Inflation, bad?
I have heard the idea of reducing inflation down to 1-2% on Steem - by eliminating the reward pool for Proof of Brain and leaving just inflation for witnesses & Steem Power hodlers. And moving token rewards over to Smart Media Tokens, strictly.
I believe the inflation in place is good + sustainable, with 8%ish and lowering every block.
I always figured Steem as The Upvote of The Internet.
Of course, every good faucet needs a sink to go along with it. A few ideas I had for sinks would be an Instant Power Down + 5% burn fee & Burn to Promote (buy Steem, burn it to get more exposure for your post) which popular front end @SteemPeak have already implemented.
Creating thoughtful sinks will allow you to get the utility of Steem with upvotes while balancing with burns.
I look at Steem token being the visa of the Steem blockchain, excepted everywhere (under each "house rules" if you will) retaining its amazing utility.
Steem is a Delegated Proof of Stake (DPOS) blockchain, which is a stake based democratic chain meaning we need to Steem in as many hands as possible for decentralized voting.
To do anything on Steem you need resource credits, which is another reason we need Steem in as many hands as possible. Giving Steem “samples” out for free is a great way for people to see how deliciously useful it is!
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Erm, no ty.
TRY FRIED RICE!!!
Ok, Ok... Mmmm! That is delicious!
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Issues that arises with locking Steem up so that holders and witnesses are the only ones getting inflation.
First, the rich get richer.
Secondly, witnesses are a tiny group. The DPOS can become centralized to early adopters & witnesses only if that setup.
Steem can one day be in a billion hands, where hordes of minnows can make or break a witness being in the top 20.
Power corrupts all, and we need checks & balances. By giving the bulk of inflation away to new users, I believe that is the key to winning. You get people to use your currency by giving it away. Fried rice anyone?
BUIDLing into the future, I believe we should buidl with Steem powered upvotes in mind.
Why Price Bad?
People think inflation is the reason the price is down. No, one the reasons the prices are down is that Steem has a working product and it's an altcoin in a bear market. I know you're saying we are dropping in rankings, but when we are getting passed by the likes of "Japan Content Token" listed on sketchexchange dot com… much wow!
Steem is a victim of being a good blockchain. It's not listed on sketchy exchanges that have market makers pumping fake volume. ICOs do that to appease ICO investors, Steem didn’t have an ICO; therefore, there are no market makers faking volume.
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ICO token is key to success!
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Look, I'm saying Steem isn't the only great project getting slaughtered in value. Look at coins like Civic and NLC, low alts with working products, slaughtered. What's still standing? Fcking hype coins, stuff with no real products. Because they are being manipulated in price.
In the NFL, they have a term called "getting frazzled." It means, when you get down by a few scores, you start deviating from your original game plan.
For instance, a team with a great running attack but an average passing offense, might abandon the run and start throwing out the deep balls to try and catch up. In reality, what is best is to buckle down and stick to the game plan.
With mass adoption, Steem will tear through inflation like a knife to hot butter. If anything the inflation will be needed to keep supply up & help with sell liquidity, remember, people actually need Steem to use the platform, chocking supply to nill isn't a great sales strategy. Tons of Steem will be locked up by apps/dapps as it is, cutting inflation will severely cut supply, in a bad way, in my opinion.
Combining a great Faucet like Steem has for onboarding (proven very effective in making Steem go viral) + creative value adding sinks. the burning of Steem takes Steem from hodlers hands and destroys it. That means these people where already onboarded. New Steem inflation can be used to onboard new people.
I am a fan of the current PoB setup with the new improved Economic Improvement Proposal (EIP.)
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The idea that you have to choose between (high) inflation and distributing Steem to many hands (say a billion, to use your number) is false.
There are many ways to distribute coins. For example, a front end or community can require that advertisements be paid for in Steem and can then distribute those coins to its users as rewards. This has numerous benefits as an economic model, including the fact that it closes the loop in terms of value add and value paid out. Any front end or community which allows its users to 'milk' by earning rewards without bringing in eyeballs and ad revenue will run out of coins and go out of business. On the other hand, a community or front end that is successful with this model will bring in large numbers of eyeballs, high ad revenue, and have many users.
This is unlike Steem, where people, including the very largest stakeholders can milk for years while we are bringing in few (net of attrition) users or eyeballs, and there is no natural limit to it. That's the real rich getting richer problem (at least if you want to measure 'rich' in terms of stake rather than actual value).
