I was noticing the recent explosion of growth that the Steem chain has been experiencing in our user base. @penguinpablo keeps some pretty good stats on the whole thing.
Steem is blasting past 50k active users and getting ready to touch into the 60ks.
It's driving our Alexa rating too:
"Inflation is the worst thing ever and must be stamped out"
I think I see a lot of this with crypto hounds. They seem to hate practically all forms of inflation. There's a good reason for that sentiment. Inflation can cause a lot of harm to an economy. Especially a lot of inflation, and especially a lot of inflation in a somewhat developed (slowly growing) economy. Inflation in the USA is particularly bad because rich bankers are the primary recipients of the wealth and everyone else is stuck holding the bag of an inflated currency and the decreased purchasing power that comes with it.
A lot of folks are worried about hyperinflation. They also like how powerful a completely deflationary currency can be. There's no doubt that a deflationary currency can do some pretty solid growth! Just look at bitcoin.
There's a part of this discussion that clicked for me when I was watching this mainstream approach to the value of a currency and why a bit of inflation can be good.
I have gotten on board with a little bit of inflation can be a great thing for the platform, but now the question to me is how do we distribute that inflation so that the entire platform is able to experience the benefits?
Steem inflation is different than other token inflation. We have Proof of Brain, which means Posting = Mining
The price of doge has been rising. Here's the price chart from livecoinwatch.com.
When that price is rising I might think, "Man I missed out on that opportunity," but it doesn't drive my desire to get into that community. Maybe since the inflation goes through mining I might want to mine a little more, but just cause the price is going up doesn't mean that I want to go join a Doge Community forum and spend a ton of time on it. That's not the case with Steem...
New Members
Please welcome @marcinromowski to Steem. He's the 577,435th account created on the Steem platform.
I don't know this dude, but if I had to guess he heard from a friend that you can make absurd amounts of money by blogging here. It doesn't take any money to get started except possibly an instant sign up account. Otherwise, you're off to the races and life is good.
What macrin is experiencing along with everyone else is the effect caused by platform inflation on the Steem blockchain and how we've put it to truly exceptional use!
Let's look at inflation Steem
Right now it's hard coded into the blockchain that we start at 10% platform inflation and it goes down 0.5% every year for a little less than 20 years. Right now we're slowly lowering inflation and we're in the 9% range.
There's some good and bad in how our platform inflation works and you can see it in this diagram from @jesta's steemdb.com.
Platform inflation is good if we use it well
First off I happen to like overall platform inflation. To me it's one of the counters to totally fucked platform distribution. This is where the top 100 accounts and their sock puppets own 93% of the steem or more. This occurred because of a premine followed by a STAKE WEIGHTED mega inflation that was total bullshit. Platform inflation going into Stake Weighted hands is one of my least favorite totally un-egalitarian things I've ever heard of. It's a wealth sucking mechanism that takes capital from the users and pumps it into the richest accounts on the platform. That's terrible! That's what everyone in crypto is fighting. Why the fuck did this platform do it?!?
This following image is from steemwhales.com and it's data is a couple of months old, but this is what I'm talking about.
The distribution on this platform is worse than any time in feudal England. It's worth noting that the 70 million steem that Steemit owns isn't even included in this. The distribution picture is actually far worse!!!!
What do you do about a fucked distribution?
So, the counters to that are things like forking steemit or the devs off the chain, murdering the devs and while doing that extract keys out of them, or slowly over time distribute the stake through platform inflation to active users. We could have a Marxist revolution and go down to Austin with guns and seize the means of Steem production by force!!! That said... I run a peace group so I'm less inclined to fork people off the chain, coerce them with violence, or murder people. So, to me I think the inflation route is the way to go in part because it has some additional benefits that are unique to steem and truly extraordinary from an abundance for all perspective.
A couple types of inflation
To be clear there's platform inflation, and if used well I like it a lot. Platform inflation is the new amount of Steem printed every year. I'm a fan of making this a witness variable, or hardcoding it to be 10% instead of the slowly declining thing that it is now. Platform inflation I perceive as a major growth driver for us, which I happen to think is one of the main reasons we're mooning right now. I'm a big fan of this inflation type.
