Steem Budget Proposals Whitepaper!

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When we begin reinvesting 200,000 Steem every 28 days in projects promising to help Steem grow through a decentralized governance system featuring budgets, proposals, and voting, we can expect the value of the Steem we hold to increase exponentially without it costing us anything in upvotes, curation, author rewards, or inflation! Will you please read the next two paragraphs because the excitement will build in seeing how easy this is to get started with?

What Do We Really Want?


Are we all hoping for Steem to make the greatest difference in the world and to get the highest return on our investment? Absolutely. How do we make that happen? We make the difference and get the ROI by increasing the value that Steem provides to everyone using it. Every action dedicated to building the value of Steem gives us what we want. A transparent budget proposal funding system designed to reinvest some of the new Steem created every day in projects that grow our community is very likely to add massive value to Steem as it has done for Dash and therefore give us what we want.

Executive Summary!


How much of a return on our investment will we get when we make about 200,000 Steem every 28 days available to any member of Steem submitting a proposal that offers to add value to our community? If the results from Dash are any indication, we may be looking at a Steem price 20 times higher than it is today within a year of adding a budget proposal system alongside smart media tokens, communities, and a mobile app.

To make the 200,000 Steem available, we can remove Steem power interest and reduce top 20 witness rewards by 50% or increase inflation by the same amount. While any suggestion of change is likely to trigger fears and quick dismissals, after further investigation, we find this change is likely to give us exactly what we are hoping to get and be worth the discomfort of trying something new. Would you read the rest of this post or the same text in the whitepaper at http://jerry.tips/steembudget because this will empower you to help us make budget proposals a reality today?

Dash Price up from $11 to $300+ in 1 Year!


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The digital currency Dash attracted me as an investor for my first all in cryptocurrency investment in December 2016 which purchased a Dash masternode for $11,000 at $11 per Dash. Dash’s budget proposal system is the primary reason I invested because it made it easy to see how Dash was funding its own growth and predicted a bright future because every speculative increase would increase the real value of the budget available. Learn more about Dash’s budget proposal system using these links.

  1. See existing proposals at https://www.dashcentral.org/budget.
  2. Learn how the budgets, proposals, and voting work at https://dashpay.atlassian.net/wiki/spaces/DOC/pages/19169430/Using+Decentralized+Governance+Proposals+Voting+and+Budgets.
  3. BitShares has a similar system with worker proposals at http://docs.bitshares.org/bitshares/user/worker.html.

Within a month of investing in Dash, I was promoting Dash in all my videos and submitting my own proposals. Within 4 months of using Dash, I had submitted 7 proposals despite having almost no other relationships in the community. The first several of my proposals failed with the fourth and fifth succeeding. Dash budget proposals gave me over 70 Dash in exchange for advertising Dash on Facebook and YouTube along with making a new series of tutorial videos which I completed before the proposal was funded. Most importantly, these proposals gave me a way to immediately add value as a new user without having to build a following, spend months hanging out in chat, setup a server, or get approval from the Dash team directly.

The Dash I was given was a small fraction of the total budget which funded many more projects like mine every month including integration with an exchange, sponsorship of YouTubers, travel to conferences, new app development, exclusive partnerships with Dash by third parties, promotion on a cryptocurrency radio show, and hundreds more projects designed to add value to Dash.

What makes all this amazing is the fact that Dash is only a small improvement over Bitcoin and now has no other feature besides budget proposals and the relationships resulting from successful proposals that give it value above another blockchain. Dash has a fraction of the transactions that Steem has and appears to have less wallets despite being older than Steem and having a market cap 10 times higher than Steem. Dash’s “instant” transactions cost a significant fee and are limited to once every 15 minutes or so while Steem and many other blockchains do nearly instant transactions all the time. According to some, Dash is not truly anonymous because the private send feature can be traced while newer cryptocurrencies offer anonymous transactions every time. Nothing about Dash is unique as newer cryptocurrencies do everything better and older cryptocurrencies have bigger followings … except the budget proposals.

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Every month 7,000 or so Dash are available in budget proposals which today is worth about 2 million dollars. Few other digital currencies, companies, or agencies anywhere make it so easy to access so much money with transparency as to how to apply and who gets funded with the purpose of reinvesting the payments into projects intended to build the community. Dash’s budget is almost completely responsible for Dash’s success because every effort in the budget proposals multiplied with everything else the Dash community was doing. How much would we benefit from adding a budget proposal system into Steem? If the results in Dash are any indication, making this one change is likely to produce our best chance at giving us what we want.

Dash Budget vs Steem Author Rewards.


New users join Steem every day and try to make a contribution via blogging. Often the projects new users develop to promote Steem add incredible value right away including meetups at universities, new app ideas, suggestions to improve Steem, and translations to languages beside English. The massive effort made by new users to get started often is usually rewarded with almost nothing while the very best get a few hundred dollars and some Steem power delegations that can be taken away at any time. A budget for project proposals that is community funded will give many talented developers and entrepreneurs the ability to contribute immediately without needing to spend six months to build a following or sending hundreds of messages begging for upvotes!

