What Will Likely Happen When Steem's Economic Improvement Proposal (EIP) Is Put Into Motion?

kevinwong (76)in #steem • 5 years ago (edited)

Let’s say whales or certain groups of people always have the tendency to keep upvoting the same authors, or circlejerk amongst themselves, or are just dishonest voters most of the time when there are direct financial incentives... also known as human beings being lazy asses - what will likely happen when Steem’s EIP is put into motion? You can make your guess. Here's mine.

Proof-of-Brain: A Self-Correcting System.

If the wider community subjectively deems any highly-rewarded posts to be obviously unfit as trending material, the low % free (or subsidized) downvotes available for everyone will likely be used as it doesn't come with an opportunity cost, except one might lose support from parties that disagree with the downvotes. But with everyone else being able to downvote en masse for expected to be highly-scrutinized posts means there would be a lesser fear of revenge and grudges. It's less personal. EIP’s relatively low % free downvotes is likely good enough for taking care of the attention space occupying the top trending, where it all matters the most for any content community. If downvotes can be delegated, then more cases can be handled especially through some specialized impartial party. What if the EIP still does not encourage downvotes? Well, that could be the case, but Steem's price may continue to suffer and there's really no good reason not to use downvotes that wasn't free or subsidized before (like what we have today, at time of writing).
If (1) happens frequently enough in making the game way less rewarding, circle-jerkers and lazy curators (ie agents exercising bad voting behavior) will either:-

2a. Switch to a better voting behavior by going for other authors / content, including the ones being unearthed from the curation activities in the low-to-mid tier levels.
2b. Switch to efficient micro-spam farming at the low-reward zone. But EIP's convergent linear (or something similar) makes this so unrewarding that it'd be much better to just go for something with higher rewards (encouraged by EIP's 50% curation rewards) via (2a) while actually helping the platform.
2c. Sell out their stake if they don't like to play the game. This will transfer stakes into more suitable players over time.
2d. Continue doing the same thing and lose out to good voting behavior.
2e. Delegate to curation groups that can do a better job. This is almost the same thing as (2a).
2f. Delegate to bidbots or sell their votes. This is also almost the same thing as (2a), under the context of the new economy with the EIP in place. Why? Please refer to one of the sections below, titled "How About Self-Voting and Bidbots?".

There will be a perpetual cycle between (1) and (2), which all makes up for a self-correcting system. With that, we get a functioning content discovery and rewards platform. This system can then be replicated for future Communities / SMTs. It will probably not work with the full efficiency of non-decentralised content discovery platforms, but it's likely good enough for a decentralised, sybil-resistant, stake-based system.

Potential Attack Vector.

What if saboteurs always downvote all highly-rewarded good content? It is very likely then there will be less support for the affected contributors over time. Rewards will then continually shift towards authors (and content) of deteriorating quality, corrupting content discovery. The severity of this scenario would depend on the cost these saboteurs are willing to bear with the devaluation of Steem, of course with the potential offset made through the rewards gained by their upvoting activities.

All said, I don't think this specific attack vector is a great problem as the cost of doing so may increase exponentially as the community grows. Proof-of-stake in action. But it's likely a hurdle that is difficult to overcome when a community is considerably small.

On balance, what we have today is actually far weaker against attacks, if we're to consider Steem as a content discovery and rewards platform. It's so bad that it's not even functioning as one at the moment as most of the SP are simply treated as staking returns. Anyone can also buy votes for just about any content, disrupting trending / content discovery, and likely not receive any downvotes, all while covering the cost of doing so (plus ROI) in the process.

How About Self-Voting and Bidbots?

Self-voting and bidbotting are perfectly fine, in my opinion. It's unfortunate they're usually written off one-dimensionally as just "bad". What matters is having an economy to keep these activities in check. Self-voting and bidbotting activities will still be around after the EIP is implemented. It's just that these activities will be more subject to downvotes and other economic inefficiencies, which currently isn't the case.

In theory, everyone will be forced to operate honestly which is the entire point of the EIP. In this case, we'll begin to have honest self-voting and honest bidbotting, not the imbalanced versions we have today usually unchecked and conducted at the expense of our network. Anyone participating in these activities will be more considerate of what others might think and thus, likely deliver better content with input from the community if they still want to do it all the time without going the curation route. This is a stark contrast compared to the environment that we have today.

My rough estimates based on the effects of the EIP says that the average payout for the self-voting / bidbotting enterprise will be lowered by ~37.5% compared to what we have today, making it less economically efficient to do so. This in turn, increases the payouts in the curation economy by ~150%. Steem will likely become a healthier game overall, and that's good for potentially an increased demand in Steem Power.

Overall, it’s still very difficult to say what happens here because the potentially heavy use of downvotes may render self-voting / bidbotting way more unrewarding than I’ve anticipated here, which in a way actually isn't a bad thing for a content discovery platform. But what’s very likely to happen is that most would opt for curation instead, especially SP holders.

Short vs Long-Form Content?

