People give Steem value by working together. The more everyone contributes the larger the pie we share grows. The core idea is that everyone should get a slice of the pie proportional to their contribution.
It would be nice if everyone would be content receiving a fair share, but the reality is that many people wish to maximize their take. These are the people that show up to a pot-luck with enough food for one person, but eat enough food for two or more.
A whale is someone who makes waves in the market every time they move. An Evil Whale is someone whose negative actions dramatically reduce the value of the whole pie.
Demonizing Doesn’t Help
The first instinct is to blame those who work the rules to their advantage. After all, they should be more respectful. Getting upset at this behavior doesn’t hurt the abusers, it just causes you to suffer.
We must design systems that minimize the incentive to be selfish and give the honest individuals the power to police. Anyone playing by the rules has rightfully earned what they receive. The problem is the rules, not the people.
Vesting Stake
One of the most significant factors Steem employs to keep people from abusing the system is Steem Power. Any widespread abuse will cause the abuser to lose more value due to capital losses than they earn from their abuse.
The impact of capital losses does more to keep large whales in line than small minnows. The actions of a individual minnow are unlikely to significantly devalue Steem as a whole, so the profits on their selfish actions can be high.
Prisoners Dilemma
The minnows are in a prisoners dilemma. If everyone defects then everyone loses, but if only one person defects then they might earn a small undeserved profit.
The value of Consensus
Steem minimizes the ability of minnows to cheat by distributing rewards proportional to n2. This means minnows have far less influence relative to their weight and whales have far more influence. This means that minnows only have influence when they work together.
By requiring people to work together to gain influence we bias rewards toward common causes that grow the pie. It doesn’t make sense to collude with others if you must share the reward. It will lower the profitability of defecting and make it more likely to get noticed and countered by others.
A whale is effectively the same as a large group of minnows colluding together. In this case the whale can act more efficiently and doesn’t have to worry about defectors.
The larger the group of whales and minnows agreeing to a particular payout the less likely that the payout is harmful to the pie and the more likely it is beneficial.
Good Whales
Good Whales act in ways that maximize the value of their capital. The side effect of their actions is to increase the value of everyone else’s capital at the same time. These individuals are motivated to counteract any abuse they see. The larger the whale, the more incentive they have to be a good whale.
So if a group of minnows get together to milk the system, a single whale can come along and eat them up. The more effective they are at policing abuse the less incentive there is to attempt abuse in the first place.
Good Whales are the primary defense against Evil Whales.
Cannot run and nowhere to Hide
Due to Vesting Stake evil whales cannot run and their actions cannot be hidden. This means that any evil reputation they earn will stick. Once the good whales learn who the evil whales are, it is trivial to write a bot that will counteract every attempt to profit at the expense of the whole.
Giving Good Whales the Advantage
A down vote is fundamentally selfless. There is no profit for the voter unless the down vote increases the value of their capital. The system as a whole needs to be designed to ensure that those wishing to down vote get the last say.
In other words, good whales running bots to police the activities of evil whales need to have the last say. We have systematically designed Steem to maintain this behavior in every aspect except curation rewards.
Curation Rewards
The current curation reward system is designed to encourage consensus. It makes it profitable to vote with others and less profitable to vote elsewhere. The result of this system is to increase the contrast between posts with high payouts and everything else. It serves to accelerate the process of reaching consensus without respect to the consequences of that consensus.
Not voting on something everyone else is voting on is a selfless act. The whale who abstains from piling on with other whales is losing a guaranteed profit opportunity.
An evil whale will join any pile. They will take any actions that maximize their reward even if it harms the whole.
In some cases an evil whale is motivated to be the first to pile on. This motivates them to predict what will be popular to maximize their return. On the other hand, their motivation isn’t to find good content, but to predict where everyone will pile on next. This can devolve into a self-fulfilling prophesy.
To maximize rewards these evil whales aim to devise algorithms that collude with other evil whales.
Impossible to Police Evil Curation
The only way to police evil curation is to down vote a post. This isn’t targeted policing. There is no way to negate the evil whale’s curation behavior completely without harming others as a byproduct. This means that there is a hole in the rules of our game that enables some people to walk away with more than they contributed.
