Return Proposal : Its Importance in Decentralized Hive Fund (DHF)

in OCD3 months ago (edited)

Decentralized Hive Fund

I think it is timely to discuss about the Decentralized Hive Fund. About a month ago, I wrote a post about it, mainly to raise my personal awareness and how to evaluated a DHF. I asked some open questions to the community developers primarily, as most of the DHF is related to developers who is working on some hive related tool, I didn't get too many public responses in terms of how to evaluate these proposals. I did receive quite a few private ones, which led me to write this particular post.

The Decentralized Hive Fund (DHF) is an on chain decentralized autonomous system that allows users to submit proposals for funding and vote on which proposals should be funded.

Hive_dao.JPG

Source

I urge people to look into the above definition and associated FAQ here or here.

As it is visible on the image above, the current daily budget for the Hive DAO (Decentralized Autonomous Organization), which is just a fancy name for the community fund, is about 4816 HBD/day. Currently, there are 8 proposal funded by the DHF, totaling 1300 HBD/day.


PositionName/PersonHBD/day
8netuoso275
7good-karma70
6howo275
5yabapmatt100
4steempeak395
3themarkymark20
2netuoso150
1anyx15

How do we evaluate these proposals

Ideally a stakeholder should read each proposal and decide for himself/herself on the merit. I treid to do that, however, when it comes to "funding" I have very little to compare with. So I asked that question on my previous post, but it was mostly silence. So I thought I should give it a try myself.

DHF_data_annotated.jpg

I do a lot of data analysis on my day job, where little is known about the data. So one of the first thing people does in that case is compare the data to itself, and see if any patterns emerge. I plotted the 8 data points on a probability plot (magenta triangles). X-axis is a log-scale. Then I fit a log-normal and a beta distribution on it, those are the red straight line and green curved line. On a semi-log plot a log normal distribution is a straight line. Most natural processes are log-normal, so it is important to compare the data to a log-normal fit. If the data does not fit (as in this case) it typically highlight a pattern.

First of all, at the low end, the outliers pop up. The 15 and 20 HBD/day proposals by @anyx and @themarkymark respectively. They are cheap, easy to understand, no-brainer items from my point of view. As an investor, I like to fund cheap proposals if they make sense.

Median of the distribution is important to me (P50), not the absolute number (because it is not a good fit), but the ballpark figure. But if we take the two low numbers away, the fit is quite good. So a 120 - 150 HDB/day proposal seems reasonable.

Obviously, this is just screening. Then I will have to again evaluate the ones I am considering with more detail, and ask questions to understand the merit and de-merit. It will be upto the person or group doing to proposal to convince me, not the other way around.

Does it Matter?

Right now, I have a dark feeling about it, hopefully with time it will go away. But I did a terrible thing, and checked the current top 30 accounts by HP. I also checked how much does it take to get a proposal funded. The answer is about 23M HP staked/or proxy.

Current_Top_30.JPG

As you can see from the above stakeholders, it really only requires 14 accounts to vote for a proposal and it will get funded. Actually the number will be less, because these are just owned stakes, many of the top 30 account, and also accounts outside top 30, have substantial HP proxied to them. So potentially only 10 accounts can get a proposal funded perhaps. Obviously this is an arbitrary case, as no proposals are funded by those exact 14 accounts. But my point is that we are very centralized and 10 big accounts CAN potentially fund a proposal. Neither a community support nor a consensus is necessary.

What can we do? Vote the Return Proposal

Well, I wrote this post, that is something. Hopefully you are reading it, that is something. But unfortunately "hopefully" ... "doth butter no parsnips"

I love British Humor! Hopefully you do as well. However, the only thing we can do perhaps is raise the bar via @gtg 's return proposal https://peakd.com/steemdao/@gtg/steemdao. It does not ask for any money, but other proposals must clear its threshold to get funded. If we vote it, we raise the bar above that 23M HP number where it currently is. Then hopefully the proposal makers will lobby for the proposal more effectively and ask for our vote. As written, that is the fundamental purpose of the Return Proposal.

PS. As I check, proposal #80 is just outside the threshold at the time of posting. So currently there are 7 proposals that are funded. However, it does not change anything I have described in terms of my thought process. As I mentioned I currently support 2 proposals within the funded ones, and of course I vote the Return Proposal.

Proposals_supported.JPG

I think this discussion can be a civil and valid one, and it will help us to seek the truth.

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But my point is that we are very centralized and 10 big accounts CAN potentially fund a proposal. Neither a community support nor a consensus is necessary.