Proof of Brain maybe could possibly work, in some theoretical sense, but it hasn't been demonstrated to work so far. Yet Steem is still, for years, spending an enormous part of its inflation budget on something that doesn't work. This is contrary to every notion of good business strategy. If a startup has a growth plan that involves spending $X on such-and-such promotions, marketing, etc. and after a reasonable time (months to years, in this case, depending on how you measure) it turns out that spend isn't producing anywhere near the planned or needed growth, then any sensible management will pull back on the spend, iterate on the strategy, and try something else. To just continue to pour money down the drain at the predetermined rate on a failed plan is suicidal.
I think it would be perfectly okay to drastically cut spend on PoB and then, if a successful model could be demonstrated using SMTs, with some growing communities, or if some other credible proposal were made to further modify it to make it really work (say EIP 2.0), then it could be dialed back up. It makes perfect sense to spend money on something that has been shown to work, and indeed is stupid not to.
I like EIP, I was a big supporter and advocate for it. And it has improved things a bit, but not really all that much. There is still a tremendous amount of milking going on every single day generally by large or very large stakeholders (as they have the stake to direct rewards to themselves or within a small group; users with little stake do not), and the very largest stakeholders are still selling their votes to the vote sellers and bots with the highest ROI (and in the process getting richer). There is still a only a very small amount of downvoting, as apathy and fear of retaliation are enough to discourage most from using even EIP's free downvotes, in practice. And most importantly of all, it still isn't working as a growth engine, and there is no data that I've seen suggesting it is on a trajectory to do so, ever.
Unfortunately, the inflation you claim is distributing stake is actually doing more to destroy the value of it as well as in some non-trivial ways, actively concentrating it.
This is like to have someone to pay for the authors/workers for their work upfront and offset the inflation. Its great, but first, their should be a product for which someone will like to pay upfront. The inflation and getting rewarded to blog/work in some cases do actually work. I'm a real example for it, I came for the free money, but later bought in more (as much I can afford), and have never sold a thing.
The market is not moved by those like me, with few hundreds or thousands dollars, but from the large stakeholders, and the overall BTC trend...
Since you are a top witness with nice stake (with potential to pay upfront), and been around here from the beginning, have you used your stake to bring more eyeballs, large content creators with large followings.... build the product that someone will be willing to pay for..... then implement some sort of add sharing or whatever ... Incentivize following and good content ... All in all nice to have this brainstorming, but probably when/if the next bull market comes, all this will just fade away and we will be with some still imperfect product, but with a lot of hype ...
I've supported (both financially and otherwise) several projects to build applications, to recruit users and build communities, etc. None of them have really panned out overall (in the sense of creating enough growth to move the needle for Steem overall). The failures of the projects I've personally supported aren't the point though. The point is that no one has done it.
If we look at the application/project that is bringing in the most users right now, it is Spliterlands, which doesn't even use inflation rewards. In fact that their stake is inflated to pay inflation rewards is an added dead weight cost to them and a discouragement to even be on the Steem blockchain, and that is our most successful application in terms of growth. That's nuts.
The reason spinterland shines because it does not use the reward pool. The reason it shines because it is independent of the price of steem. Both it’s marketcap and user base went up during the alt coin bear market because of that. We need more projects like that, which are independent of the price but uses the efficiency and scalability of steem blockchain
Exactly. The reward pool is actually a cost to them, since their stake (which they need in order to provide RCs to their players) is inflated to pay for it even though they don't use it.
Well if we follow the Splinteralnds example, you can create a gaming development fund :)
I feel that a lot of the talk around lowering inflation (beyond the set rate now) is a knee-jerk reaction to the bear market trying to engineer price increases, even if it is not in the best interest of the long-term view.
While tweaks are needed here and there, Steem has a strong running and air game and the applications are shaping up to be some pretty hardcore RBs. What is needed is a line that holds under pressure.
If you want to call four years of observing how Steem works and doesn't work to be a knee-jerk reaction than that's your prerogative, but I disagree.
Proof of Brain is an intriguing idea but one which has just not panned out. Most of the failure modes were predicted in posts made within the first six months to a year (and no, not by me primarily, if at all).
What has happened over time is that available evidence has entirely falsified the idea of Proof of Brain as a growth driver (which is what it was intended to do, and which it clearly has not done since there has never been significant growth apart from, temporarily, during major price spikes) and has mostly validated most of the theories about its failures (vote selling, vote trading and self voting, all in various obvious and less obvious forms, for the most part).
