As I see it the major issue we'll have to face is not reward distribution (that can probably be fixed with hard-caps per post in order to force the rest of the small-medium rewards to increase) but long-term reward scaling.
-The user base is 50.000. When it goes to 50 million, it will be 1000x.
-The marketcap is 200mn. To keep the rewards "consistent", we'll have to experience a 1000x growth in the marketcap to reach 200 BILLION (bitcoin in comparison is 10bn).
In other words, the userbase can experience booming growth yet the reward pool cannot (in all probability). Which means the avg reward will go down a lot, and that's when the other attributes of the platform, like censorship-resistance, instead of "rewards" must come into play as a motive to participate.
I've made the analogy that early posters are like "early miners" of cryptocurrency, precisely due to the above issue of problematic reward scaling as the userbase increases: https://steemit.com/opportunity/@alexgr/contemplate-this-if-blogging-mining-then-early-blogger-early-miner
...but obviously this can't last for a long time without changes to the economic model or some kind of other tweaks to the economy, money infusion from outside our closed loop, etc etc. I guess we'll see what the devs have in mind for this...
No afaics, that would just open the vulnerability for pacts. Once you lower the threshold for sufficient¹ (see blog post), then you've reduced the protection against them.
Agreed on your other points, except I do think the market cap for a social network that somehow creates a new token ecosystem could be much higher than Facebook and perhaps even into the $trillions if the right confluence of factors comes about (e.g. the world realizes the negative profit future of the industrial age economy and wealth moves to the knowledge creation age economy), but that is a long shot so I will concede to your concern.
If, say, you have a 1000$ or even 500$ limit, I don't see right now how small votes can accumulate to that level. I have ~3500$ in SP and my vote is worth 2 cents. It would take A LOT of money to start hitting the limits.
You are forgetting the effect of the quadratic weighting. Refer again to footnote ¹ in the blog post. The amount of reward is the proportion of the total pot of reward. So if the pact reaches the sufficient level explained in footnote ¹, then the reward is outsized. Ditto curation rewards (I think).
The problem with Steem's voting reward algorithm is not that 20% get 80% of the rewards, but it is that the selection of the 20% is done by 1%. And this is motivating the wrong behaviors and focus of content produced.
Some part of the difference is the drop in market value. My votes aren't worth what they used to be worth either.
I don't think it is really the algorithm as much as the distribution. With 50% of the daily-active stake controlled by 1-2%, no matter what algorithm you use, the 1-2% is going to run the show. Nothing can really change until the stake is spread out.
If curation rewards weighted exponentially more the earlier you vote as I heard they are (and especially if they are 3 - 5 times author rewards as claimed by @james-show in the comments here), then @dantheman's $140 in author rewards could be good for perhaps an order-of-magnitude higher in curation rewards. I know you were thinking about thresholding author rewards, but if curation rewards are more lucrative for pacts, then you'd need threshold them also.
Also I don't believe @dantheman's upvote is only $140. That is probably because his voting power was diluted by numerous upvotes. I've observed @smooth upvote my post and it jumps several $100s or more when he hasn't been too busy voting recently. @ned upvoted my first blog after my #introduceyourself post and I think it was like instant ~$1000 boost.
Even if you threshold at $500, it won't solve the problem. You will still have a minority of the posts at $500 and the vast majority at a few dollars. The top tail of the power-law distribution is very steep, so not many posts above $500 any way.
You'll need to bring the threshold down to much less than $100 per blog post to really spread out the rewards widely and then you will open the vulnerability to pacts.
Remember my calculation from our discussion at BCT:
Also I assume naturally income and blog quality is going to power-law distributed as well in any case, so we won't be able to widely distribute rewards in any case. The only way to widely distribute money is to make a few people very rich and the 85% get the crumbs. This is unfortunately the natural power-law distribution of wealth that always exists in every instance of humanity. I guess we can argue the distribution in Steem is even more concentrated (worse) than a natural power-law distribution. So maybe you are advocating thresholds to try to get closer to a natural power-law case, but the problem is the vulnerability comes into play and we are starting from a worse than power-law distribution due to the way the Steem token was launched. So afaics we'd have to compensate with a very low threshold.
Obviously, but still it takes quite a lot... I mean dantheman has ~3mn $ in SP and his upvote is like 140$.
Agreed.
Thanks for raising the point of clarification because no one can read my mind. In my mind I was thinking of selection algorithm in a more general sense of for example not allowing whales to vote (which I posited in this blog would be game theoretically vulnerable to attack) or not even using voting to select rewards. I haven't yet proposed any concrete ideas for a better algorithm for selecting rewards.
Note I am positing in this blog that spreading the stake out will be vulnerable to attack by collusion of voters.
@Anonymint, did you say only the top 1% decides who can be in the top 20% in Steem, to be the top whales? Are you saying that will always be the case? I was thinking that some people can become whales if they are popular enough to get upvotes each day by thousands or maybe someday by millions of people each day over the course of maybe many years and not just upvotes by bots.
Like I have been saying in previous comments, I want to believe that some people can slowly get into the top 20 percent. Are you saying that the top 1 percent will downvote potential whales if the top one percent decided to do so or something? And if the top one percent has that kind of power, then the question is whether or not the top one percent should have that much power over what might be basically their own FrankenSteem Creation, right?
Mathematically it would require dissension at the top and unanimity at the bottom w.r.t. to upvoting, which seems highly implausible.
Thanks for the response. Interesting. Upvoted.