Some information about the Hive(previously steem) proposal system/sps/steem.dao/hive development fund/hdf

in #hive3 months ago (edited)



I am reading quite a bit of stuff on here from misinformed people, so I thought I'd do a refresher on how the SPS works.

the sps in a nutshell

it's pretty simple, 10% hive inflation goes to a specific account steem.dao as HBD (hive backed dollars, a token that tries to stay at 1 USD value).

Then people can create proposals for 10 HBD. Where they ask for a daily amount of HBD. In order for them to receive that money. They need to get votes, it's the same as witness votes so it's hive power of an account + it's stake proxied to it. And he needs to get more votes behind him than the return proposal, is just a proposal that acts as a threshold : proposals with more votes gets paid out, proposals that have less votes don't get paid.

Steem.dao ? I thought this was hive !

So the name. We don't really have a new name yet, there are a lot of propositions, you can see some of them in the title. I'll call it SPS in this post out of habit, but I am indeed talking about the hive proposal system on hive and not the on on steem.

Yes the blockchain code still sends money to an account called steem.dao, we will change this in the future, it's just a minor thing for now and we have much higher priorities at the moment.

Who controls the steem.dao account ?

I saw here and there that the hive hard fork was a cash grab for witnesses because now we own all of the tokens from the ninja mine. This is not true, nobody owns the steem.dao account. In fact you can see on hive that his keys are locked, it's because it's a special account like @null

Nobody can use that account to post, vote, transfer tokens or whatever. The only way for tokens to go out of that account is via proposals and in HBD.

So if only HBD can go out, what happens to all the HIVE on that account ?

It's currently locked. In a future hardfork (soon:tm: the code has been partially done by myself and @netuoso) we'll have a system where that hive will slowly get converted to hbd and thus available to be used for proposals. We decided to do it that way instead of converting everything to hbd during the previous hard fork because there are huge security and economic impacts in converting that much hive to hbd at once.

For instance you can withdraw 1% of the sps funds per day, for instance as of this time of writing there are 454,813 hbd on the dao, which means there's "only" 4548 hbd available per day. If we converted these 83 millions hive to hbd, a bad actor could potentially withdraw hundred of thousands of hbd in a day.

The sps is just a cash grab for witnesses, I only see them getting funded

That's a critic that I see often, and to a degree you're right, it's mostly top witnesses that get funded, but the reason is not the conspiracy thing that you think where we witnesses (I manage a top 20 witnesses so I would know) get together to exploit hive as much as possible.

The truth is, to reach high witness ranks like top 30-35, you need to convince/impress an enormous amount of stake to vote for you. Rank 35 is about 25.5 million HIVE as I'm writing this, top 20 is 60 million HIVE. These numbers are incredibly high. And if you managed to get that much stake to rally behind you, because they like what you do and trust you with governance issues. Then most likely that same stake will vote for you if you were to do a proposal (and that proposal is not bs obviously).

The sps is just a fund decided by stakeholders, and stakeholders want to "invest" in proposals that have the highest chance of success, and obviously they will trust someone who has been there for years more than someone who just arrived. And more often than not on this chain, if you have been there for years and are actively contributing to the community, you have a witness.

My point is, the fact that witnesses get voted in for proposals more often than non witnesses is just a side effect of how stake weighted voting and trust works.

That doesn't mean you can't get voted in because you're not a witness. And that doesn't mean we are hoarding all the hbd for ourselves.

Do you have other questions about the sps ?

Feel free to ask them in the comments :)


Important question. It is understandable for witnesses to submit proposals, everyone needs money, particularly now.

HOWEVER, if the price of HIVE goes up a lot (distant future), witness earnings should cover expenses of running a full node and much more. A witness should not need an incentive to work for the HIVE blockchain, his stake and witness earnings ARE the incentive.

The SPS should instead be used for developers in the community that are not witnesses (or outside of the top 20). A great example of that was the proposal from @inertia to help with the documentation in the Steem API.

Your own proposals as well were great, before @steempress became a top 20 witness. I understand that at these prices witness earnings amount to nothing with the node costs, but this should be kept in mind for later.

I am all for non-witnesses getting fudned, don't get me wrong, it's just that with the way stake is set-up there is a higher chance for witness or well known community members (like inertia) to get funded

Yes, I agree with that.

I have off-topic question that I have not pulled my self to ask before, because of being lazy but do you think we can get the smt's this year? Even if just getting the work done and scheluding the fork for next year?