Seems like decentralization runs from us, and we keep on chasing it. I'm not technical at all but I realize that you can't simply have lets say full decentralization and DPOS...
Regarding proposals I would like to see one day a great mobile app for Hive. I am wanting that since the good old times of Steem. An app that would work great, be simple to use as Facebook is, that would let you post on what communities you wish, have working notifications and simply look and feel inviting for possible new users. Something that I would show to friends and acquaintances and make them understand what this blockchain is about. If it's possible to have a built in wallet that acts as an exchange as well, making it easy to buy and sell HIVE and creating liquidity as well. The man making that reality is definitely a 500 HBD per day in my opinion. It's hard to get mainstream when we don't look and feel mainstream.

I think this mobile app is going to the right direction https://peakd.com/hive/@dapplr/dapplr-account-settings-and-account-transfer-in-action and they are taking seriously into account our suggestions! Ask them to implement your ideas!

This is a very important issue and I'm glad you put together this post to demonstrate how the most powerful accounts ultimately decide on which proposals receive funding. It also shows that if 'staking' is permitted by exchanges in the future, as was proposed by CZ_binance for Steem, centralized exchanges could dominate the DHF and fund any proposals they prefer, including ones that are not in the interest of the community.

At the moment, the majority of Hive tokens are not powered-up onchain but are stored on exchanges. Currently, there have been no statements or actions by the exchanges to launch Hive staking for their customers but there's an obvious trend toward 'staking' initiatives and it's not out of the realm of possibility that this should be taken seriously as a possible attack vector.

As we already have a precedence of exchange involvement, I am certain that our dev team (who, I trust) will take care of that.

Hmm I certainly hope the creators of proposals can't approve their own proposals, that would be a huge conflict of interest. hmm.

Voting return proposal is one way but really we need to evolve the system in some what to be more robust and fair.

Alts can be used for voting for one's own proposals.

The only thing that can improve matters is a more decentralized stake distribution.

In a democratic system, you can vote your own candidacy, can you not? I do not think that is the problem. Problem is the distribution of stake, it is happening, but it is slow. Until that happens, I personally will remind stakeholders:

With great power comes great responsibility.

Nice job and this type of break down data is exactly what we the Community needs more of.

I believe the HPS needs a complete overhaul and allow non-supports to balance the voting, making it more inclusive.

Also, we have ppl wanting past pay and devs/witnesses supporting it, claiming the position is needed, yet no proposals to add elections to fill these 'necessary positions'.

We have a loooong way to go to become decentralized and it doesn't look like the current devs/witnesses are truly interested in reaching that aim.

If they were, the Community would be voting in many more area's, this ability would be under discussion and negative voting would be part of it to create a better balance.

I hope you bring us more information on other areas too in the future. It'll make for popular content, I assure you.😀

"One man’s freedom fighter is another man’s terrorist"

More digging will only make me less popular. Oh well. I think I am there already.

Netouso is making almost 500 HBD a day since he has 2 proposals going. If i were him id make 5 proposals that overlap in work done to maximize the amount i can take from the pool.

Ive been voting the gtg proposal for months.

Raise awareness is the only thing we can do.

If you increase the amount voted for the return proposal, in the current system less popular proposals will never ever receive any funding.
That increases the problem that new devs can't get their project funded even if it only requests a smaller amount.

We need stake based voting so that there is no abuse by scammers, but on the other hand that means that we will always have whales decide who get's funded.

Maybe there is a system to make it more "fair". Maybe double count votes for accounts under 100k HP or something... But that is easily exploitable too. Just create more accounts under 100k HP to get double voting strength.

I am open for ideas...

probably need to develop a human-index, without KYC of course, and mix it with the stake-based voting?

Right now, for an individual, the return proposal is the only viable option. Everything else likely require a HF. Voting the return proposal can be temporary for an individual, un-voting the return proposal is as simple as voting it. Takes a second.

Sometimes I do wonder the merits of DPoS. In a way, if JS wasn't a total jerk and tread carefully he could have ruled the chain and no one could do anything about it.

But then what are the alternatives? I hate this if you can't beat them join them feeling.

Absolutely he could have. He was clueless about what we bought and generally was clueless about DPOS. In addition he lacked vision. He took a perfectly good business opportunity and threw it away. This should be taught in blockchain related business schools in future; hopefully!

From my perspective, there is too much looking into the amount asked for and too little looking into the benefit that the proposal creator brings. I don't think the amount asked for is a big problem for the community. The real matter of importance is how much benefit a proposal brings to the community, and are potential proposals that can bring a lot of benefit getting funded or sitting unfunded?

Kudos to you for starting this conversation. It's imperative that we throw some color on these difficult governance issues now, before @steem.dao becomes a honey pot for the "in crowd." I'm not saying that that is the case now, but I am saying that that easily could become the case if we don't set some ground rules now. Trust me, I've seen great blockchain projects just die because of this exact issue. The Foundation (which is what we used to call DAO's before 😜) gets taken over by whales and they vote themselves high salaries until the token price is just in the dirt. If you can guess which project I'm talking about, I'll give you a full upvote! 🤪

Thanks for highlighting this system, so that those of us with small grubstakes can also feel like we can participate. I recently penned a post about monetary policy with some of these same ideas in mind.

