Earlier today, I just saw a discussion on the blockchain between a couple of individuals that are both fighting abuse within the ecosystem. We'll call one of them Thomas Michael Moore and the other shall be called Howard Wallace. I won't get into the discussion of who's right and who's wrong, because that's not the point of this post. They both seem to have the right idea, which is that they've both identified a way to exploit the system. And where theres a way to exploit a system there will be a cheater that finds it and will abuse that vulnerability for short-term personal gain at the expense of long-term network health.
Hive's distribution mechanism
The Hive blockchain distributes newly minted tokens through something that was at some point known as Proof of Brain (PoB) mechanism (I'm not sure if this term is popular any more), designed to reward content creators, curators, and other stakeholders for their contributions to the ecosystem. Here’s a breakdown of how Hive distributes its inflationary rewards.
Let's first look at some key factors
Inflation Rate:
The Hive blockchain uses a declining inflation model:
Starting from ~8% annually in March 2020 (after the Hive fork from Steem). Decreasing by 0.5% annually until it reaches a fixed 1% annual inflation rate in the long term.
Block Time:
Hive has a block time of 3 seconds. This means approximately 20 blocks are created per minute, 1,200 blocks per hour, and 28,800 blocks per day.
Inflation Allocation:
Newly minted tokens are divided into different pools for content rewards, witnesses, and the Decentralized Hive Fund (DHF). We'll look at the exact percentages in just a moment.
At the time of writing, the current HIVE supply is 459,809,075 tokens (source: coingecko.com) with an estimated inflation rate of 6% in 2024. As mentioned above, Hive has a 3 second block time, so the blockchain produces about 20 blocks per minute or about 10,512,000 blocks per year:
20blocks/min×60min/hr×24hrs/day×365days/year= 10,512,000
If we take the current supply x the expected inflation rate we can calculate how many HIVE tokens are created per year (approximately):
459,809,075×0.06=27,588,544.5 HIVE per year (approx.)
27,588,544.5 Hive per year / 10,512,000 blocks per year ≈2.62HIVE per block.
These are distributed in the following manner:
65% to Reward Pool (Content Creators & Curators):
2.62 × 0.65 = 1.70 HIVE per block10% to Witnesses:
2.62 × 0.10 = 0.26 HIVE per block15% to the Decentralized Hive Fund (DHF):
2.62×0.15 = 0.39 HIVE per block.10% to Staking Incentives (if applicable):
2.62×0.10 = 0.26HIVE per block.
These Hive rewards are not paid out in liquid tokens. They're paid out in a combination of
- Hive Power (HP): Illiquid, staked tokens that represent voting power and
- Liquid HBD (Hive Backed Dollars): A liquid, stablecoin-like token pegged to the USD
Another consideration is that rewards are typically distributed after a 7-day voting window for posts and comments, ensuring fair assessment of community interest.
So now that we've gone over how Hive tokens are distributed I'd like to ask if you think it's possible for cheaters to try to find a way of earning more tokens with less effort.
Could content creators possibly be involved in...
Buying Votes (Pay-to-Win Dynamics): Offering direct financial or token-based incentives to stakeholders to secure votes, undermining the meritocratic basis of the system.
Gaming Content Metrics: If content quality or popularity impacts voting, creators might inflate metrics through self-voting or fake engagement through secondary accounts to appear more deserving of rewards.
The answer to these questions, I think is "yes". It's also true that it's in the community's (token holders) best interest to call out these bad actors. After all, I have vested interest in maintaining the network’s integrity, as its collapse would devalue my holdings.
In fact, token holders are empowered to enforce fair play by voting out or downvoting bad actors and reducing the amount of rewards these dishonest individuals receive from the reward pool.
What about curators with huge stake that don't do much for the blockchain other than blindly upvoting random posts to receive 8-10% APR in "curation" from the reward pool.
Like I've stated before in others posts: the hive faucet won't last forever and what seems like a free lunch to some today, won't be there tomorrow.
Inflation on HIVE is decreasing by 0.5% annually until it reaches a fixed 1% and at that time will it really be profitable to try to game the system to extract a few pennies? I think not. It WILL, however, be profitable to come up with ways of providing value to the marketplace ( in the form of work or an automated solution) in exchange for value ( in the form of $HIVE).
value for value.
Don't make it a goal to spend hours of your day writing 2 or 3 watered down shit posts only to extract pennies on the dollar; your time is worth more than that.
