Reallocating rewards from interest to the SPS would have similar effect to taxing stake. Interest plays a role of encouraging users to hold Steem Power even if they are inactive. Curation rewards are also an incentive to hold Steem Power. Therefore, interest may not be critical. However, auto-voting and delegating to bots could become even more popular as the alternative passive income.
Another option, which has been taken off the table, is creating new inflation. This would put pressure on lowering price. The extent would be hard to establish as the SPS would create upward pressure on price. From what I have read, investors consider the higher inflation of Steem compared to other cryptocurrencies a deterrent to investing.
You make a good point about interest. However, stake being dependent on capital gains for profit is the key to creating capital gains. Allowing profiteering by letting investors harvest the product of the investment vehicle is completely antithetical to creating capital gains. Curation rewards, self-voting, circle-jerking, and etc., are nothing more than profiteering and the opposite of investing.
Further reducing incentives to create content by reducing author rewards will exacerbate Steem's retention tragedy. It's bad enough now, and reducing author rewards can only make it worse. Stinc spent stake to fund development, and has substantially reduced it's stake doing so. That's been the mechanism that funded development, and regardless of whether folks think those funds were efficiently employed, it did not tax author rewards and decrease the incentive to create value of Steem.
I propose not changing that mechanism, but neither confining funding development to Stinc alone, as affected parties have convinced Stinc to let them participate in funding development too, and now seem to be seeking to offshore the costs of doing so to the sole source of Steem value: the content creators.
I can't think of a better way to degrade content quality, or make retention worse, which are the best ways to decrease the value of Steem.
I want to thank you for the lively discussion. I want to just round up my position regarding SPS.
I strongly believe such a system is necessary for more decentralised development of the platform. The extent of the valued added is uncertain, we will get a better idea once proposals are made.
Funding appears to be the biggest challenge. Adding inflation is a likely deterrent for investors considering Steem has relatively high inflation as it is. Donations will be unreliable. I expect we can see them drop off once users donating realise many are not contributing.
That leaves us with existing inflation. Cutting witness rewards at the moment when prices are this low will strongly discourage anyone becoming a witness. Many good existing witnesses may drop out. This puts the whole blockchain at risk. Curation rewards are very low compared to passive income such as vote selling and delegating bots. Barely 15% of inflation goes to curation. I would like that closer to 40%. Curation rewards are an essential incentive for investor engagement. Curation is also essential for authors.
Interest is also important for encouraging holding Steem Power. It is less important than curation rewards but some form of passive income is still necessary. It would be risky to reduce it.
That leaves us with just authors. I have argued many times that author rewards should be reduced in favour of curation rewards. Reducing author rewards in favour of SPS partly achieves this. Based on the figures above author and curation rewards are about 22/78 split. After accounting for SPS, it will be about 30/70, which is still strongly in favour of authors. I believe 50/50 split would be fairer but quite possibly still not sufficient to encourage active curating (I proposed an algorithm which could make this possible). Otherwise, a split as drastic as 25/75 would most likely be necessary.
As it stands, funding through donations is winning the poll. Looks like some of larger stakeholders are volunteering donations. If this is implemented, we will see how long it lasts.
I also appreciate the discussion we have undertaken. It seems that we are unable to reconcile, and I accept that: I expected it.
Last word from me are that the poll is basically on whether to tax author rewards, as initially donations are a certainty, and no one expects voluntary donations to provide a long term solution to SPS funding IMHO. So, the failure of taxing rewards is essentially a plebiscite to reject that offshoring of development expenses from the present source, which is large stakeholders (Stinc, to date).
Given that this is a stakeweighted poll, I consider that a significant statement by actual investors, who care enough to spend the tiny VP required to decide the issue, unlike profiteers, who are so short sighted that they are unwilling to invest that practically infinitesimal expense to prevail in the poll.
That is a very telling statement indeed!
Thanks!