Steem - What if we turned off the inflation?
Well, not completely off, but just reduced it dramatically...
To the point where we got rid of the inflation content reward pool all together, basically turning off the inflation to steemit.com. The remaining inflation would go to pay SP holders, witnesses, and the SPS.
At this point I am not sure what a good overall inflation number would be, but perhaps something in the 1% range would be sufficient.
Something low enough to make the coin a lot more scarce than it is now, while being high enough to keep things running.
The reason I am proposing this is due to some thoughts I have been having for a while now as they relate to SMTs.
Why is it that basically every new app that builds on the steem blockchain will eventually use an SMT, but Steemit.com does not?
If steem is truly to be the base layer, we shouldn't have one app that is benefiting from the inflation while the others are not.
We should truly set steem up to be the base layer and all the other apps can build on top of it with their own tokens.
I am not sure what the best inflation numbers are at this point or the best split between the SP interest, Witnesses, and the SPS... but overall, going this route makes a lot of sense to me and something that I have been thinking about for a long time.
I was recently reminded of it by a comment on the newest Steemitblog post by @sepracore, which reads as follows:
"I have an idea I would like to hear feedback on from the community because I have not truely thought through all the pros and cons. We all want Steem to increase in value. I have heard the high inflation rate scares off many investors. This forms the basis for my idea below.
Once SMTs are released, I propose dropping the inflation of Steem to something reasonable. For the sake of argument, let’s just say 1-2%. There would be no steem reward pool. Inflation would go to current Steem holders, the SPS, and witnesses. People would still earn crypto by posting, it would now just be in the form of that communities SMT and their own reward pool.
Since RCs would still be needed, people will still need Steem to interact with the blockchain, creating buy pressure (finally). App creators could buy the Steem and delegate those RCs to their users. The apps could earn revenue from ads, etc. ... something like that. Or users with RCs could earn passive income through delegations. Maybe this is how Steemit Inc could keep their Steem and earn the necessary money to stay in business. Rent it out.
I do not have the details worked out obviously but to me something needs to be done about the price of steem. I know I am stating the obvious here. @aggroed wants more ways to burn steem. I say lets considered burning future Steem by reducing inflation. With SMTs, do we need to keep printing Steem at the rate we are. It seems unnecessary and a pain to police.
Going away from the current Steem reward pool also might solve another problem. Starting with a new SMT community would reset the playing field so to speak, decreasing the importance of the premined stake, etc. I know communities are already doing this. This would just be doing it for Steem specifically.
Thoughts on this brainstorm from my phone? I am sure there are major problems, but let’s stsrt the conversation from here."
While not agreeing on everything in here, I do share a lot of his same thoughts on this.
I am not sure the problems with steemit and steem can be overcome by the coming changes in the HF, in fact I am pretty sure they cannot.
However, basically starting over with a separate coin for steemit and dramatically ratcheting down the inflation on steem may be just what the doctor ordered.
I am not sure whether going this route will create enough demand for steem prices to go higher, but we have basically seen over the past 16 months that the current inflation model likely isn't going to work, not to mention all the problems we have seen on Steemit.com over the past 3+ years with everyone trying to share the same reward pool.
Which means, exploring something along these lines makes a lot of sense to me.
Again, many details will need to be ironed out and worked out, but the basic premise is there.
What say you?
Stay informed my friends.
Image Source:
https://www.ccn.com/major-milestone-steem-blockchain-hits-1-million-accounts/
-Doc
perfect!
Why do you say that?
sounds good to me
you and edicted have lots of good ideas for steem
if there were more like you guys this place would not be so chaotic with the dicks running this place lol'
have a great day JR
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That and burn about 50 million Steem and you got something.
Sure, that could help as well. Though I am mostly talking about going forward.
What you are saying is not turn off the inflation, it's for steemit Inc to stop selling? Correct? Nothing is being inflated by them selling, the STEEM already exist.
Edit: no, you are saying let's completely break steem. If anything we should get rid of the inflation to steem holders. I don't think this is a good idea.