That comedy video was awesome. Glad to see people stepping up to address the community funds before things get out of hand. As @joshman wisely said, the wheels are already greased for some, but how we move forward will be a larger risk.

Hopefylly we are making progress. :)

Good morning sir. Thanks for all your good work here in the community. Please I will like you to check your discord channel for a very important observation. Thanks sir.

Please DO NOT spam my DM.

Please DO NOT reply to this message.

I was just taking a look more clearly at the proposals only today because I wanted an app that's coming on HIVE to get funded. It seems they're pretty far away still and like you mentioned, without big accounts voting, the community consensus isn't just enough to get a project funded. So I'm learning a thing or two here and there and your post gave me a new insight.

I think what he is trying to say is Community does not matter just a handful of votes from elite gets the job done 👍

Absolutely centralized voting - we urgently need to change the system -

How do we change it?
The top brass can change it, we cant and they wont, so kinda end of that conversation really.
Zero effort onboarding
Full efforts are being made on exchange listings and raping funds at the same time.
Put 2 and 2 together and you get?
Some dicks and whole bunch of cunts.
Welcome to decentralisation😉👍

Agree. That is my point.

Dont worry i dont mind saying out load lol
Its a shame everything is set up to be awesome yet the same gatekeepers are playing the same shitty games at everyone elses expense. Glad you and a few others are atleast trying to highlight it although alot more needs to be done what? No idea

Pretty much yea. Haha

Yes zord. It is difficult for some, easy for others. I am learning as well. Hopefully we can learn together.

I've always supported the return proposal except when I didn't (lol - I wanted to try and get markymark's blacklists above it).

I like your thinking. 50HBD is a lot of money. Way more than 99% of non-whales make and surely enough to do some really good work. Time to unvote some proposals.

Edit: I've decided to become a proposal absolutist. Nothing over 50 (except burn and return proposals), everything under 50 except those 1 dollar votes. Time to get value. And nothing is stopping anyone from making 30 X 50 HBD proposals

I always read the proposals thoroughly before voting. I have come to terms with the fact that people have large stakes and that isn't in my control; they have funds and bought tokens when the value was low. To have a bigger say, we simply have to increase your stake to an amount that makes everyone sit up.
Code is law after all.

Yes, that is how it works. However, until we have a lot ourselves, we need to consider and monitor what the larger stakeholders are doing to decide if we like what we see

kudos to you for writing this...This is need of the hour to stop exploitation of the dao fund. If a decentralised fund remains in the mercy of 10-15 voters, it will be mockery of decentralisation.

It's not 10-15 (this article sucks badly, see my other comment).

It's 2.

Thats indeed true and you have a point. Could power be given to each account in the case of democracy based on activity on involvement. For instance, there needs to be a minimun of 25m vested shares plus a minimum of a certain percentage of the active community to get a project funded will be a better concensors mechanism to approve a proposal. I think the return proposal is also a great idea

Possible, will require a HF though, I think.

A lot more people believe there's a sense of exploitation in these funds. Thanks for sharing such a beautiful piece with us @azircon

The current system will always be lopsided. As long as the HIVE coin is associated with governance, that will always be the case.

This is a lot to process as a newer user. I am happy to see someone cares about these meticulous details.

This is the most needed post now. Especially after seeing some of the recent proposals and the existing proposals. I'm not going to go into details as to which is fair and which is not fair but definitely this system needs an update. I also feel that voting return proposal is something that can hold off the situation a little bit more.

There are definitely good projects but honestly, it would be good that the open source projects get the priority support than a closed source project. Nothing against them but I personally feel that it would be fair that way.

Voting Return proposal can harm some of the small proposals or emerging projects but if return proposal is not there, I also feel that too much of abuse will happen to the DHF.

I guess everyone should write post like how we did for witness voting as a community to create awareness about Proposals and the necessity to vote Return proposal.

Last note, people should vote for the proposal and not for the person. I mean people should not vote just because it is their friend who created the proposal.

Let's eliminate Steem.dao. Let's vote on this.

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This is all a bit technical for me, but thanks for sharing.

not funny post, i dont like it

If your job is to analyze data, you should consider changing career path.

1- Whales have two ways to get something funded: either they vote the proposal, or unvote the return proposal. @blocktrades for example is currently voting the return proposal. If he unvotes it and votes for an unfunded proposal, the proposal gets 2 * 5.3M = 10.6M closer to the threshold.

2- You didn't take proxy voting power into account: @theycallmedan has +4M SP, @gtg has +2M, etc.

Now if you want to be thorough, how many whales does it take to get something funded? (p.s. the answer is 2)