I definitely think we'll get SMTs this year. We have a lot more devs than steemit inc had (by a factor of 3 or 4). Right now we have bigger priorities but we will get back at it very soon.

Thanks for the answer! This will definetly put hive before bitcoin for my powering-down steem.

Thanks for the explanation @howo.

Can we use HPS for any kind of funding? Like a crowdfunding campaign on kickstarter or Indiegogo or even charity websites. Can this be an alternative to a project like @Fundition?

The HPS was not really designed to be a specific crowdfunding system where x people poll for y project, it's a more global thing.

I think a crowdfunding process like this should be done with a projectlike @fundition or using escrow transfer on hive.

Got it. Thanks. AND Escrow transfer, how does that work? I didn't know something like this exists.

Thanks for the info. You mentioned "other priorities", can you give a quick run down of what those are please?

Sorry if these have been covered elsewhere, I've not been as up to speed with the goings on as I once was

No problems, I don't think it has been covered elsewhere except in the last dev meeting.

Priorities are always changing a bit but something like :

  • Delay votes to prevent a future exchange takeover
  • Airdrop (or not) to excluded accounts
  • Start converting the massive amount of HIVE tokens in the sps to HBD
  • Do a security audit of the chain
  • Improve node performance so it's not as ressource hungry as before.
  • remove all notions of "steem" in the code for "hive" (trust me there are a loooot of those)

List goes on, there are a lot of things to do, you can check them out here

Ultimately I don't think we'll change steem.dao for a long time, the change is purely cosmetic and it requires a LOT of work, to give you an idea here's the checklist (taken from

  • Transform this new account into a "locked" account (clear keys/ remove recovery account), see hard fork 21
  • Hard fork steem.dao funds to this new account
  • Change the STEEM_TREASURY_ACCOUNT def to the new account (needs to handle replays so it should only change at a specific hard fork ?)
  • Update all return proposals with payouts to steem.dao
  • Update all pending escrows to steem.dao
  • Update all pending payout posts with beneficiaries to steem.dao

What about stopping HBD and moving solely to HIVE all together? SBD failed on Steem as a stablecoin and caused much more economical trouble (debt, high inflation, complexity) than it was worth in my opinion, what do you think about focusing solely on HIVE on the new platform?

This is still quite a lively debate actually, but nothing is decided, the implications are not exactly yet known if we should drop hbd, but even with a broken peg, it's still a useful mechanism, for sps payments for instance. I'd rather know that my payment will be in the 0.60 to 1$ range than 0 to 10$ with unpegged tokens over a year. Makes it easier to budget the daily payout I need.

Now regarding added complexity I can't say I disagree, and @netuoso actually did a version of steem with sbd stripped away (not sure if he finished it though). But it's a lot of work to do it, and it still up in the air if it's actually worth it to remove it.

IMO, unless there is a very big push from the stakeholders to have it removed, it will stay there.

Another idea is, if we keep HBD, to really improve it (add convert HIVE to HBD in both directions, lower debt ratio from 10% to let's say 1-2% in order to reduce the debt and high inflation risk to HIVE). Removing HBD could be done in a quick way by just stopping HBD printing with a HF if we decide to remove it and then removing it from the front-ends gradually for example.

Proposal fee is 10 HBD unless it got changed when we forked and I didn’t notice.

Oh yeah, my bad, I was sure it was 15.

If that was only SPS funds distributed to proposals as it should be, I have no problem when witnesses or devs get paid.

But what you skipped, is that the steemit inc stake is in there too!!!

Why convert it to HBD? And distribute it to proposals, these funds have nothing todo with the SPS. Let the SPS pay for proposals with the 10% inflation received.

Or will the 10% inflation turned back into the reward pool?

Maybe there should be some solutions presented as proposals first, and let the community decide what to do with the 80+ million HIVE. It's strange to me, that the witnesses and devs, decide to pay themselves out this huge stake.

Ah thanks, I should have adressed that in my main post. This stake is not really "steemit inc stake" it was stake that was mined specifically for the purpose of developing steem. The idea was to give a bankroll to steemit inc so they can do stuff. It was a smart idea to raise funds while doging some regulations.

So now that steemit inc is out of the picture, what do we do with those funds that were earmarked for the development of the chain ? The place that's the closest to the original idea for that stake is definitely the sps, which was designed for decentralized development of the chain.