One new user’s journey with Dash and Steem shows the power of budget proposals to make effective collaborations. Max Keiser at maxkeiser.com or @keiserreport joined Steem in June 2017 making posts earning 3,344.52 Steem Blockchain Dollars or SBD along with 3,772.92 Steem paid in Steem power which is much more than most users on Steem earn in the first few months. Initial posts featured Bitcoin, Gold, and Steem. As rewards continued to build with one post earning over $1,000 at @keiserreport/how-i-learned-to-stop-worrying-and-love-the-fud excitement about Steem was high until …

In August 2017, @keiserreport received 2,000 Dash equal to $660,296 USD today for a Dash budget proposal at https://www.dashcentral.org/p/dash-gap. This budget proposal provided funding for a nationwide tour in the USA sponsored by Dash. Since then, @keiserreport has understandably lost enthusiasm for Steem. Most new posts by @keiserreport are about Dash. Almost all the rewards we paid @keiserreport were powered down and sold.

keiserreport dash posts.png

We lost the opportunity to build an effective ongoing relationship with @keiserreport to a competitor with worse fundamentals and we are missing more every day. Will we learn from this and build in a system that has proven to be incredibly effective at promoting collaboration because this will help boost the effectiveness of everything else we already have?

Why Add Budget Proposals to Steem?


Allowing any Steem user to create and submit proposals to build our community will attract many new users and empower our community to fund our own growth consistently. When we combine this with our incredible innovation in smart media tokens, we are likely to MULTIPLY the benefits together. Multiplication of our efforts will give us a blockchain that becomes a clear top 5 choice for an investor hoping to gain value.

BUT JERRY don’t we already have author rewards, witness rewards, the crowdsourced marketing protocol, and countless projects designed to help with this? Yes we do. None of them offer the following together!

  1. Makes the funding easily accessible without having to go to any individual or central authority.
  2. Provides clear directions for success that any user can easily understand and follow.
  3. Allows every user to participate in making the decisions about what gets funded.
  4. Shows outsiders with no previous knowledge of Steem exactly where the money is going.
  5. Proves the process works with case studies featuring hundreds of users receiving funding.

Addressing each of these five points is critical for a funding mechanism within Steem to maximize participation, excitement, and results. We have nothing that does this today, based on my experience going through every single process we do have to get funding for ads for Steem. Despite me having the largest real following here mostly from new user signups and being one of the top 200 holders of Steem power, I have found the process of receiving funding for a project designed to build the value of Steem extremely challenging. If it is hard for me, it is probably impossible for most while being too easy for a few. This equals low participation which equals low value for Steem which equals not getting what we want. Budget proposals enable us to get what we really want by increasing participation, consistently building the value of Steem, and thereby raising the true value which will guarantee a price increase in time.

Read the Whitepaper for More!


The first use case and who earns the most Steem sections do not appear in this post because that made it too long to submit. For the full text, the whitepaper is available at http://jerry.tips/steembudget.

Where Does the Money Come From?


We have two basic options to fund the budget. First, we can simply increase the inflation rate if we prefer not to change any of the existing systems. Given that we currently are already paying most of the new Steem to those that already have it, we probably are better of adjusting the existing payouts without raising inflation.

What appears to be the best solution to raise the money for the budget is to reduce the passive rewards paid out in Steem power interest and to divert 50% of the top 20 witness block production rewards to fund the budget proposals. This will make about 200,000 Steem available every 28 days to anyone paying 10 Steem to submit a proposal without having to increase inflation. If you are about to start telling us why we cannot do this, would you read the entire post because I will address every concern made to me in person when talking about this proposal?

Below I have demonstrated that we can do this just like we changed the 100% inflation to 9% and we changed the power down to 13 weeks from 104 and we changed the author rewards to linear from curation and we changed the … you get the point!

We Already Made Changes Bigger Than This!


There were a lot of reasons not to make the huge changes we have already made such as reducing inflation or changing to linear rewards. We made them anyway because we felt it was best for all of us. When we add budget proposals, we will open a system that will fund hundreds and soon thousands of projects to grow Steem every month. In exchange we shall demonstrate a new set of beliefs that will free us from thinking we have to prove Steem is worth holding with 2% interest on Steem power and free us from believing that we have to pay top witnesses 260 Steem power a day or face them quitting without replacement.

How Do We Maximize Our ROI?


As @starkerz made so clear in his talk, we each get the best returns by the price of Steem going up. Investing 200,000 Steem a month in projects to grow Steem in a way anyone can audit that has no central authority dictating who gets it will guarantee that the price goes up to match both Steem’s true value and takes on an additional speculative value which in turn will raise the true value more. How does that sound compared to 2% interest on Steem power worth under $1 and paying 20 witnesses 260 Steem power a day at under $1 per Steem instead of 130 a day at $2+ per Steem ?

Who Will Decide What Gets Funded?


Proposals receiving the most stake weighted votes will be paid out in Steem in the order of percentage of approval making room for thousands of proposals to be submitted and hundreds to be funded every month while guaranteeing the largest stake holders the choice as to which proposals would receive funding. For example, if @freedom, @blocktrades, @hendrikdegrote, @thejohalfiles, @minority-report, and/or other top Steem power holders decided a proposal should be funded and voted on it, funding would be nearly guaranteed.

No downvoting would be allowed on proposals to ensure those with the most positive support win regardless of who disagrees just as is the case in the witness voting system. Dash’s one fatal flaw in its budget proposal system is the ability for no votes to cancel yes votes while requiring 10% net votes from masternodes which allows those downvoting to effectively have twice the vote of a yes voter and ruin projects that might add a lot of value. We will avoid making the same mistake here and simply fund the projects in order of which receives the most approval in vested votes.

