Background of the Bots

I have been using Bid Bots on Steemit for some time. I know the proper way to use them but never knew the history until now.

• Wave 1

"When it first comes to I pay, you vote, the very first to sell votes explicitly are @randowhale and @whaleshares. Whaleshares is done by some of the creators of bitshares (made by the co-creator of steemit). You buy or earn whaleshares, hairshares, or beyondbits on the Bitshares Decentralized Exchange (Dex). If you send 1 SBD to rando, you will get a random % vote."

• Wave 2

"After these OGs, @minnowbooster and BuildTeam were founded. MinnowBooster has a feature where you provide them posting authority so that they can vote and provide you 40% of the profits. They sell votes at 270% ROI. So you get a 2.7 SBD vote for every $1 SBD you send. There are easy limitations for it that you can customize. @BuildaWhale was created around wave 2. This was the first bid bot, but it has a massive value so in the early days you got incredible returns. This was especially true when it didn't get the reach it now has particularly with steembottracker. Qeue list bots were created around this time as well. This was where you would send the post link and wait until the bot refills VP and then vote 10 posts from the list. These have the highest ROI with @lays giving 270%, Tpot gave 300% for a while, and @bumper which was 300% up until recently. I am a part of both of these teams (Bumper and TPot)

• Wave 3

"Now we have over 70 bid bots. SteemBotBtracker made it easy to fill and overfill the bids. This often led to harshly negative ROIs. This is essentially you paying them x fee for bidding and y cost for the vote. To understand, the important ROI is the liquid SBD you get from payout. Because of the 50/50 split, you need 200% ROI (2x the cost value) in order to break even **if voted first on post when it first posts). Otherwise, you get 75% and give 25%. This means anything below 250% is already a loss. You can consider the SP as adequate for anything above 200% ROI, but again this isn't a liquid currency."

The Shift in Dynamic

"Bid Bots then kept blowing up. Left and right.

"With the help of steembottracker loading up the bids and overfilling, the bots became way to profitable to run. This meant everyone was creating one. This had several unfortunate side effects. Firstly, this shifted the wealth upwards towards a few whales running the bots and the average money left in minnow hands to be much less. Afterall, if you get negative ROI or still earning less liquid than paid, you aren't growing your wallet and only slowly growing your SP at a much smaller rate... then you turn around and give up your SP to help these bots!"

The Circular Inflation of Delegation Markets

So when a bid bot gets SP, where do they turn to?

"MinnowBooster SP Delegation Market. Prior to bid bots, it was easy to lease SP for personal usage. After, it became harder. Due to the incredible profits, bid bots were willing to pay more than average leasers would be willing to shovel. This, accompanied by the explosion and invasion of bid bots on the market, meant the delegation market became ruined... the only people delegating were dolphins. As a minnow, if you managed to hussle 100 SP to delegate, you would have decent ROI on being able to delegate SP, but where are you spending that SBD? To the very same bots! Your money is being circularly drafted from your pocket to whale pockets, fee taken, then given back to you so that you don't even notice the slow drain to your wallet."

Above info from @jpederson96
https://steemit.com/blog/@jpederson96/blogging-around-day-58-so-you-made-a-bid-bot

The Need to Add BS Filler To Please Those That Feel I Am Plagiarizing

Even though I gave credit to the source of the above information certain users find the need to comment that I am plagiarizing stating that

" Copying/Pasting full or partial texts without adding anything original is frowned upon by the community.
Some tips to share content and add value:
Using a few sentences from your source in “quotes.” Use HTML tags or Markdown.
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Include your own original thoughts and ideas on what you have shared.
Repeated copy/paste posts could be considered spam. Spam is discouraged by the community, and may result in action from the cheetah bot." @steemcleaners

So to please this user and avoid flags from other users that simply piggyback off larger accounts I will add some of my own 2 cents.

I like Bid Bots I think the idea is pretty cool and the tracker site is helpful I just wish that if a user over bids the max profitable amount remaining, then that bid gets carried over to the next round to avoid negative ROI for the previous bidders.

What Do You Steemians Think?