RE: Blog rewards CAN’T be widely distributed

[anonymint]

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).

Comments

[anonymint]

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.

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.

[smooth]

I've observed @smooth upvote my post and it jumps several $100s or more

Some part of the difference is the drop in market value. My votes aren't worth what they used to be worth either.

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%.

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.

[anonymint]

I mean dantheman has ~3mn $ in SP and his upvote is like 140$.

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:

Do the math. Rewards are 7.75% of market cap yearly with 50,000 signed up users, so 0.0775 × $200m ÷ (12 × 50000) = $26 monthly per user. But the rewards are distributed non-linearly roughly in a power-law distribution where the upper 20% get 85% of the rewards, thus 80% of the users will get 0.15 × 0.0775 × $200m ÷ (12 × 40000) = $5 monthly. If you argue that actual usership is 1/10th of that, then multiple those figures by 10... Social networks are typically valued at around $100 per user, if we are looking at the stable case down the line. Even if we up that to say $1000 with expectation of acceleration and more ecommerce than typical social networks ad funded models, it is still only $77.5 per year per user without factoring in the power-law distribution effect.

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.

[alexgr]

Obviously, but still it takes quite a lot... I mean dantheman has ~3mn $ in SP and his upvote is like 140$.

[anonymint]

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%.

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.

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.

[joeyarnoldvn]

@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?

[anonymint]

Mathematically it would require dissension at the top and unanimity at the bottom w.r.t. to upvoting, which seems highly implausible.

[joeyarnoldvn]

Thanks for the response. Interesting. Upvoted.