To keep voting as simple as possible, the voting will be handled the same as witness voting where proxies will handle budget proposal voting also. Like witness voting, delegated Steem power will not count towards proposals to ensure those with the actual stake make the decisions rather than those renting Steem power delegations.

Votes will be limited to approving funding for 100,000 Steem to ensure a variety of projects are funded and that top voters along with popular project creators are not able to dominate the budget decisions every month. This limit would allow for one voter to approve many smaller projects collectively worth 100,000 Steem or a few larger projects with the same total payout. Every vote a user placed on a project would count towards the limit whether funded or not encouraging users to work together to vote in the best projects and vote on smaller projects to maximize the limit.

While this system will still allow those in the top witness, investor, and author positions to easily receive funding, it would be clear how that happens and it will reward more active participation which will increase the value of Steem dramatically.

What Types of Proposals are Possible?


Successful proposals would include funding for new app development, adding new features to existing apps, integrations with third party websites, sponsorships with influencers, writing contests, help with marketing, creating advertising campaigns, receiving reimbursement for Steem related travel, hosting Steem meetups, presenting Steem at conferences, producing new tutorials showing how to use Steem, sponsoring Steem related events, launching Steem based businesses, and many more innovative strategies to spread the word and educate about Steem.

Making a successful proposal will be ten times easier with this system than the grind necessary right now to build a new app, update it, maintain it, and report on it. For example, I have spent $10,000+ advertising Steem and am ready to ask for the next $10,000 to continue building on what has proven successful in introducing millions of people to Steem and bringing thousands of new signups. Where do I ask for $10,000? How about asking for witness votes and using the rewards? Making a pitch directly to Steem? All of these have proven to be ineffective at allowing me to be of service to our community with the least resistance. To make this all better/worse, I have the single largest following on Steem not achieved by follow/followback. If this is my user experience, it is likely much more challenging for everyone else.

Budget proposals will allow each of us to use the unique skills we have, ask for help in funding, know exactly when the money will come, be able to immediately cash out to pay for our projects, and demonstrate to anyone wanting to look exactly how the entire process worked.

In other words, it would make running a legitimate business or other operation in the Steem ecosystem possible, and, hopefully profitable.

When Will Proposal Voting and Payments Happen?


At steemit.com/budget every 28 days about 200,000 Steem generated from what we were getting in interest and witness rewards will be available for payouts to the proposals. This total number will show at the top of the page along with a number of “funded” proposals which require at least 1 MV in votes equal to about 486 Steem power to be eligible. This will open a “voting window” where 28 days of proposal votes and submissions will take place allowing the Steem power of a user to vote on proposals. These proposals will then be ordered by approval percentage the same as the witness list is. Anyone viewing the page will be able to see the most upvoted proposals first and those with the least votes last. An option on the page will also allow sorting the opposite order and by newest proposals first along with an archive of past proposals by month in an optional sidebar.

To build this reward pool, every block will put a portion of the rewards that were going to interest and the witness into a budget pool which will then empty after the exact amount of blocks in 28 days. Any remainder in the rewards pool after a payout will remain there and be able to be paid out in the next budget. The calculations for this should be simple enough to handle in one block but if not the processing could be split into successive blocks until payouts finish.

At the end of 28 days, the proposals will automatically pay out the STEEM from the budget reward pool in the order of those budgets approved starting with the budget with the most vests in votes and continuing down to each proposal until the budget is empty. The code will check the proposal value against the available budget and pay if it is available. If not, it will skip to the next budget all the way down the list. This will allow small proposals to be more likely to get approved while huge proposals will need to be towards the top in order to get funded if other huge proposals are in. For example, let’s say the budget is 200,000 Steem and the approved proposals go through until 10,000 Steem is left. Here is what happens with the proposal cost and the result.

20,000 = skip
15,000 = skip
11,000 = skip
1,000 = paid. 9,000 remain
10,000 = skip
5,000 = paid. 4,000 remain
5,000 = skip
4,500 = skip
3,500 = paid. 500 remain
100 = paid. 400 remain
500 = skip
200 = paid. 200 remain
250 = skip
10,000 = skip
100 = paid. 100 remain
50 = paid. 50 remain
5,000 = skip
50 paid = stop

Then we start a new budget period fresh and do it all over again. No multiple month proposals will be allowed because that allows for inactive proposals and voters to keep deciding which proposals get paid which is a huge limitation in the existing witness system. Ongoing projects will have to submit updated proposals every month featuring results from the previous month and a specific plan for the new month.

How Will New Proposals Be Submitted?


On the budget page, an option to submit a proposal will allow any user with a Steem account on the active key permission to pay 10 Steem in exchange for making a proposal. The 10 Steem will then be added to the budget that month allowing for additional funding from users submitting proposals. 20 Steem will be the minimum payout allowed with 20,000 Steem the maximum proposal amount to prevent popular projects from taking the entire budget all in one month. Each account could be limited to one (or more) proposals per month to limit spam and reduce the amount of total proposals.

Each proposal will allow a user to submit what will be like a post on the blockchain with the addition of a specific amount of Steem requested for the proposal. Edits will be allowed in everything except the amount of Steem requested and the URL up until 24 hours before payout after which time no edits will be possible. Comments will be enabled the same as on posts. 1 MV of votes will be the minimum threshold required for a proposal to be approved to prevent proposals with no base level of support being funded.

