Since this has come up a few times over the last weeks in comments, I thought I would put it down in a post in case it will help people have a different perspective about the inflation pool as reward, upvoting and of course, downvoting. For me at least, I like to understand concepts through stories that visualize what is going on.
The inflation pool as a shared wallet.
Rather than look at the technical aspects, imagine the inflation pool as a shared wallet to which all all of those with stake have relative access. This access allows each staked user to choose where they direct their portion of the pool, essentially, what they are going to buy using what is in the wallet.
This is an opportunity cost position because the wallet is finite and to buy something, means something else can't be bought.As it is a shared wallet however, there is an option for discussion between all with access to have a relative say over whether that purchase price on that particular product is going to be increased or decreased.
What this means is that the wallet funds are allocated and earmarked for a purchase on a layaway plan, and there are seven days for all owners to negotiate if the purchase will be increased, decreased or rejected altogether. After the seven day period, whatever value is on the purchase, will be transferred to the receiver and that value then becomes owned. At this point, the new owner now has some additional stake to access the pool and negotiate with in the subsequent purchases.
When it comes to the negotiation of purchase and price, there are a couple of tools that direct value toward or away from eventual ownership, namely, upvotes and downvotes. Upvotes move relative value from the pool toward ownership, downvotes move it away from ownership. It doesn't matter how much access one has or the price paid to have that access, it is always relative to stake and for seven days, open for negotiation.
A person who bought 100,000 units of access for a million dollars has no more access than a person who bought 100,000 units for 5000 dollars. The purchase price of access does not give additional access to the contents of the shared wallet. One can of course try to negotiate this point through the use of upvotes to direct value toward oneself, but the rest of the owners are entitled through their stake to negotiate that same value away again and back into the shared wallet for redistribution.
Entitlement of stake on the pool isn't about where eventual ownership of the shared wallet value will be, it is only on the movement toward and away from for the seven day negotiation period. No wallet owner, nor any beneficiary from that wallet is entitled to any of the contents of that wallet uncontested when it comes to the reward portion. Until resources are moved from the shared wallet to a privately owned wallet, it is unowned and unallocated.
When it comes to the earmarking of that value on a purchase, it is good to remember that at that point, nothing has come out of the wallet and it is only removed from the wallet after the end of the seven days. It is also good to remember that while the seven day period has directional volatility to and from, all purchases are final and once allocated to a private wallet, it is owned by that wallet and is no longer a shared resource. the only one to have claim over what is in a private wallet is the key holders of that wallet.
Household management - economics
There is nothing unusual about this process at all as it is the way a household manages its finances. For those in marriages and long-term relationships it is common to negotiate purchases as the cost of buying takes away the opportunity to buy something else and this impacts all participants of the household because resources are always limited.
Some couples may even have shared bank accounts and cards that allow each to access, but still the negotiation is going to take place and inevitably, the value of a purchase is going to come up. Negotiating what, where, when and how much of something is going to be purchased is a core component of relationships, and good and bad purchase decisions impact on trust dynamics, as well as the types of possibilities the members of the household have access to themselves.
Understanding the allocation
In my opinion, understanding the allocation of the pool and the mechanisms involved at even a basic level takes away a great deal of the emotional reaction to the flow of resources. A large part of the problem with not understanding that the reward pool is an unallocated resource is that people feel entitled to where it will be owned without factoring in the negotiation that needs to take place before ownership happens.
The other thing that causes a lot of problems is the negotiation as to what is valuable for the household and while some consistently look to improve conditions and increase possibility, others look to satisfy their own needs using the pool as if it is a private wallet. This is why the negotiation period and the tools to direct resources is so vital.
While I am sure that I am missing points that I wanted to add, I hope that there is enough here for people to build their own mental representation of the reward pool and hopefully, better understand the benefits of it in a space like Steem. Having this shared wallet and negotiation period is what makes the Steem economy so unique as all owners have an impact and a voice over what is bought and what is not and in time, perhaps the direction of resources will increasingly improve the lives of those who participate in and benefit from the allocation so to improve the experience of many.
