Most people like to be part of building something, especially when it comes to Community initiatives. When it comes to building and supporting Communities with Membership Voting Bots I have recently been asking some potentially controversial questions about how things could be run better for the Community Members benefit and I floated the idea of the Power Down and Lease. Of course, like many of my ideas it was a bit unpopular but in this post I am going to try to prove my point.
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In Australia we have all manner of Clubs, Associations and Societies which have a stated Not-For-Profit charter. In my opinion these are some of the most Democratic and loved institutions in the country, run BY the members and FOR the members benefit. Because they are Not-For-Profit they are not trying to build up a massive war chest and hoard wealth, their job is to return value to the membership and that’s why if you want to go out for a beer with a few mates, get a good meal or even host a function, you will often find that “Club Prices” (as they are frequently referred to in Australian culture) are a hell of a lot better than you’ll find in a regular bar or pub. The Clubs put profits back into the membership by subsidising or pulling back the profit margins on things like food and drink.
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On the STEEM platform there are all manner of Voting Bots with all sort of different motives, communities and (mostly informal) governance around them. I have noticed that the “Benevolent Dictator” model is quite common here for some of the community related bots and I personally think we can do a bit better, but I am digressing. My personal view is that a community membership focused Voting Bot should not be looking to hoard wealth and should be focused on returning value back to the community it is supporting. Just like the Clubs do in Australia. That is where the Power Down and Lease idea stems from – A desire to return hoarded wealth back to the community members.
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To try and make my point from an economical standpoint I’ll show you a direct comparison between two scenarios and with a bit of basic math I hope it will become clear. Let’s start out with a hypothetical situation where a community membership bot has 1000 STEEM and the person running the bot is trying to decide whether to power it up or spend it on a lease for the next 28 days (approx. 1 month). For the purposes of the math I am going to take prices of STEEM $2 and SBD $2 but I’m pretty confident the case will hold for any price changes as markets generally find an equilibrium. These numbers are realistic from a recent price history perspective and they also make the math easier to follow.
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If we power up the 1000 STEEM for the 28 days then at today’s prices a 100% strength vote at 100% vote power has a strength of about $0.135. If the voting bot is running at bid bot type efficiency then it can make 10 x 100% strength votes sustainably per day. So multiple that by 10 and we get $1.35 of vote strength returned to community members per day. Multiply again by 28 days and we get a final vote strength of $37.80 returned to community members for the 28 day period.
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Lease rates do vary and I have seen realistic lease rates as low as 2% per month but for the purposes of this example I am going to use a more realistic current market rate of 2.5% per month. That means that 1000 STEEM can lease approximately 40,000 STEEM POWER via a delegation for the 28 day period. Using the same prices for STEEM and SBD and the same calculations as Scenario 1 this is a 100% vote value of $5.386, a daily vote value of $53.86 and a 28 day vote value of $1508.08
Ok, so that looks like a big difference but keep in mind that for Scenario 2 at the end of the 28 days the 1000 STEEM is all gone. While in Scenario 1 we still have it powered up for next month. But is the vote value returned to community members in Scenario 2 enough to pay back the cost of the lease? To figure that out we need to factor in Curation and the SBD price. So for a 28 day vote value of $1508.08 there is approximately 75% post-curation divided by 2 = 565.53 SBD which at $2 SBD is actually worth $1,131.06 USD. Now add the STEEM POWER component of this (75% divided by 2) which is $565.53 USD worth and then the remaining 25% of Curation value of $377.02 USD (some of the curation reward will return back to the bot, the rest will be dispersed amongst the community too) we get a total value of $1,131.06 + $565.53 + $377.02 = $2073.61 USD. Now that is actually enough to buy another 1000 STEEM at $2 so for Scenario 2 we are actually in front with Scenario 2 if the community members are recycling that vote value back through the bot.
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The additional benefit of this approach is that there isn’t any hoarding of wealth within the bot itself that could then be a major point of failure for the community member contributions. A large amount of hoarded SP can provide temptation for whoever is holding the Master Key to decide that it’s theirs and we have seen this a number of times on the STEEM platform already. Alternatively, if the person with the Master Key disappears due to tragedy then the community member contributions (which can become quite significant for larger/wealthier communities) can be lost that way too. So not only are the members better off financially with Scenario 2, but they are also safeguarded from misappropriation and tragedy by not hoarding contributions in one place.
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