How does it help us moon? Well, ask yourself if you feel inclined to post more or own more now that steem is worth $5-9 and your post rewards just quintipled. If the answer is yes and you're acting on that you're making this platform grow because of platform inflation. Did you talk to anyone and say "holy shit look how much you can earn now? You have to join STEEM(IT)!!!" Then you're in the group of people that are having a positive experience with platform inflation. This is increasing our value because there are more users, and out of those users some are buying Steem and that's also driving the price upward!
Bad Inflation
Stake Weighted inflation is bad. I don't know exactly how they were doing this a year ago when the price tanked down to 7 cents per Steem, but a remnant remains that's hard coded in how the block operates and the effective amount can be seen in this Steemdb.com image.
The hard code says that 15% of all inflation will go to back to users through stake weighted inflation, but Steem is a complicated beast and as a consequence it doesn't work exactly like that in practice. See that 9% that's boxed in red? That's 9% of the platform inflation going back to users through stake weighted inflation. So, let's do some back of the envelope math right now.
260M steem. Call it 10% inflation. That's 26M new steem. it's supposed to be 15% but effectively it floats so I'll call that 10%. That means roughly 2.6M steem is going back to users through stake weighted inflation, but that's borked. 93% is going to the top 100 accounts so we're funneling about 2.5M steem back to the already largest accounts. Right now that's $12.5M usd. A year from now I'm betting that's 125M USD. This is dumb. Let's not do this anymore!!!
Why I hate it
Part of what I hate is that two of the biggest beneficiaries of this are bittrex and poloniex. They are two of the largest collective accounts and when you're holding your steem in there they are getting the benefit of this platform inflation. Yes, THAT poloniex that let our wallet slip for months at a time was collecting assloads of free steem while doing it...
Part of why I hate it is that I don't think it really does much for the platform. If a wealthy person gets 10 more Steem what's he/she/furry care about that? They likely won't change behavior all that much or promote the platform any more or less than they did before. If it goes into the hands of active users and especially new active users we're likely to see a whole army of people running around telling everyone they know to blog on Steem. That sounds better to me. It grows the platform and brings more devs and communities on board, which will ultimately allow Steem to support a higher price.
I'm not mad at the devs. I'm not mad at Steem. I just thanked these guys. I'm not mad at our whales. I'm not anti investor, but I am anti-dumb investment. We need people growing the platform incentivized by life changing money distributed to many active users rather than already rich people getting slightly richer where it won't really impact their behavior.
Good inflation use
The good type of inflation is platform inflation going to post rewards and curation (with a small percentage for witnesses). I know some of the other witnesses and whales aren't totally happy with how the reward pool is working right now. There are some major whale vote trades happening pretty easily spotted in trending. There are whales that don't distribute rewards to anyone but themselves, and a myriad of other problems. These are bad. Hopefully good whales will flag this bullshit down.
That said, I know there's abuse, but there's also a lot of good shit. Have you seen dtube? This chain has our own youtube service. Same with dsound and dlive. It's fucking amazing!!! And we're rewarding them. Have you used Vessel (another @jesta baby)? That program is awesome. Post rewards are helping to fund that too. I'm just saying at the same time we can find abuse we can also find some pretty epic shit that we're collectively making happen. Just cause there's some abuse doesn't mean the whole reward pool distributed to 50k people is a cesspool.
Could it be better? Yes! that's why I support a separate pool for downvoting. Downvoting is necessary in linear rewards now that other types of consensus have been removed. But I don't think the fact that it's imperfect should make us avoid putting more rewards into the hands of authors and curators especially if we're simply diverting new wealth from going into the already exceptionally wealthy.
So... this is long Aggroed... WTF is your point?
So, my first idea was to turn the 9% stake weighted inflation into a worker proposal system. Basically kill the 9% stake weighted inflation and shove it into a worker proposal system. It has a lot of supporters, but the large account naysayers basically say wait till SMTs. Ultimately there doesn't seem to be any political will to implement this.