Small Losses are Acceptable
Every business owner knows they will lose some merchandise to shoplifters. Every customer knows the prices they pay are high enough to cover the cost of the losses. Neither customers nor business owners would profit by adding TSA level checkpoints in an attempt to cut all losses.
There is a law of diminishing returns. It costs exponentially more for each additional bit of loss prevention. At some point the cost of preventing losses is higher than the benefits. This is the point at which shop owners buy insurance or simply write it off.
Steem is no different. The cost of preventing abuse is complete loss of decentralization and complex rules that reduce engagement and kill the project. At some point we must accept that we cannot prevent all evil. We just need to make sure that the amount of evil we tolerate doesn’t prevent Steem from growing.
Magnitude Matters
If 100% of all rewards were distributed via a flawed system, then it could devalue the entire platform; however, if just 1% of rewards are distributed by the same algorithm then any misallocations can be tolerated.
The trick is to identify the proper balance between incentives and the risk of abuse.
Conclusion
As the largest whale, Steemit has the greatest incentive to be a good whale. We have more to lose by tolerating abuse than anyone else. Any changes we propose are selfishly designed to maximize the value of the platform which benefits everyone. Some people may suggest that we make changes to increase our slice of the pie, but any rational actor would be foolish to want a larger piece of a smaller pie. We would be quite happy to have 1% of a trillion dollar pie.
There are some people that are upset about potential reductions in their pending curation rewards. We know that the only people that stand to lose from the proposed changes are the reasonably large whales, especially those who have written bots designed to maximize their profits. I encourage every whale to look at the bigger picture and realize that even though you may end up with a smaller slice of the pie, any change we propose is designed to grow the value of the pie.
So lets keep the debate about what rules will maximize the value of the pie. Then we can let the “chips fall where they may”.
I think that rewarding past behavior based on a set of defined rules and honoring the rules that everyone agreed upon, even though one is not bound to abide by this non-contractual agreement, will maximize the value of STEEM in the far future.
What happens if the next rule scheme is found to be inadequate again after some amount of trial and error? We will run over the same ol' ground again and again. I do not find that to be very productive.
I believe that this may not be the only time such changes will be proposed, and I would be greatly surprised if this were so, especially considering the beta-ness of this project.
In fact, I would welcome the opportunity to be able to change the reward system in an honest and consistent manner so that we can find out what does work BEST. This would require having a system in place where all the users know in advance how rewards will be affected (and hopefully honored) when a new schema will be rolled out at a future date.
How the rules change now (and the manner in which past behavior will or will not be rewarded) will set a precedent if we decide we need to change rewards again in the future. If consensus can be found as to how to seamlessly move from one incentive scheme to the next and still reward behavior that follows the rules (even if you may not believe that behavior to be good), that would be something. Essentially, this could be an unspoken rule that all rules are subject to change -- but will be done in an amicable way by honoring previous rules for the short time in which they were put in place.
Here's to the scientific method!
Agree completely, with one caveat. Anything that directly affects SP needs to take a longer term view, because people are locked in for two years. To be fully non-retroactive, changes would need to have two-years notice to give people who do not agree an opportunity to exit under the existing rules.
For example, the recent proposal for reward changes shifts 25% of the total reward pool from curation (SP-based) to comments (non-SP based). This effectively redistributes 25% of future SP creation from current SP owners to non-owners. I do not feel this sort of change should be made, at a minimum not with less than two years notice, unless a compelling argument can be and is made (and is supported by a broad base of the community including SP owners large and small) there there is a need to increase SP dilution in this manner. Otherwise changes should be limited to changes in how rewards are allocated within the existing classes, and even then broad community buy-in is a must (but would likely be much easier to achieve).
And, specifically, I have seen no such argument whatsoever that the current level of dilution for content rewards (about 5% per year) is inadequate. Posts that are very popular get large rewards of thousands of dollars. Post that are somewhat popular get hundreds. Unpopular posts get small token amounts or none. Shifting some of this to comments (as described in the proposal) and/or changing the system of reward-sharing between posts and comments, would in my opinion still leave posts in each of the categories sufficiently well-compensated to encourage new content and participation, which is what we all want.