New projects will be accepted up to 48 hours before payouts to allow voters time to review every potential proposal. Votes will be accepted up until the payouts process with votes being able to be made and removed without limitation when under the 100,000 Steem limit in total proposals voting.

Any proposal submission will be able to be canceled by the author up to 48 hours before payouts which will automatically remove all the votes also. An author canceling a proposal will not receive credit for a new one and will not be able to undo the cancellation. Canceling a proposal will not make a spot for a new proposal and the only way to submit again will be to wait until the next budget.

Expected Outcome?


steemit.com/budget will have a good chance to be the most viewed page on steemit.com within a few months of release as users obsess over submitting proposals, voting proposals up, discussing existing proposals, reviewing past proposals, and planning new proposals. New users and those having given up at being an author will shift attention away from obsessing over author rewards to focusing on budget proposals as most users with no following see that earning Steem in by adding value to Steem through a budget proposal will be easier than by posting. This provides the double-benefit of creating an outlet for programmers and those with other talents that do not translate well to the long-form blog format, allowing Steem to benefit from huge, untapped potential in the largely-IT centric cryptocurrency ecosystem. As word travels rapidly about this new addition to Steem, steemit.com/budget will become one of the top backlinked pages giving us a huge boost in Google and in sharing on social media websites. Millions of people will first discover Steem through talk and ads about the budget proposals which will produce consistently outstanding growth.

As soon as any investor in Dash sees our budget proposal system, we have a good chance to convert a lot of investors in Dash to investors in Steem along with bringing in hordes of new speculation about what the return on the investment from these proposals will lead to. When combined with the excitement and possibilities of smart media tokens, speculators and traders will start to predict the price of Steem going way up and begin buying and holding. Volume on all exchanges will consistently grow alongside huge price pumps and dumps as news related to budget proposals and smart media tokens continuously triggers waves of excitement followed by selloffs.

Things Will Go Wrong!


This is no everything is perfect fantasy. This is the future I see for us complete with some ugly realities. Some budget proposals will be total scams or honest submissions saying I just want money while adding no value to Steem. This could require adjusting the price of making a new proposal. Whales will vote some up in protest to the change and may earn thousands of Steem doing it unless other votes push better projects higher. Every month we will probably waste at least 20,000 Steem on projects that fail to deliver value and are dumped immediately on an exchange lowering the price of Steem temporarily.

A few projects will be voted in amidst huge controversy as top upvoters disagree on which projects should be allowed. Epic arguments will come out in comments on proposals and spill out into posts talking about scams in the budget resulting in more flag wars and a few users powering down and leaving Steem. The usual circle jerks among top voters, authors, and witnesses will happen as projects are submitted and voted up by the same people every month voting for each other while newer users shout at the unfairness. In other words, a lot of what already goes on on Steemit...will continue to go on.

Competition will be so high some months that great projects will fail to get funded while other months those with over 1 MV in voting power will literally drop in little projects at the bottom offering to do almost nothing and clean up hundreds of Steem. Critics never signing up will point to this system as proof that Steem really is a ponzi scheme and make convincing reports showing how the budget just gets paid back to those at the top, much like the author rewards today. Authors having failed before will try again and fail to get funding and swear to everyone Steem is complete crap.

So Much Fun!


All of this attention will add immense value to Steem and multiply with the existing efforts we are making. Our budget proposal system when combined with smart media tokens, author rewards, witnessing, curation, and projects like utopian.io will give every type of potential Steem user something to be excited about and participate in.

In two years, we will look back and be extremely grateful that we added a budget proposal system in alongside smart media tokens and credit both of these as reasons Steem pulled out of the $1 price and launched into $10 first, then $20, and finally $50. In five years, we will have more wallets than Bitcoin and hundreds of times more transactions. Most new users in the cryptocurrency world will come in through Steem and never need to ever use Bitcoin.

One day a flip will happen and Bitcoin will go the way of all the apps and websites we have stopped using because we no longer needed them. In ten years as Steem overtakes all of the other top websites in the world, maybe we will build a garden of Eden where we live and give up needing to go online to feel like we are connected. Or maybe a dictator on Steem will take over the world and put us all into worse slavery than we are in now …

Everything that happens will be a beautiful journey together and allow us to more effectively collaborate online in building Steem which is a gift to the world offering freedom from the grind and a fair share for artists. Would you please do whatever you can to make this possible because we will benefit unbelievably from adding a budget proposal system in an upcoming hardfork?

All The Reasons Not To.


Thanks to Steemfest, I shared this idea before posting about it and got some amazing feedback. Most of the responses were positive ranging from “that sounds good” to “OMG best idea ever!" Some responses expressed confusion which I hope is cleared up now. A few voiced objections within a few seconds of listening and explained why we could not do this before hearing any of the details.

I will address each of the objections I heard here and demonstrate beyond any reasonable doubt that not only will implementing this budget proposal system help add value to Steem, it will also help us stop believing that Steem has no value and therefore needing to prove Steem really does have value. We will be empowered to take action that is based on the belief we recognize Steem has a lot of value and we are committed to building that value every month!

Will Investors Stay When We Remove Interest?


The primary objection I heard was that removing Steem power interest removes the incentive to hold Steem power voiced something like this.

We cannot reduce the Steem power interest because then there will be no reason to hold Steem power. Those with Steem power need to keep up with inflation and the interest helps with that. If we take it away, people will start powering down and selling leading to a lower price and perhaps a crash. With a crash and more power downs, we will be open to an attack in witness voting where the blockchain could be forked.