There were ideas of just burning it with the hard fork, but we felt that it would have been a waste.

Why not keep the SPS as it is, it is funded by us all, 10% inflation.

Why not try to have another solution, like distribute the stake between HIVE Founders, Witnesses and Devs?

This is much faster, and we can leave the past behind us.

We really dont' need to be "fast" to distribute that wealth, if anything we want to be as careful as possible to make sure it's best used.

And why brainstorm a new distribution solution when there's the sps.

Also imagine the PR nightmare if witnesses/hive founders and devs (which I am 3 in one if there is such a thing as a "hive founder") were to distribute that money to themselves.

I certainely would not be interested to be in a chain where witnesses distribute money to themselves like this. It sets a terrible precedent.

First of all, that's incredible. Thank you so much @howo

Sometimes I question whether there would be a much more secure and attractive tokenomy system to make Hive the center for many blockchain enthusiasts. Yet, regarding the way DPoS works and the ongoing system do not have sufficient flexibility.
Can we adapt a more effective tokenomy system than the current one in the near future?
While things are all fresh nowadays, do we have an opportunity to create or adjust applicable systems?


Your question is quite vague, but I'll try to reply best I can.
Sufficient flexibility in what sense ? We can definitely adapt any token economy, and some of the ideas behind smts go that way, they would allow you to test a lot of token economic models really easily.
Right now is definitely a way where we are more open to ideas than ever before, if you have ideas don't hesitate to write a post with lots of details in it to expose your ideas and start the discussion :)

Hi, nice to know about this proposal system. Just commenting... I hope you witnesses work and develop HIVE well...decentralised and without exploitation.

All the Best.

There aren't any funds in the SPS, there are only tokens. Turning them into funds requires selling them.
I'd like to see a proposal to burn a big chunk of the SPS; to support the price of the token; ultimately getting to the point where witness earnings are sufficient to fund development.
You mentioned there's a lot of crossover between devs and witnesses, so why do we need two holes in the bucket?

"There aren't any funds in the SPS, there are only tokens." tokens which have value, thus funds. It's not because it's magic internet money that it's not money.

There is actually already a burn proposal to vote reduce inflation, feel free to vote on it.

Imo, The idea of the sps is to allow anyone to contribute, let's say I want to champion a proposal where we hire a marketing company, I'm never gonna get the funds to do that via witness rewards, and it's pointless to grind the witness ladder for so long (took me about two years to reach top 20). Just to barely get enough rewards. And witnesses get rewarded in hive power so it's not like those funds are instantly available either.

You also mention "hole in the bucket", as if money just gets lost, it's not. Think of it as an investment, The whole community gets a lot of value out of @anyx's nodes for instance.

Imo, The idea of the sps is to allow anyone to contribute, let's say I want to champion a proposal where we hire a marketing company...

Is there any way to make an open proposal? As a non-developer, I'm not sure how much funding an effort may require.

Who decided to convert the HIVE to HBD exactly? The community?
HBD is already broken and you want to increase the debt?

Chill, it won't be done overnight. As you can see it's a plan for the future.

Exactly, it's an idea up in the air, we also thought about having proposals pay out in hive, but that has issues where the price of hive may change significantly between the start of a proposal and the end of one (especially for those one year long proposals)

Also there are talks to remove the hbd and hive in the sps as counting towards the debt ratio, it would only count at payout (which makes sense when you think about it). So it wouldn't change much for the peg if that hive is converted or not. point is that this decision, which has an impact on the Hive economy, has been taken by 2 people it seems... How did they calculate how much to convert exactly? How did they calculate the economic impact?

Everything will be converted, because there is not really a point in keeping frozen assets there (can't withdraw hive from the sps). And those changes have yet to hit live servers, if you feel like you have good ideas about it (or anything) please come on gitlab ( to write them down.

The economic impact would be minimal because as stated above, these funds won't count towards the debt ratio.

If it doesn't count towards the debt then I guess it's another story, I didn't see that part in the post, that's why I was asking.
I'm not an economist, I just know that it's not a good idea to increase the debt 😉

You're right, but I think this post was more about presenting possible solutions than a statement that no other options are possible.

I realize this is off-topic but can you tell me if Hive Keychain has been approved by the Chrome store yet? I realize you can do it by installing it yourself sidestepping the store, but I would rather just get as an approved application from the Chrome store. Any idea what the hold up is? Firefox already has it.