I agree that PoB hasn't panned out as expected, but I do think that there is still a fair bit of game in it that has value if there was adoption. I am not sure what lowering the supply would do for adoption of the social aspects of the platform and what the knock on effects would be. I am guessing then that the RCs will need to be adjusted to suit also - lower transaction/action costs?
What reducing inflation does is buy time to come up with better models for achieving social growth or see other types of applications (such as games e.g. Splinterlands) thrive to the point where they lift up the entire economy (and IMO they are more likely to do so if not burdened with the extra cost of paying for poorly-working social reward scheme they do not even use).
RCs adjust their own costz via an internal (hidden) market within the blockchain code. The more RCs being used, the higher the RC prices, and vice versa. So in general, no adjustment is needed there, it should all be automatic (with the caveat that RCs are something new and unique to Steem, are currently a "1.0"-type solution, and could benefit from further refinement in any case).
What I wonder is what happens if say going to a 2% inflation rate. An account like freedom's with 10M will have the same value as over 1.5 years of the entire pool - isn't that a risk? It makes all other accounts on the platform with significant stake that much more powerful with essentially no way for their power to degrade significantly.
Thanks for the RC insight.
As things stand now, @freedom's account is increasing faster than inflation (I did a quick one-day estimate at about 11.4%; this is rough and may be low if some delegations don't pay every day). It is also possible there are off-chain payments or payments to another account which make the rate even higher.
Distributing more stake with votes makes large accounts more powerful, not less.
But under lower inflation, it will still climb relative to everyone else, but without the ability for everyone else to do anything about it. The distribution would remain quite static and similar to now unless they sell - which is likely if price climbs enough also. The problem is that if there is such a thing as good actors to come, they do not have much chance of ever gaining influence against those who have largely proven themselves indifferent to the community for 4 years.
edit: I will add - publicly indifferent at least.
Exactly.
To a hammer, everything looks like a nail.
And to a nail, everything looks like a hammer. 😨
I think an Instant Powerdown should cost 20%, not 5%.
And I'm saying that from someone who would actually use it.
Instant versus 13 weeks can easily double the gains that a person would achieve at the peak of the bull run.
NOTE: Instant Power Downs should only be considered after the savings feature has been improved to allow longer holding times of up to 13 weeks.
I am a fan of higher then 5% TBH, in-game theory, I know whales that would pay more than 5% burn fee to instantly powerdown. That is a reason I am not a fan of the 4-week powerdown being proposed. I say keep it at 13 weeks a charge a burn fee to get out quickly. It is a win/win IMO.
Plz help me im a new user plz follow me
That sounds like a good plan to me, Hope it could be implemented some day. It would be nice to have that option
Instant power down, at any price, is contrary to one of the design goals of Steem, which is, as a noob- (or to use a less loaded term, mass-market-) friendly blockchain, to give users some reasonable protection against hacks.
If your account is hacked, the most you can lose is the liquid funds in your account and possibly one power down installment in progress. If you don't discover the hack within 3 days, you can also lose savings. If you don't discover it for a week+, then you can lose multiple power down installments. Still, you can get your account back within a month, and if you discover the hack quickly, most of your funds are recovered too.
With any sort of instant power down, poof, your account's value is gone in a flash, and while a burn fee would need to be paid, the hacker still gets to keep 80% or 95% or whatever.
To be perfectly clear, I'm not entirely in favor of this "protect people against themselves" model, but many stakeholders are in favor of it, and, as I understand it (though not speaking for them), so are the devs.
So, I would expect that any form of instant power down would have a lot of obstacles to being adopted.
Maybe have an opt in for instant power down? That would have to take some time, to make sure that it wasn't a hacker doing it. Then people can still have protection if they want it, or go with instant access for a burn fee. I see lots of people being put off by the 13 week power down. It would be good to remove another barrier for serious investors.
Something like that might be okay but I'm sure there are many details that would need to be worked out to reach consensus on it, not to mention coding.
I agree with you that the 13 weeks is a serious barrier to investors, and that's why I am generally supportive of the 4 week change, as something that can be done now, without complicated development, to at least reduce that serious barrier, if not remove it entirely. 4 weeks is more within the range of other popular blockchains (e.g. Tezos has 3 weeks I believe, and you have to wait the entire 3 weeks before you get any of it back), while 13 weeks really is not.
But if we simultaneously improved the Savings feature on the blockchain.. then the Savings feature could be where a lot of noobs keep their Steem.. and the SP could then be issued Instant Powerdowns at a 15% burn rate.