In the past during Steem's n^2 or quadratic rewards curve phase, many complained that we were getting uninteresting long-form content that seemed forced so that it looks like they're worth being highly-rewarded. Well, I think such content will be rejected under the EIP. Maybe that's the nature of a decentralised content discovery platform that we have to accept. A blockchain alters conventional games, and rewarding effortful or "long-form" content (in writing or video, etc) does actually seem like a good fit, given how different an open decentralized database is when it comes to notions of cost and scarcity when compared to traditional databases.

On the flipside, it's hard to imagine tweet-like posts surviving top trending as well, since many may think they're not worth the likes of $100 dollars at today's Steem price, no matter how good the tweet may be. Imagine the severity of this situation when Steem goes 10x. It's unlikely that it'll be accepted by the wider community, but who knows? I certainly don't. Maybe that's a thing for Communities and SMTs with specific guidelines and such.

Or maybe the EIP would actually encourage most users to avoid downvoting genuinely good short (or even long) form content as they could better benefit from upvoting them as well. At least, until the wider community gets tired of the same authors making away with the rewards all time. It’s just riskier to support short-form content on something like Steem when the EIP is in action. Users in general would most likely factor in effort far more than just appeal when it comes to highly-rewarded content.

Toxicity from subsidized downvotes.

There's no doubt that an increase in downvoting activities would result in great emotional distress in the community. But content discovery platforms can only work with curators freely exercising downvotes, irresponsible or not, there's no way to control anyone but we can design limits and incentives to mitigate things. Some users may not be able to handle it. Some may learn to understand and overcome it. Many may disagree and migrate elsewhere. But where? They may go elsewhere else that promises to be the things that Steem could be without some of the costs required to make it work, but will it work?

What can possibly happen on another blockchain-based social media platform that doesn't have the concept of downvotes or cheaper downvotes? With mining activities that can't be disrupted, and with no game to play? With virtually zero disagreements? That paradigm is already being established by the likes of Proof-of-Stake coins, Bitcoin mining, and such. There's no need for community posting and voting in those networks. So shoving this idea into something like Steem, at least during our early stages, creates a misconception, placing us in the kind of competition that we shouldn't be getting into in the first place. Maybe we should. It’s just seemingly futile, imo.

Cheaper downvotes will surely generate toxicity, but it's just way better than having a completely broken platform. Also, one should consider the increased incentives for network participants that could mitigate the side effects of downvotes. Things will likely normalize and mature over time as we have productive discourse after the initial "destructive" phase (which happens with every new technology). Maybe I'm just quite optimistic in this regard.

Steem: A Social Media Game.

Steem's value would likely begin to appreciate with a functioning Proof-of-Brain. It can be many things in the future, but for now, maybe a way to think about this is to view Steem Power as a utility token to participate in a competitive multiplayer game. To put it simply, the more awesome the game is, the more value it brings. Just like Fortnite, except our economy can extend much further in a lot of directions once we get our core game design in the right ballpark.

What’s an awesome game in the first place? Unbalanced? Non-competitive? Pay-to-win? Quite the contrary. This is why game developers typically spend a lot of time and effort balancing out their games, making sure that it's all fairly competitive. As for Steem, running on EIP's paradigm of play-to-play / pay-to-play / play-to-win via Steem Power is much better than today's pay-to-win, where players would bypass the game of Steem Power via bidbots (which most of the times deal with a discounted pool of Steem under the current broken economy).

Conclusion.

As explored in this post, the EIP is expected to create a self-correcting and fairly competitive game, conducive for a stake-based content discovery and rewards platform. It's very uniquely Steem. This may lead to a better valuation for our network when websites such as Steemit.com rise up the ranks again.

So what are your thoughts? Did I miss anything? Please let me know if I missed anything super obvious. Of course, I can't account for every idiosyncratic human behavior, including random skirmishes, trolls, and personal vendettas. But viewing the game from an economic perspective has probably covered most of the cases, assuming that most SP holders wish to maximize their returns over time. Let's see how accurate this is if and when the EIP goes through.

Thanks for reading.

Disclaimer: Not to be taken as financial advice.
_{Vote @kevinwong as witness today.}

By the way, check out @snaxteam or their website https://snax.one/. It looks interesting, so I'm going to give it a try. Hence the authentication text below, which is part of the account creation and linking process:-

I want to link my Steem account with my account on Snax blockchain using https://snax.one
Please, create Snax account for me!
My authentication hash: 2f3b9048596fab4075675d8a6458cecdec8e2a67c737f807d2073897b8078a9d

#eip #busy #economics #free-snaxaccount

5 years ago in #steem by kevinwong (76)

$90.88

Sort:

Trending

[-]

geekgirl (79) 5 years ago

Nice overview of things may or may not be happening once EIP is implement. I am optimistic about it.

This is probably a UI level addition, It would be nice to have a “tip” or “gift” button for posts, so users could give authors additional rewards. I know anybody can transfer from wallet. But having this feature on posts might encourage rewarding authors without solely relying on reward pool. It would also develop a gifting culture.

$0.53

10 votes