This argument is based on a fear that lowering interest will upset those with a lot of Steem power and lead to a sell off. The belief required to have this fear is that holding Steem power or just holding Steem provides no value to an investor outside of interest and then removing the interest will remove the incentive to hold and lead to power downs. Further, you must believe that the interest is a key holding consideration for those holding Steem.

The fact is that holding Steem power provides some of the greatest benefits of holding any cryptocurrency from voting to lending Steem Power via delegation to potential curation and witness rewards IF Steem has value. If Steem does not have value, what difference does 2% interest make when the price could drop 50%? Bitcoin is up 700% this year without paying interest. How does that compare to 2% interest on Steem power?

bitcoin 700 percent yield.png

Who is here for that 2% (or less) yield, again? {crickets chirping}

When we look more closely at this objection, we see that there is no point in paying interest on Steem power because if Steem has value, interest becomes irrelevant as the price increases. If Steem does not have value interest is also irrelevant because the interest will not cover the losses.

Steem is not, and should not try to be, a competitor to your local bank’s certificate of deposit.

Do We Believe Steem Has Value?


What we believe has value has no need to prove it has value. Look at Bitcoin. Does Bitcoin pay interest? Bitcoin does not need to pay interest because it is a store of value. We see it as valuable and therefore no one needs to incentivize holding Bitcoin. Does holding gold, silver, or platinum pay interest? No. It is a way to store value and therefore no interest is needed. I heard a lot of talk about Steem being a store of value at Steemfest. If that is what we want, now is the time to act like it has value which means giving up trying to prove it.

As we can see from the logic above, if we believe Steem is truly a store of value, then no interest is necessary to keep investors, authors, and proposal winners holding as much Steem as possible. If we believe Steem has no real value, then the games we play to try to incentive holding Steem are simply proving our belief that Steem has no value.

In dating and relationships, we can see this very clearly. When we are single and know we are attractive and have value as a lover, we tend to attract a partner that feels the same by simply being our (confident, outcome-independent) selves. When we are single and feel insecure about our worth and question our value as a lover, we tend to work hard to compensate to prove a different truth than we feel AND we attract a partner that feels the same way. Healthy relationships tend to be founded on trust and have no need for games to maintain faith and excitement. Unhealthy relationships tend to be founded on fear and constantly have drama from the games played to manipulate and control the other.

Our Relationships on Steem.


Let us look at our rules for a moment to see the truth about our community as it is today. We force ourselves into powering up and endure a 3 month withdrawal period instead of creating enough value for Steem to render powering down undesirable. We pay interest on Steem power to try to prove to others and ourselves that Steem has value. No one I have ever pitched Steem to has gotten excited about the interest, because we typically associate interest with boring investments like bonds.

We pay most of our new Steem back to those that already have the most in the form of interest to Steem power holders, witness rewards, and payouts to mostly top authors to help encourage ongoing participation out of fear that if we stop, they will leave us.

Our relationship with the value of Steem feels insecure. The first step in doing better is admitting we have a problem and that yes, we are struggling to believe Steem truly has value. Our entire approach to those holding Steem and participating feels like we believe we do not have true value here and we must put systems in place to prove our value and force people to stay. What we have gotten in return is a Steem price that is nearly the same as when we released, a lot of users with influence that never invested, and new users every day joining for a promise we do not follow through on.

In summary, it seems most of us are struggling to believe Steem really has value which is why we behave the way we do and feel so insecure every time the price drops. When we ACT AS IF STEEM HAS VALUE, the rest of the world will follow our lead.

Adding the budget proposal system will prove this to ourselves and everyone else that we know Steem has value and that we are willing to continuously reinvest in building that value. On top of that, we prove by adding budget proposals that WE TRUST the top witnesses and WE TRUST top Steem power holders to continue making valuable contributions and holding Steem with less rewards in the short term in exchange for much more value in the long term because of a higher Steem price.

After we look at what our belief is about the value of Steem, we are ready to cover the rest of the objections!

Will Top 20 Witnesses Will Keep Contributing?


Every top 20 witness gets about 260 Steem Power every single day which is more than double the average that the top 10 authors on Steem receive in addition to having the ability to earn more from posts, create projects that make money, witness in other blockchains, and/or keep a day job. Not one top 20 witness has an account created after October 2016 meaning every top 20 witness today has been on Steem for more than a year. While this means there are no newer witnesses in the top, it also proves the loyalty of the top witnesses through a lot of our previous changes including approval of hardforks that reduced rewards and interest!

Given most top 20 witnesses already have some of the highest income earning potential on Steem, is it reasonable to ask the top 20 witnesses to GIVE 50% of the guaranteed rewards to pay for budget proposals every month? Adding 50% of 260 Steem a day every 28 days to the budget will produce 130 Steem times 20 witnesses times 28 days which equals 72,800 Steem just from top witness pay alone every 28 days. Meanwhile every top 20 witness will still get 130 Steem Power a day PLUS the option to submit projects to the budget with a very high likelihood of approval. Many witnesses already have ongoing projects that would be eligible and nearly guaranteed to receive funding via the proposed budgeting system. (@jesta with https://chainbb.com, @goodkarma with Esteem, @furion with view.ly, @busy.org, etc.)