You might be able to get some free money now, but as Robert A. Heinlein wrote in his novel The Moon is a Harsh Mistress:
TANSTAAFL
There ain't no such thing as a free lunch
For the data in this article I've used a number of resources including
Hive blockchain whitepaper
does hive blockchain print lesser hive tokens when hive token trades higher?
Hive inflation for October 2024
Posted Using InLeo Alpha
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Good breakdown, thanks!
You're welcome Joel! I remember you were looking for something like this, so I put it together from some articles I've bookmarked. If you want to go deeper, read some of @dalz work, he is much more knowledgeable than me and explains concepts very well.
Haha you should check your X DMs 😃
This blockchain has been exploited since the start. There used to be some way to 'mine' it and someone managed to make a lot from that by exploiting some aspect. I can't remember the details. We have had people looking for those who try to cheat the system. That can be subjective and often leads to debates, but it needs doing. I have a fairly big stake and I take that responsibility seriously. Most of my voting is manual as I do not trust trails and curation accounts to just support the good stuff. I tend not to give big votes to posts that already have top rewards.
If Hive ever does grow to millions of users then rewards will be spread a lot thinner. You would hope the price will go up too, but in time it could be much harder to earn as much as some do now.
I also think sniffing out cheaters is and important activity that ALL stakeholders need to do. It's in our best interest to look after the integrity of the chain and to protect the value of our stake.
Eventually, there will be no free lunch for cheaters and milkers though and everybody will have to work to earn some HIVE.
Great explanation of the "where's the money come from" question... Unfortunately, if there is a possibility of rigging the system, someone will try to do it. I would rather try to find a solution that can be coded, instead of policing others, but sometimes, it's not that easy to put things in the code...
I like that a lot! This SHOULD be the ONLY incentive and motivation for stakeholders to DO BETTER on the chain... And this already should be enough to thrive and be better... Sometimes, I have a problem understanding big HIVE stakeholders when they support things that are clearly undermining the complete network and the token price itself... It's like shooting in your own foot... 🤔
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Love this comment! Thank you for thinking this way my friend. This is exactly the reason I think HIVE will be around for a very long time. Because of Hiveans like you, who I have the fortune of interacting with.
This!
I will do police work NOW because it's in my best interest, but it's unsustainable long-term. Token production on the HIVE network is designed to go down 0.5% per year, which means that by 2040 it will be like 1%. Even if HIVE doesn't grow in users, this amount of newly created tokens for authors and curators will be too little as an incentive. HIVE BUSINESSES need to be created that offer a service in exchange for HIVE. This is the way. This is the incentive.
Yup... I'm repeating the same mantra over and over again... We just need one successful business built on HIVE, to show the way, to show by example... I remember talking with @detlev about this topic at the last HiveFest. When he mentioned the idea of making WorldMapPin a self-sustainable business model, I wished him all the luck (and stubbornness) in the world that he achieves that... as that would be a great example that IT IS POSSIBLE TO DO IT! The rest will follow...
I think this is the second time you’d be talking about the value for value
We need to have something valuable to exchange for Hive itself
I talk about bringing value to the marketplace quite a lot. Providing value and exchanging value for value too. Post and earn will end one day, but providing value to others will always be a way of getting paid.
I think the argument of fighting abuse within the Hive ecosystem will remain indefinite and we simply cannot see the end, although getting the right way to do so will remain difficult as well. Nice breakdown of how things works here, I read a lot of dalz's post and that's how I get to understand some of these stuff
Really? I see the end clearly. For a healthy economic system to remain functional, you need balance in the exchange of value. The early stages of hive blockchain allow for token distribution. The community votes for who gets a share of the reward pool. That number decreases over time though until it reaches 1%. So you see, the incentive to extract more than you provide becomes smaller and smaller, whereas the incentive to provide actual value (in the form of work) becomes more and more attractive.
Look at this graph. In 2035 inflation will be around 1.47% There will be a day where you MUST provide actual value in order for someone else to want to give you tokens... Give them work, a car, a house, etc. This will be the end of the reward pool abuse and we will no longer need police.
There was not so much knowledge before, after your post, more knowledge has been gained about this platform
#hive #posh
Vote buying is very diffuse, I heard for example you can get big upvotes from leo.voter if you pay leo subscription
The funds you pay to leo voter go to a liquidity pool. They don't go to a person or entity.