who are still stuck in their old thinking. As more people are doing good and adding value to this space, those who do nothing but extract value will become more apparent. They can now easily be called out.

This is sort of Tragedy of the Commons in play. More value should be added than what is extracted or else, everyone will fail and suffer the consequences.

Thanks for your comment, there could be a huge difference between how people view a stake that was easier to obtain (essentially house money), as opposed to someone like myself, who must weigh the pros and cons of say, purchasing more Bitcoin, Ethereum, or other project that interests me.

That could explain the difference in behavior between the two types of whales.

good info

Thanks, I thought so too!