You are right on the money. How the rules change is very important. Using the scientific method would be an improvement.
If people stop in every weekend and see massive changes to the rules and rewards each time, they are less likely to invest time or money in the project. If past promises are retroactively changed and rewards taken away on a whim, this will also kill any faith in the future of the project. Right now, even I am wondering what the heck is going to change next. Is it even worth posting? voting? commenting? voting on comments? I may have missed the rule change and am out of the loop (again).
There needs to be a clearly posted list of current rules and proposed changes, a much longer discussion phase with more community involvement, and a testing and simulation phase before changes are implemented. If you want a public project to succeed there needs to be some professionally managed change controls put in place, with a process and procedure that is followed each time a change is made.
Like Complexring said, use the scientific method!
I really appreciate both your posts, but I just wanted to say, I don't think anyone is suggesting an arbitrary shifting sands approach. We are in beta which comes with the expectation of adjustment and we are trying to form a consensus on what is the best way to enhance the incentive design for fairness and a model that is sustainably inclusive of what we hope is a massive membership. So if this analysis is the result of a problem which we are rationally trying to resolve to as many people's satisfaction as possible.....there's no need to be concerned that some kind of precedent for changes to incentive design has been made.
Past changes across 3 previous projects are the concern that brings this topic up. Shifting sands is an accurate description...
A more professional change control process is needed.
Thank you for writing this!
Guess i would fit into the whale definition! Anyway, I'm following the current debate and discussion about curation rewards etc . I can just speak for myself! Important for me is to help people earning money with writing exclusive and enjoyable content for steemit.com! I'm not care about a short-term view and a getting RICH quick scheme. What i'm caring about is, we have the tool to disrupt the current social media world (centralized monetizations pyramid modells - where only a thin minority of the top stakeholders are getting more and more money USING our data and content). Let's use this tool we hold in on our hands to make this world a better place, every vote counts!!
hilarious
agree
That's good too know. This post by Dan is one I totally forgot about and seems like it might be one of the most enlightening about Steem.
Dan, this is genius. Personally, I think if the marketing efforts are geared more to these benefits and structures, then the result would be that more like-minded people arrive here. Most of the standard, "make money from your posts" advertising attracts greedy click-bait style writer-hacks who are only interested in gaming the system.
Perhaps a different strategy is in order. I have some ideas. Most of my friends who possess integrity and value have not joined me here because the marketing they've seen is the cheesey, "make money from your posts" variety. It does not appeal to them because they are not motivated by selfish desires and a push to "game the system". That mentality is pervavise among a certain type of marketing parasite, which also dominates the mainstream culture of greed.
Woo woo types are not lured by money. Spiritual people who identify themselves as 'empaths' are in short supply here on Steemit currently. This is a problem. I'm going to do some serious thinking on how to attract people, the kind of people who could really get this machine going in a direction that has the power to change humanity on a VERY LARGE SCALE.
I think it's possible, but there are a lot of brainwashing, cultural and psychological programming issues that need to be resolved. You cannot expect great outcomes from those who are programmed to take from the poor and who do not possess empathy, not even a shred. What we're dealing with a cultural and psycho-social disparity that will not be resolved easily or without a full-scale war. War for dominance, war for resources. This is a microcosm of the forces that have created the mess humanity is currently in.
I think you're a genius. I think I've never seen a leader before who possesses the kind of determination and fairness I've witnessed.
If theres' something i can do, i wish i knew what that is. your honesty is really rewarding and making me understand that radical honesty is worth pursuing. thank you
What an excellent response! Now I see, as a newbie, why your reputation is so high on here. :) The key seems to be to build in enough traps to minimise the troll action which ALWAYS follows on successful social networks, as the greedy folk arrive. There is so much more potential here than mere pay for play, as you say it could be a real game changer in enouraging more ethical, rational and empathetic behaviour. If it doesn't profit a troll to do its business, then what you're left with are those who want the best.
I guess then the only folk you're worrying about are the socio/psychopaths, but what to do? The one caveat I can think of is the fact that right at this minute there are people sitting down in various countries of the world trying to work out how to crack/hack the system, which could be a problem perhaps?