Can we be fairly certain that most top 20 witnesses continue at the same level of service even with half of the rewards because of an ongoing commitment to Steem? Maybe a better question is how many witnesses do we want working for us in the top 20 that would immediately cut back service upon reducing the rewards? How many witnesses working hard at the bottom and getting less than 30 Steem power a day would be happy to step in and get 130 Steem Power a day if one or two top 20 witnesses disabled in protest? Steem is blessed with far more than 20 highly qualified and dedicated witnesses, but currently the “Steem witness market” bears a striking similarity to a labor market with a very high minimum wage stifling competition and innovation.

steem witnesses below top 20.png

It comes back again to whether we believe Steem has value. If we believe Steem has value and the price will continue to grow as we continue to add value to Steem every day, the rewards we are paying witnesses now become huge as the price increases. When Steem goes to $10 in a few months after adding budget proposals, communities, and smart media tokens, we will be paying witnesses in the top 20 even with a 50% paycut $1,300 every day in Steem power. That adds up to about half a million dollars a year. Would a cut to half a million be reasonable with the other half open to the community? Will we be better off acting as if we expect this to happen and accounting for it beforehand?

I get it. Nobody likes a paycut. I did not enjoy getting 260 Steem a day last week as a top 20 witness only to mysteriously lose 20% of my votes while at Steemfest and get reduced back to 50 Steem a day despite using all of my witness earnings to fund ads for Steem. With budget proposals, the most active witnesses working on Steem full time would be motivated to submit projects every month which would mostly get funded at an equal or higher reward than 130 Steem a day.

For example, in hosting Steemfest 3 next year, @roelandp would simply submit budget proposals for up to 20,000 Steem as many times as needed until the entire conference was paid for. How many hours of time and energy would he save not having to worry about funding outside of making proposals? None of the whales then would need to contribute to the cost to have the conference and instead we could have more money to reimburse those traveling which could also be done directly in the budget. The budget could easily pay for all of Steemfest and we would barely notice the difference.

Do We Already Have Funding On Steem?


Before hardfork 19, an amazing project on Steem often would receive thousands of dollars in upvotes to get started and go forward. The problem was that complete crap posts and circle jerks were also receiving huge amounts of funding while the average user received almost nothing and had little chance of changing that. Within a few weeks of joining the community, we funded my Steem ad campaigns with as much funding as I had received from submitting my seven Dash budget proposals over 4 months. If I was a user with no following, that probably would not have happened because no one would have seen the posts or trusted me with the upvotes.

After hardfork 19, funding new projects with author rewards has become extremely difficult with linear rewards. The only practical way for most to get funding is to make posts consistently which now are lucky to earn $500 for an incredible idea. While $500 is good money to earn on a blog post, $500 is a fraction of what we need to fund projects that will add the most value to the Steem blockchain. $500 is also a lot more than most great posts make even among top authors, and the effort that goes into such a post can represent days, or even weeks, of high-level effort. Writing this has taken me a week's worth of effort making posts combined with hours of edits by @lexiconical to make sure this was truly a worthwhile project that read smoothly.

$100 is about the average a top author on Steem can hope to earn today with one post per day average or fewer posts with more upvotes. To produce at this level for me means spending hours of time to research and write a post or making a video first and then spending $20 to $50 for help in transcription and edits along with 10 to 30 more minutes to edit the post. Meanwhile, this only works for me because I have the largest real following on Steem and have invested over $50,000. Despite my best efforts as an author to contribute every day, I am open to downvotes on a regular basis regardless of what I post.

Worse than the downvotes, my rewards stop immediately if I stop posting. I did not make a post for almost a week before this as I worked on writing this massive whitepaper which is over 10,000 words. From looking at earnings, I take a risk putting so much effort into one post versus just taking the auto votes on many smaller posts where I am virtually guaranteed $50 per post on autovotes but there is no guarantee on a larger post of larger rewards. At the same time if I post about a project too much, readers and voters get annoyed leading to even more downvotes. If I attempt to help in other ways, such as engaging the community in chat, assist new users directly, or do anything other than post, my earnings will be zero until I return to solely working on my own content creation. This very format encourages burnout and “Steemicide” as @stellabelle has talked about.

Being an author on Steem is an ineffective method for raising money for a project beyond an initial idea and occasional update. Unfortunately, author rewards are the best chance most of us have to get any funding for our project.

How to Raise $10,000 More for Steem Ads?


I have been obsessed with advertising Steem on Google, Facebook, and YouTube because I know how powerful online advertising has been in building my own following to over 2 million online. In my first five months on Steem, I have averaged a few thousand dollars a month in funding raising using every method available and I can tell you with certainty there is no good way for me to raise $10,000 more to fund the new ads on Steem despite having done a great job according to feedback on the previous $10,000 I was given and have now paid to Facebook and Google. To make matters worse, it should be easier for me to do this than for 99.99% of other users because of my focus and following. If I cannot raise $10,000 easily in my position to help promote the growth of Steem, it is unlikely that most of us can realistically raise $1,000 or even $100 for an amazing project to benefit Steem!

Our existing systems to reinvest in Steem are not effective in allowing new users to participate at scale. Smart media tokens will not change this because they are designed to empower anyone to add the value of Steem into an existing community. Unfortunately, smart media tokens offer no way to finance promoting themselves which will make it difficult for those that would benefit most from using a smart media token to learn about it or be motivated to give it a try. If our release for smart media tokens was any indication, the excitement might peak for a few days at release and selloffs from those waiting for a peak will bring the price even lower than it was before smart media tokens were out. We need one more part in this system to make it all work.