The savings feature is opt in and has no incentive. Especially when the goal is to protect newer or less experienced users, as well as to get a high systemic level of security, this isn't a good combination.
The design of powering up, where you have incentives to do it, and earned stake is at least 50% powered up by default, is built around strong security, both for the individual and for the blockchain as a whole.
Savings is supposed to be a bit more security for mostly liquid funds.
As I said above, I'm not really so tied to the noob security aspect of powering up, but a lot of stakeholders are big fans of it, so I think it would be a challenge ever reaching consensus to allow instant power down.
I agree.
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Good point @smooth . . this is kind of a tough topic to decide on.
I actually agree with you.. Though I think maybe 15% would be a little better. 20% seems a bit high, especially on larger holdings. Very good point I think you have though.
Yeah.. I think you are right @badseedalchemist.
15% might be best :)
Alright, well... then 15% it is! Mush, developers! Mush! MUSH!
Thank you for posting this. It’s very informative and ai think people can unfortunately get influenced by charts and so forth and quit because of the $US price. Wouldn’t cheaper prices be the best time to buy, traditionally?
I still get paid for producing quality content, regardless of what other social media is doing.
!BEER.
I really can't understand the hatred of inflation on crypto community.
When a currency is deflationary it becomes a shitty currency, people would rather stock them up rather than spending them. The currency devolves into Store of Value™.
My contempt to fiat currencies is not because they are inflationary but because newly printed currency starts at the hand of people that earned none of them. Steem does have black stain historically (ninjamine and bid bot) but ninjamine will not happen again and bid bot shitshow has been solved by EIP. Also, fiat currency has the problem of incapability of destroying supply (no incentive on top of being illegal) to retain value, that's not the case for a lot of blockchains including Steem.
I am not opposed to inflation, I just want to have a say in it. Steem is one of very few projects that align with my vision. A project that doesn't simply want to increase price of the token for the sake of it. Removing STEEM content reward is deal breaker for me for the same reasons you mentioned on your post. I will simply leave if that ever happens. Such shortsighted proposal.
Lot of people lost their money investing on scam project where they could invest on steem. Steem is the only one real decentralized social platform. Other social platform highlight them as decentralized but none of them are totally decentralized.
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Ending steem inflation is like Apple stop selling its products. Would more people check if it's good or bad?
Large companies take care of value, through new proposals that make their customers feel satisfied.
The price falls because there are not many people who think that steem has much more value or people who need to leave steem for several reasons.
If you burn or stop giving away, it does not change the perception of a buyer or sell.
It's my thought, maybe I'm wrong
There is no actual value in not being able to do almost immediate power downs. 3 or 7 days for security perhaps. What is 3 month power downs protecting the price? Absolutely not. We got dumped on harder than most random clone coins from 2013.
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Huh? All tokens have inflation. Bitcoin has inflation. Its around what... 3% i think.
Its just that the inflation is distributed differently.
In bitcoin only miners get the inflation, on Steem its distributed to everyone that contributes.
Once bitcoin stops being mined fees will go through the roof. Low Inflation is good and anyone that thinks otherwise knows nothing. Those that use the fact fiat is inflationary as a bad thing are idiots. Fiat has other drawbacks but inflation isnt one.
Its actually one of the reasons we live in the wealthiest time in human history.
When I started posting on Steem, both Steem and SBD were worth $1.00 USD. It was like that for quite a while, then it hit a top and then hit bottom again. Because of the bull and bear markets.
If the people working on the blockchain made it so only the whales got greater value, how would that encourage content creators? Steemit used to be a viable income source for me. And that was when I was still a Red Fish. I'm a Minnow, a delegator, halfway to Dolphin, but I don't see how when I do become a Dolphin how that will change. My upvote today is worth almost as little as it was when I first joined in June 2017. I don't Power Down, but I'm holding Steem that I don't intend on Powering Up so that I can cash it out, because it's my income.
I used to Power Up ALL my Steem. I used to only cash out SBD and sometimes buy Steem or other tokens and crypto currencies with SBD. What happened to those? WHY are we not getting SBD anymore?
Due to the low price of STEEM, the ability of the system to support the SBD already in circulation being worth $1 is not there, so creating new SBD is mostly disabled (the only exception being for SPS).
If the price of STEEM goes up or the amount of SBD in circulation goes down, then SBD will again be worth $1 and it will start getting paid out as rewards. In fact just a day or two ago there was a price spike in STEEM, and it looked like SBD was going to be restored, but the price dropped back down and we aren't quite there yet.