Flawless logic from where I'm standing. I support any change that will reasonably be expected to result in a bigger pie for everyone. I am very grateful for all the votes, including the whale bot voting rewards I've received. But if that comes with a cost of too rapid a centralisation of SP and not enough minnow reward then we'll all just have to get on without that kind of whale support. The whales will be fine if growth is maintained.....in fact the rewards will be bigger!!
I downvoted the post not because I disagree with the post or think it isn't a quality post but because I do not think that the interests of Steem are served by every platform or devteam update pulling thousands of dollars from the reward pools that go to ordinary users. The reward consensus algorithm also disproportionately rewards these posts since they are the only thing that 100% of Steem users have in common (aside from being human, etc.).
Also, a bit of feedback. I understand that it is a rhetorical technique but using loaded terms like good and evil will tend to be seen as attempting to marginalize people who hold a different point of view about what is best. I would suggest using more specific, descriptive, and objective terms to describe behaviors you believe should be encouraged or discouraged and leave the moralistic labeling out of it.
Precisely.
Sounds good. So then Evil Whale should == Dumb Whale in a good curation rewards system. Good luck with the curation system overhaul, and maintaining a growing userbase and a stable / profitable platform.
The whale behavior on this particular post is very interesting. The three largest non-team VESTers are @berniesanders, @smooth, and I. We would meet the definition of "whales" maybe not so much for the magnitude of our holdings, but merely for our high positions on the rich list.
Based purely on a fairly trivial "pile-on" algorithm, I voted for your post. It was the first vote, as a matter of fact. My vote intends only to maximize my profit, without regard to any other factor. I admit to that fully. My actions are a result of a complete loyalty to the nature of the system, which is one of driving behavior using incentives.
Unlike me, @berniesanders and @smooth downvoted your post. I don't know what their motivations were, but the net effect is that they sacrificed voting power to take some rewards from you.
My question is, if whale behavior can be good or evil (subject to the binary nature of a vote), who is good and who is evil here? Obviously one vote is good and the other is evil. Which is which?
These are rhetorical questions, of course, because no matter how each of us acted, it was undeniably for selfish reasons. Mine is to maximize my rewards (even if it means enriching a greater whale), and the others are likely acting to satisfy some psychological need, such as the need for justice (even if it means reducing benefits of a fellow steemian).
This got me thinking... what if voting wasn't binary, but a horizontal/vertical spectrum line that allows one to vote gradiently. I imagine it being just like the upvote arrow, but when one clicks on it, it reveals a spectrum that would by default be 1, but it can be gauged decimally.
I think what Dan said still stands. The connotation of good and evil only depends on the perspective and are not a ultimate truth.
I was just re-reading that post from Dan today and I think it might hold some hints of why a linear curve might not be a good idea.
Yay! (I think). This sounds an awful lot like you're fixing what I complained about for months.
It's hard to tell because you used a lot more words than I did and I'm a little confused.
I wasn't called "genius" either, but it's probably because of my proficient use of fbombs. =b
This is the way of thinking we need everyone to have.
"the 1% of a trillion" says it all and is the guiding force of every action I take on here (AFTER I GET A NEW COMPUTER AND OUT OF MY $4K DEBT). I post like crazy on this site because I need the money so badly. There will come a time when I can focus my energy more on those who need my help. Quite frankly, though, I fit the %22starving artist%22 type who doesn't even think one minute about money.......it's a problem. I'm trying to find a balance. I need to learn about money and finance. I don't know shit about it. I wish the evil whales could give a shit about something else, and try to balance out their greed.....
.
This was a post I very much wanted to see. Thanks.
i agree
I got your message about being turned off by my use of the f-word. I'm still contemplating what to do and if I should change or not. But I do thank you for telling me your radical truth. It's appreciated. I'm undecided. Once I get paid and can settle my debts, perhaps I'll stop using the f-word. Until then, however, I don't think I can, as my frustrations are still huge. But you got me thinking.....
Awesome post! You write with amazing clarity. The self-regulation at the whale-scale for the whole is really fascinating. I'm hopeful that as this platform develops, and the gui evolves, it will be attractive to the masses as well as the intellectuals. Keep up the great work!
@berniesanders aka @nextgencrypto, one of our esteemed witnesses, in with the down vote -- splash.