Budget Proposals x Smart Media Tokens = Liftoff!


With budget proposals, those wishing to launch a token will be able to fund the development for that with a budget proposal. If we expect companies to handle the integrations themselves, I think we are going to be very disappointed as we see almost no adoption. If we expect direct collaboration with Steemit to pay the companies to build the tokens in, we open ourselves up to criticism for funding some integrations but not others, all while missing the opportunity to allow these collaborations to be public. Further, this would result in the fate of the project being centralized at Steemit, Inc, which could stretch their resources thin. The real opportunity using a budget to fund smart media tokens would be to entice more companies to do the same by making integration profitable (and easier) via community funding. In the NYT example, how many more companies would integrate smart media tokens after watching the proposals, seeing them go through, and seeing the finished results?

Use Case #2: NYT +Smart Media Tokens!


Let’s say the New York Times would like to make a smart media token but wants to hire a new developer to lead the project. They could then make a proposal for 20,000 Steem to give them the financing to get the project started and have everything setup. A second proposal could help finish the job the following month after which they would be ready to launch by month three. We pay 40,000 Steem to help them pay their costs in launching the smart media token. They then drive millions of dollars of purchases of Steem through their new NYT token which empowers users to have influence and earn more by contributing to their website. Everyone wins.

Budget Proposals = SMT Salesforce!


In addition to companies being able to get funding to integrate smart media tokens through the budget, thousands of our users will think of incredibly creative ways to get paid to sell smart media tokens to the companies that are most likely to use them. We could afford to fund hundreds of sales pitches by individual users about smart media tokens every month for probably for less than 100 Steem each. An example proposal might include a promise for 100 Steem to pitch a local newspaper on integrating smart media tokens based on the owner being a friend or getting a meeting with one of the top decision makers. How many of these thousands of sales pitches would be successful and spawn new smart media tokens? Even if most failed, the few that worked would pay for all the others.

Funded Proposals = More Users!


We need a way to fund growth on Steem that is transparent and easy to get started with because this will MULTIPLY with our existing efforts. A user successful in getting a proposal funded will be more likely to post and refer friends. Those friends may launch their own smart media token. Buyers of that new token may invest in holding some Steem. Traders noticing this extra volume will buy and hold more often. Readers following cryptocurrency prices will see the price grow for Steem will get excited and sign up. Authors forgetting about Steem will come back to start posting again as rewards go higher. The posts made by these authors will get found in Google search and bring new users in that submit budget proposals.

The key is we need to multiply our efforts together in a way that helps make it easy for any of us to get the new Steem created in exchange for making a valuable contribution. In multiplication, adding a new multiplier is way more effective than simply making the existing ones larger. For example, if I multiply 10x10, I get 100. If I add 10 to each I get 20 and 20 which multiplied is 400. Adding 10 to each represents working on what we already have. If instead I add an additional multiplier of 10, I get 10x10x10 which equals 1,000. Adding another 10 in to multiple represents adding something new. We do not have to be math geeks to appreciate that 1,000 is bigger than 400. Adding budget proposals allows us to multiply our existing efforts which will also multiply the value of Steem.

The idea that the methods we have now are working well to fund new efforts is only valid if we are happy with the results. The Steem price today is about where it was when we launched more than a year and a half ago, while Bitcoin is up over a factor of 10 in that same time-frame. Does that indicate we can improve at reinvesting in our own growth?

Adding budget proposals to Steem will give us the most effective fundraising mechanism we have ever had and soon the most effective in the entire world of digital currencies. Budget proposal funding will multiply everything we are currently doing to provide funding in Steem such as witness rewards, author rewards, curation rewards, and Utopian.io.

Will We Be Safe From Attack?


Another fear is that if we remove interest and lower witness rewards we will open our network to a hostile takeover where witness voting would fork the blockchain. This assumes that the witnesses and voters we have in place already are not interested or capable of doing this, and are rather just waiting for the right time to strike. The security argument is based on the belief that the people we have today are the only ones we can trust, which is a popular tactic among centralized governments and corporations. It is ironic to see the same strategy used when so many see blockchain technology as a solution to these same problems.

Over the last year, we have seen more people come and go in Steem than stay. If our community truly has value, we will continue with whoever is in the top witness positions without any big problems because everyone has the best interests of the community in mind. If we are out for our own gain and are just using Steem to get what we want, then this community is one where we must watch our backs and truly offers nothing of value to the world.

In summary, creating a budget proposal system from the interest and witness rewards pool poses no greater risk than we already face today. In fact, creating a budget proposal system will most likely reduce the likelihood of a hostile takeover as the excitement builds and the price of Steem grows. The higher the price of Steem, the more resources would be required to assemble a “hostile takeover” by purchasing an influencing stake. The more joy we have in our community and the more we believe Steem has value, the more stability we will continue to enjoy.

Who Benefits Most Keeping Things The Same?


Most of the interest created from holding Steem power goes directly to the @steemit account resulting in over 1 million new Steem power added to the Steemit account every year in interest. This means that Steemit in fact will lose out most by changing the interest. Next, the largest holders of Steem power such as @freedom, @ned, and @blocktrades would lose out on hundreds of thousands more Steem power paid in interest with this change.

At first, this might look bad until we think it through. Would @steemit, @freedom, @ned, and @blocktrades prefer to earn 2% interest on Steem power or would each prefer to see the price of Steem go up? An increase of just $0.03 in the Steem price every year would be more return on investment than getting 2% interest on Steem power. Adding in budget proposals is likely to put the price up at by much more than 3 cents.