So, now it's on to the second proposal
Change platform inflation to a hard coded 10% or a witness variable.
Cut the 15% hard coded/10% effective stake weighted portion of platform inflation and get rid of it entirely.
While we're doing that let's cut top witness pay a little while supporting backup witness pay and give ourselves an even more robust set of servers, community builders, and devs to make Steem the best spot on the web.
While we're doing that let's make a separate pool for down votes to make sure we send the platform inflation to good content, people, and projects and less to various forms of abuse.
What's the upside?
Change platform inflation to a hard coded 10% or a witness variable.
Cut the 15% hard coded/10% effective stake weighted portion of platform inflation and get rid of it entirely.
While we're doing that let's cut top witness pay a little while supporting backup witness pay and give ourselves an even more robust set of servers, community builders, and devs to make Steem the best spot on the web.
While we're doing that let's make a separate pool for down votes to make sure we send the platform inflation to good content, people, and projects and less to various forms of abuse.
This would effectively raise curation to authors and commenters, and we could at the same time make it so that the rotation of witnesses included 2 backup witnesses per 66 seconds instead of 1 backup per 63 seconds. This would knock top 20 witness pay down by 5% while simultaneously doubling the rewards for all the other witnesses. A handful of witnesses are asshats that basically don't do shit for the platform except leach rewards, but there are lots of high quality devs and community builders that we could support while simultaneously increasing rewards to authors and curators.
Basically let's support the active users on the platform as they broaden our reach and simultaneously support the witnesses who build stuff that allows this community to have a more stable and decentralized platform with better access, tools, and communities all over the world.
Since abuse is a concern let's empower the community to fight abuse. HF19 requires more vigalence and community tools to fight abuse. Let's make it happen!
The cost
Well, this would involve diverting somewhere around 2.5M new steem from going back to the richest steemians and instead pumping it out to the nearly 60k active users and 100-200 witnesses that work on projects on behalf of the block.
I'm pretty sure that we'll get far farther as a platform moving inflation from those who need it least to those that spend time active promoting and building tools for this ecosystem day in and day out. So, yeah, the big accounts would miss out on some steem, but they'd have steem that was worth a lot more. They'll figure out a way to cope...
These guys aren't evil for having put it in there
To be honest before the price surge I now kinda understood the need to have it there. It was a compromise to keep the large investors from leaving. We desperately needed that to prop up our price, but as we're now out of the $1 range I think we can reexamine our priorities a little as a platform.
As an aside we're gonna need their support on this!!! The witnesses who can change things are effectively voted in by the whales. I have over 3000 votes on my witness, but about 12 votes still account for 70ish percent of my vote total. This isn't gonna happen without the whales. It's part political and part common sense to share I'm really not anti-whale. You guys are smart people. Hopefully you can understand how an army of people working on behalf of your investment (the Steem platform) is better than letting it sit in your Steem wallet.
One last time... what's the tl;dr? Steem to the people not to the 0.01%!
There's no political will for a worker proposal system (because SMTs and this whole platform can be a worker proposal system) so do a few things.
Change platform inflation to a hard coded 10% or a witness variable.
Cut the 15% hard coded/10% effective stake weighted portion of platform inflation and get rid of it entirely.
While we're doing that let's cut top witness pay a little while supporting backup witness pay and give ourselves an even more robust set of servers, community builders, and devs to make Steem the best spot on the web.
While we're doing that let's make a separate pool for down votes to make sure we send the platform inflation to good content, people, and projects and less to various forms of abuse.
Benefits:
This proposal will help platform distribution, which will make Steem a better experience for everyone.
This proposal will increase platform rewards for all but roughly 100 accounts who don't need the extra money and many of those folks got the steem from a mined stake that was hyperinflated, which required practically no investment.
Changing witness pay will give us a more robust set of servers, community builders, and devs to help spread the gospel of Steem.
Having a separate pool for down voting will help ensure that rewards go to good people, posts, and projects rather than abuse and vote swaps.