Taraz
[ a Steem original ]
Sooner or later it will start sinking in :-)
It is difficult sometimes to build workable stories from complexity and many overcomplicate Steem.
Absolutely. This is reminiscent of the battle on traditional social media such as Facebook as to whether there should be a dislike button. I think the reasoning behind the sentiment against downvotes on STEEM is the same, and it comes from a noble place. People don't realize what they are doing to their own earning potential by adopting a passive approach to managing the reward pool.
Having a direct economic incentive from a shared resource that behaves like the Steem pool, fundamentally changes use case and therefore governance.
Passivity doesn't cut it for responsibility of ownership.
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Thanks mate. =)
No probs.
How does it work? Can anyone request?
I think it's full now but if I have a free nomination I'll tag you.
Thanks. It would be great. You can always hit me up on discord if needs be.
You explain the reward pool with such eloquence and clarity that you surely deserve a larger slice of the pie than most ;)
:)
I do okay.
I think a lot of the problems around Steem are because of confusion about concepts that are fundamental to the experience. As an individual starts to explore wider I think that they will start to see how incredible this place could be given time and effort.
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So I've been thinking, this could be the infrastructure of a true democracy, just change products to what people want their taxes be spent on, without central government. A decentralized society. I think I am enlightened •o•
Welcome in. :)
What a great analogy! It definitely makes it easier to understand for those just getting started although those starting still have bigger challenges like RCs to consider.
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Some of the people who don't get this have been on the platform since near the beginning ;D
RCs are another case again, but don't need to factor ir here as they have no voting rights.
I really believe it's exactly here where resides the confusion and is actually the true Key Point of the entire explanation of the mistaken "Grade of Entitlement" everyone has as for thinking of going everyday to the collective rewards pool with a tanker truck or with a mere humble bucket to fill these containers to the top of its capabilities to then water the plants of their own private garden (Curation) with the 'water reserve' that we all share and consume here daily in the whole community.
I mean, those who've needed to pay 1 million dollars for those 100,000 'units of access' to the communal rewards pool (wallet), in the measure that their initial fiat investment has lost enough value in the markets to the point and compared against the initial fiat investment that someone else later through barely five thousand dollars was also able to purchase these same 100,000 'units of access' to the communal pool (wallet).
It is more probable that the former pretend to always fill indefinitely his previously perceived $1M 'original' tank truck alike worth of a container to the top. And aim to start using from that moment the same 'amount' as before, of this now cheaper water exclusively for his own plants in his private garden and try monopolize the rest he don't use no matter what. In a desperate attempt to recover asap the previous ROI and surplus value of his initial fiat investment ignoring that at that point in time his actual 'container' only can have the size of a humble bucket.
Hence the reason for many of the changes in people's behavior and distortions in the ecosystem economy. };)
Well yeah, maybe you would like to talk a little about the everlasting spring that fills the communal rewards pool daily and through what kind of limited and scant liquid is it filled. :)
Cheers!!
People are trying to average their buy prices, which is natural behavior, but there is no reason to kill the platform to do so as, that fucks over the actual price.
That's exactly the problem. The $1M dollar investor still has a tank truck parked in his garage. But he is well aware that if he wanted to sell it now in the market. He would get the fiat value in return equivalent to that of a humble bucket worth to collect water.
So, kill the platform and fucks over the actual price to pull off a nice ROI out of their new economic situation and general reality asap. Seems like an exclusive and intimate Bizniz that only resides inside the entrails of each one headz as for how, when, where and above all what they have to do to pocketing no less than these same $1M dollar fiat tokens once again no matter what. After all, atm, they only spend, consume, waste and live IRL.
Meanwhile, we are just living & passive spectators of their funny show of trickery, shortcuts, subterfuges, skulduggery, legerdemain, chicanery, shenanigans and jugglery watching what they try to get back $1M dollar fiat tokens out of their now bucket's worth tank truck IDL. };)
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who's she?
I know what Pollyanna means. This is neither positive nor negative as a view, it is just the way how the pool works can be visualized.