Who really wants to keep things the same? The “haters” and the critics benefit the most from not making this change. Everyone that has powered down and said Steem sucks has a better chance of being right when we avoid setting up a mechanism that has proven extremely effective to help blockchains fund their own growth. Every commenter on Steem, Facebook, YouTube, and Reddit saying Steem is a scam benefits when we decide adding budget proposals is too much of a risk or that we have more important things to do.

Those hoping we fail benefit the most from our own failure to help ourselves and empower new members of our community immediately to add massive value by submitting budget proposals. None of us that love Steem and want it to grow come out ahead by keeping things the same. Will we take a leap of faith on making this switch with the objective to help us reinvest in our own growth?

The Price of Steem on Budget Release Days.


Another very logical concern is that if we pay out 200,000 Steem every 28 days, the price will take an epic dump as Steem paid to proposals gets immediately sold on the market. However, if we look closer, we will see that is unlikely to occur.

Currently we have so few transactions on exchanges that our volume is so low that most traders do not even notice us today or make trades in Steem.

volume by cryptocurrency.png

Even if all the Steem from the budget does go out on the market, it will get the volume going which may trigger some new interest in Steem including some big buys and trades. The additional trading will generate exchange fees, encouraging new exchanges to support Steem, and current exchanges to continue listing Steem. If Steem truly has value, buyers will know to wait until budget release day and be ready to buy up a lot of the Steem cheaper, which will boost the price back up.

In Dash, the budget releases do not seem to have impacted the market and the 200,000 Steem rate is almost exactly the same as the 7,000 Dash rate when adjusted for about 7 million Dash being available and around 200 million Steem in circulation. These numbers can be adjusted by the community before implementation for Steem’s individual needs; nothing is set in stone.

What we have currently is resulting in lots of Steem being released on the market as buyer interest is overwhelmed by constant selling pressure from those fearing Steem will drop even lower based on the belief it has no value. If we work on building the value of Steem, there will be much less temptation to sell and a lot more buy orders. Having the confidence to allow 200,000 Steem out on the open market every 28 days is a sign that Steem is valuable enough to handle any temporary price drops and actually may lead to a price increase from the extra volume on trading days.

Finally, 200,000 Steem at today’s prices represents only 8% of a typical day’s trading volume in Steem. Even if the entire 200,000 Steem from budget proposals is immediately dumped on the market each month, total selling pressure will only be increased by 0.27%(albeit mostly at once). This is hardly likely to cause any catastrophic results.

Is There Time To Build This?


The final argument is the “too busy” excuse we use when we do not have time to do the things that we love or when we are afraid trying something new. I used to be too busy to eat better, exercise, listen, get a massage, be a good husband, go to AA, see a counselor, take a deep breath, and to appreciate the world around me. That made me so miserable I could not stand to live like that anymore. I either had to die to escape the pain or start making time for what mattered like taking my dogs for a walk instead of writing another post or filming another course.

When we see the biggest opportunity to make an improvement in our lives, we are only hurting ourselves and those around us when we delay action. I know because I spent a lot of years of my life being busy and producing nothing of value all the while suffering and hurting the people around me AND knowing in my heart there was a better way to live. Today if I am busy I cannot stand the pain for long. I spend hours every day with my family, walking my dogs, volunteering, and taking care of myself and those around me by preparing healthy food, reading inspirational books, and listening to music especially by Deadmau5.

Every day new users are joining Steem and quickly getting frustrated with our inability to help produce the rewards. We fail to upvote posts that took hours and brought in thousands from Google search. We give all of our upvotes to amazing projects only to see that the costs were not even covered. We have great ideas only to realize there is no way to pay for it. We see authors, investors, and witnesses earning huge rewards every day while most of us would be happy to make a few dollars a day in exchange for an hour or a few hours of service.

Every day we are losing almost as many users as we are gaining. The data does not look good right now as almost every metric that counts is down such as new user signups, daily activity, and price. Unlike Facebook’s viral growth where users came and stayed, most of our users are joining and leaving in frustration. We are looking at another epic drop that we can easily jump out of by making it easy for anyone to come up with an idea to help us grow, fund it, and execute.

We Need This Budget Proposal System Today!


We can change everything by building this budget proposal system, finishing communities, publishing the mobile app, and launching smart media tokens. No budget proposal system and we are unlikely to see communities or smart media tokens take off because of lack of user adoption/retention which will be the same reason nearly every cryptocurrency community fails. When instead we add budget proposals as a priority on the to do list for Steem, we are looking at a shot to the moon as the proposals and smart media tokens combine to make Steem a top choice for investing in 2018.

What If Things Go Wrong?


A realistic worst-case scenario would include a roll-back to undo these changes in a following fork. Steem has already proven additional hard-forks are manageable.

It is riskier to do nothing than it is to try.

Will You Please Help?


Would you please help us make this a reality because we can absolutely add massive value to our community by making it SIMPLE and TRANSPARENT for ANY USER to obtain FUNDING for projects that ADD VALUE to Steem? Every upvote, resteem, share, comment, promotion, suggestion, conversation, and thought about adding budget proposals to Steem will help us all bring our budget proposal system into a reality that we each will love participating in!

Love,
Jerry Banfield with some images, minor additions and edits by @lexiconical

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