There is a project called @sbdpotato which is reducing the supply of SBD by converting it to STEEM on behalf of the SPS treasury. If you want to get SBD worth $1 and reenabled for rewards, then support @sbdpotato by voting for its posts/comments as well as its SPS proposal.
Cool, thanks for sharing that info, it clarifies a lot. Yeah I converted my SBD ages ago. Just have less than 1 SBD left, maybe I'll convert that too. (I like to cash out an round number lol)
I'll definitely give them a follow.
Prices ARE on the rise, but it's better when it's a slow rise and a stable one than a spike and drop.
Thank you for the awareness
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& once again...
I'd venture that if we see more and more use cases that actually tie up Steem tokens through things like membership fees to games, or things like genealogy or other "utility" front ends, the supply of "loose" Steem will soon enough dry up and send the price trend upwards faster than inflation can catch it.
And then, of course, we're also in the ongoing cycle of financial markets... I think we're at the very edge of value investors taking over the driver's seat from "gamblers" and speculators.
We may not have when Moon? anytime soon, but I wouldn't mind seeing a long period of gradual increases...
There is just not enough interest. If you look at the average daily users of steem dapps, at best a few hundred. You can’t attract investors/businesses with such numbers.
I hope SMTs will add value but I’m skeptical. We already have enough worthless tokens.
I'm not in favor of lowering the inflation. Market conditions such as the current one are temporary. There is no reason to significantly change the protocol because of temporary conditions.
A burn fee for faster powerdown sounds reasonable.
Limiting rewards could save the situation. Let's say a post should't earn more than $30. Let's suppose someone always earning more than that from almost every post he/she create while others earning cent's or a few dollars no matter the efford they do. Limiting the rewards for posts willmake everybody equal. If somebody want to earn more let them create more. That will reduce the inflation, not removing rewards from creators at all all giving them tokens.
In my opinion inflation is not an problem looks coins like xrp which has open supply of 100 billion but only 42 is open for market at this time and if they want they can open all 100 billion but is that fears people answer is no it is at 3rd in market. And also look at stellar recently it has cut 50billion from its supply but it doesn’t make any growth.
So inflation is not problem. What we need is more effective promoting to other platforms. Steem needs an great PR team and an special budget for that
If steem have faucet earning site it will useful for new steem users because this give some free steem and new steem people powerup their steem and steem base will grow.
This is really interesting and has greatly helped me to understand some of the operating attributes of the STEEM blockchain. Plus, your no soup for you approach was very entertaining. Thank you. I enjoyed this and will try to remember to check out the quora thing. :D
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Sometimes I feel topics of discussion like this one could really educate more users as well bring news ones skeptic to the public rumours. It could be something easier to do natively on STEEM. I mean, the discussion.
I say so because I wanna find time to express my side... but because I know I won’t have time to make my stance clear, I choose not to go with it. But that also pains me to hold as sometimes I loose the grasp and release bursts of opinions that are not always understood.
For me it’s hard to judge what would be best for STEEM, but if this aims to be a freedom speech platform, then we need to find what makes that the holy grail against other platform. Then exploit that feature and see if that works for the common good of the blockchain.
The hard part will be selecting and keeping lock on the grails... as they also change with time.
I don’t really worry about the price or place in the market. Oh course I want it to go up, but this is still one of the best blockchains out there. Conversations like these in the community is what helps make it strong. Just keep using the platform and earning as much as I can so that when the price finally goes up, it will be worth cashing some out. I do agree in some kind of instant power down feature. I would say 10% would be fair for an instant power down. Possibly a 5% for a 4 week power down and then free for the 13 week, make it a tier like program. Just my opinion man. Keep up the good work man.
I also noticed that there are too many tokens around the STEEM blockchain ... I don't know if this is good or bad
Very nice writeup @theycallmedan!
Yep, I'm all for giving out the "fried rice" to the masses!
I also loved this
| Key to Top 50 Shitcoin Market Cap Success:
| ICO token is key to success!
| Get big social media following, Check!
| Have ico and raise millions. Check!
| Pay a big exchange listing fee with a market maker to pump coin price and volume. Check!
| DON’T HAVE A WORKING PRODUCT! This is key, check!
| Dump on hodlers and vanish into the darkness, check!
Brahaha!
Cheers!
Lucky
@theycallmedan
what do you think about remove SBD from rewarding and make SBD like a copy of DAI from ETH?
its more scaleable and better to use. I would they this is a Killer app for Steem.
Congratulations @theycallmedan!
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Done the Flowing:
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Answer the Quora question .