Mmmh this is for @stoodkev. I know that google is being annoying with him, but since I use a superior navigator (firefox), I don't know what's the status on chrome.

Honestly you should take this opportunity to switch to firefox :

Try it out, and if you dislike it you can go back to chrome, but firefox is very fast now and it's waaay better for the web.

How exactly, step by step, is an HPS proposal created?

It's quite easy actually, if you use peakd, there is a page dedicated to it:

Just buy 15 HBD, make a post explaining your posposal, and then create it :)

Great! Thanks a lot. Nothing's easy if you don't know how LOL

The truth is, to reach high witness ranks like top 30-35, you need to convince/impress an enormous amount of stake to vote for you. Rank 35 is about 25.5 million HIVE as I'm writing this, top 20 is 60 million HIVE. These numbers are incredibly high. And if you managed to get that much stake to rally behind you, because they like what you do and trust you with governance issues.

Yeah except the only reason why these numbers are so inflated is because Justin Sun attacked us and we all felt obligated to vote blindly for the top witnesses. I assume that's why you started at rank 30. I guess we can worry about our stagnant witnesses later, as the topic at hand is the SPS which wasn't affected nearly as much.

The optics of funneling the ninjamine do not look good from the outside looking in.
We probably should have just destroyed the coins, even if it only looks bad due to ignorance.

Thanks @howo, I'll publish a proposal for my @keys-defender blockchain scanner and other projects of mine.

Thanks for the explanation. This is a good part of the platform.


I hope that hive buys hbd on the internal market, for the buy pressure.
Thanks for the hard work.

Who would be placing those buy orders?

I think a better starting point is a discussion of what extent the Hive Fund should all be converted to HBD, or if a significant portion should be staked as a delegations fund. That fund could then allocate non-voting resources to projects that need to create new accounts, process transactions, and otherwise allow users to use Hive. A bit like how steemit used much of its stake to create new accounts.

I think there is a good argument to be made in favor of delegations. As long as it doesn't carry with it the disincentives that the delegations to projects did on Steem where receivers cared more about min-maxing the earnings from their delegation than actually growing their dApp.

The problem with delegations is, who decides who gets them.
If we decide via the HIVE fund, what happens if delegations need to be adjusted? Some delegatee might go rogue and misuse the delegated stake. (it's unlikely but could happen; Sun using exchanges to overthrow Steem was also unlikely...)

You undelegate them even though the HIVE fund decided who gets the delegation? That's gonna be a PR nightmare... even if they misused the delegated stake.

I don't see why we could not have hive fund delegations if we really wanted to do the development (I'm not exactly in favor for it but hey why not).

Just have a part of the hive tokens be powered up on the sps account, and then add a new kind of proposals where you ask for sp delegations instead of daily HBD. And then do the same system where if you no longer have enough support you lose your delegation.

The system I explain above would work much better as a decentralized community than when we had steemit delegations because we can be more agile and reasons are more clear than when it was behind closed doors.

"Request a delegation" is a good solution to the problem I mentioned. Thanks for your reply.

The only downside is dealing with the 5 day wind down for delegations in some way. Likely making a special delegation rule specifically for sps delegations.

Would it be possible for potential delegates to sign into an agreement where a (vast?) % of the curation rewards go back into the DAO, and/or are burned?

Mmmh "sign" in a trustless way ? That would require some code changes in the way curation rewards are paid out, but could happen yes.

I guess it wouldn't need to be trust-less - don't abide by the rules and your delegation is removed. I think that 'here', folks would abide :)

Well then it's still a bit tricky, because you need to power those rewards down, so it takes 13 weeks to get those rewards powered down to send them back.

True. Well it's something to think about. As the original comment states, we could do with something to de-risk projects with this delegation from using it to prioritize themselves over the growing the network and their app.

I would think that a hardfork would set a price and it would depend on the market when they sold.
I can't see converting it all at once, maybe a powerdown's worth at a time.

I would like to see some of it powered up and put behind cheetah and hivewatchers/cleaners.

@howo how come now I can't add in images that I spent quite a while downloading over on Steemit for my Easter Dinner post, because it was not working on Hive , and if I try to download them on Hive it asks for my private password!? When I'm all ready logged in!! Does Hive want people to post on here or not!? I have not in posted in a few days because of all the drama, now they won't let anyone add photos!