A Controversial Way To “Fix” Steemit (Whales Will LOVE This)

Before you slay me with downvotes, hear me out.

I like the idea of Steem and Steemit. I have great respect for @dan and have been following his work since Protoshares.

But let’s be honest with ourselves. According to this https://steemd.com/distribution 88% of all Steemit stake is in the hands of 0.39% of all user accounts and 96% of all Steemit stake is the hands of 1.39% of all user accounts. That means approximately 98.6% of the users have only 4% of the stake. While it’s nice to see people like Jeff Berwick earn $15,000 for an introductory post, it leaves the remaining 99% of everyone else feeling marginalized.

The Problem With Whale Power

We all know that “Whales” make or break a post, regardless of whether or not it is “quality content”. While I am a 100% pro free market voluntaryist, the current system feels more like fascism than anarcho capitalism. As Jeff Berwick quickly found out, your efforts can be rewarded one day and punished the next, simply due to the whims of a handful of whales.

I am not saying the Whales don’t deserve their outsized (dare I say “centralized”) control over whose posts are valued on this site and whose aren’t. The problem is, this massive power disparity appears to have no way to adjust over time. It appears that from this day forward, whales will remain whales and minnows will remain minnows, apart from the occasional lottery-style voting mechanism whereby one minnow magically gets bestowed with dolphin status by a few whales to everyone else’s chagrin.

If new users join, post quality content and receive $0.00, while a travel babe with a Steemit sign earns $3000, they will stop posting and move on (no offense travel babes, we still love you). Even a somewhat wealthy person would have to put up tens or hundreds of thousands of dollars to match the power of a single whale.

In addition, there is no incentive for whales to continue to contribute quality content (or contribute at all) to the network in order to maintain their dominant status. Some whale accounts are not even active and are probably bots.

The Risks To Steemit

I am not writing this to whine like a baby because my top post only earned $2.00. I believe there are systemic risks to Steemit going forward if something is not done to fix the structure of the reward mechanism.

The main risk I see is that someone will fork Steemit, tweak the algorithm to give newbies a chance to become a whale, and Steemit will lose steam, fast. People will join the new platform and put their energy there and Steemit will lose its chance to scale to the size of Reddit or bigger. I don’t want to see this happen but we would be fools to think that it couldn’t. There is a $200 million reward for a potential competitor to Steemit. If you think I am blowing our cover, think again, there is no way there aren’t groups forming right now to build something similar to Steemit. In this sense, whales themselves are also at risk.

The “Fix”

So, in my willful ignorance, I propose the following “fix”. This may or may not be technically feasible but here goes...

Steem Power should be auto-converted into Steem at the end of each month. This means at the beginning of each month, everyone starts back at zero Steem Power and Steem cannot be used to purchase Steem Power. This would give newbies and everyone else a level playing field at the beginning of each month. It would make it more exciting to see which posts get upvoted since everyone would start out with equal “power”. The most likely result is that Steem Power earned per post would be much more broadly distributed rather than highly concentrated as it is now.

Basically what this change would do is “cash everyone out” each month - not just the whales but everyone with a Steem Power balance. Under this scenario, those users who are currently “whales” would not “lose out” since the Steem Power they have earned up to this point would all be converted to Steem which could be converted into real money.

Under this scenario, at the beginning of the month, one vote would be worth the same no matter who voted. However, some votes would start to matter more than others as successful posters started to amass Steem Power. It would all work very similar as it does today, except the whole process would start over every month.

Possible Benefits of Buying/Holding Steem

To make this scenario work, there would have to be some benefit to buying/holding Steem rather cashing out into Bitcoin or fiat. I know that was the original idea with Steem Power. I have no objection to the idea that it is better if people remain invested in a native token for the long term benefit of the network, I object to the idea that the chosen few should and always will remain the gods of Steemit.

Here are some possible benefits to buying/holding Steem:

• It should cost a certain amount of Steem to publish a post (although there doesn’t have to be any transaction fees in order to transfer Steem to another user). New users would still get enough free Steem to start publishing for free but would “run out” at some point unless they earned it back through up votes and pay outs.

• Steem could be used to “boost” a post to the top of a category or tag feed. In this way, sponsors could end up being net buyers of Steem and this would help ensure there is enough value and liquidity for users to cash out of their Steem each month.

• Steem would still be a way to transfer value between users without paying transaction fees

• Steem balances could grow over time if held (as Steem Power balances currently do)

The Poker Tournament Analogy

Perhaps there could also be bonuses whereby the “winning” posts for each month get a bonus amount of Steem Power on top of what they earned from upvotes, thus maintaining some of the hopeful “strike it rich quick” reward mechanism that Steemit currently enjoys. This would make Steemit work sort of like a poker tournament where the top performers win an outsized amount of the pot (except in our case, everyone with upvotes would earn some amount of Steem Power by default).

To continue the poker analogy, the problem with the current setup is that new players in the tournament are way, way, WAY short stacked, and since the tournament never ends, the big stack player’s advantage is perpetual! Obviously, this structure deters new players from joining.

Proof of Humanity

Users should also have to “prove their humanity” each month before qualifying to earn Steem Power, so bots could not so easily gain the upperhand.

Niche Power

This strategy will also encourage users to vote for those users they follow and publish their posts mostly in their niches rather than simply trying to appease the whales. Part of what makes Reddit so successful is that people in one subreddit couldn’t care less what people in another subreddit are talking about. The way Steemit is currently setup, if your niche is off the whale radar you are a nobody and always will be.

Summary

I think a monthly reset in Steem Power would make real quality content rise to the top across a broader range of topics, and result in a broader distribution of value overall. I believe this strategy will make the whole “game” of Steemit more exciting, since newbies and minnows will not feel so defeated before they even start. Every month would be a new chance to prove your value to the community.

Feedback or Blowback?

I am sure this proposal is littered with holes and impossibilities, not to mention outrage on the part of the “immutability crowd” who believe Steemit should never change the rules. I can already feel people throwing spit wads at me. But this project is still an experiment and it can still fail. I think we are in a position to prevent this failure before it is too late. Maybe my idea is way off base but maybe it will spark another more feasible solution. Anyway, let me know what y’all think, or better yet, forward your feedback to the devs who are behind this project.

Final Comment

Perhaps the success of this post (or lack of success) will tell us everything we need to know about the problem and willingness (or not) among whales to support a solution. One thing is for sure, I wouldn’t have sat down to write this if I didn’t care about the long term health of Steemit.