Give people a reason to buy, and burn steem. Stop giving free steem to SP holders.
Yes I'm saying completely revamp how steemit.com is set up. Why is it that steemit.com, a supposedly "just another app" on top of steem, receives inflation from the steem protocol? No other app receives that same benefit. History has shown that shuffling the deck chairs around IE curation percentage changes, voting time changes, downvotes etc is all mostly the same... just shuffling deck chairs around on a sinking ship. The inflation level is way too high for the current demand, though that is likely another topic all together as perhaps a dynamic inflation model could work. Revamping the current setup to make steem truly a base layer with everything else built on top makes a lot of sense to me and then you just set the steem economics accordingly.
Not agreeing with everything?!? Haha.
I just feel like something big needs to change. I know we have HF21 coming but as many people pointed out that addresses issues with people already here. To get outsiders (which is the main problem) we need to do something else. And something more dramatic.
I agree completely with that. I do not think the HF is going to do nearly enough to get the desired changes here. When we have stake weighted voting, and the stake not distributed very well, combined with a shared reward pool for all content, it makes it awfully tough to do what it is intended to do...
Wanna know my idea?
Let’s just remove the delegation function. That way every new app will be “forced” to buy steem if they truly want to reward their users instead of building their app and then earn free delegations either from Steemit or directly from the users.
Everyone is being benefited from delegations up until now and build their accounts...except steem itself....
Perhaps I should make a post about it and see how will people react to this idea
I see the pros of that as well. Though, there is something to be said about getting a business set up with a delegation and then removing it once they are up and running. Some businesses may not come if they aren't helped initially.
For steem to be delegated it needs to be held. So there is pressure to buy/hodl right there.
Yeah. I don't see why we need any more Steem on the market right now. There's 100 million on exchanges! We should be buying them up, not minting more.
Yep, I agree. Steemit,Inc selling is a problem, but a bigger problem is just too much inflation for not enough demand.
Definitely an interesting proposal but I still think that the inflationary pressure is only a short term problem but also ultimately helps in accelerating the distribution and decentralization of the network. Given it is DPOS, as large stakeholders sell, they will slowly cede more inflation to smaller users which will be the force behind adoption and engagement which lead to value creation. Price unfortunately is not equal value and that is why it feels undervalued here despite the development.
Yes, those things are true... but... and this is a big butt... I still don't think it makes sense for steemit.com to enjoy the inflation while other apps do not, and I don't think the shared reward pool will ever really work...
We need more discussion like that: If Steem's inflation was lower, it could have easily rank between 30-40. Yes, rewards distribution should part of DApp's work. Steem only need for backbone such as SPS, witness compensation and small percent PoS APR (similar to 1.9% right now).
I am happy to see influencer like you to post the idea and hope you will continue to post couple of times in coming months too to catch on fire.
Yep, that is what I think anyways. It doesn't really make sense for steemit.com to participate in the steem inflation. It should be a SMT rewarding content.
Really bad idea... We really don't need to add complexity to steemit, as it is already repelling content posters and attracting people who post dummy articles and comments. Because of the current reputation system, a lot of the dummy posters have higher reputation score than people who post real content. Essentially only way to gain more SP is to like every post and comment made by user who was higher reputation until SP accumulates enough to overpower the dummy posters. This will take months or even years because of current price of creating own content.
It wouldn't be adding any complexity, in fact we could remove some. Basically steemit.com would just run with a different coin paying creators. Steem would be reserved to pay witnesses, SP holders, and the SPS. The inflation rate on steem would be cut dramatically since it no longer is used for the steemit.com reward pool.
Steemit.com would be run with an SMT, or heck perhaps only SBD? Though the entire way that is structured would need to be reworked.
The reason it would function like this is to better align steem with its mission of being a base layer other apps are built upon. Currently we have part of steem's inflation going to one of its apps. No other apps, just one. It is weird when you think about it and it drags down the price of steem if that app does not do well.
Having steem be the base layer to thousands of businesses and apps running on top of it is likely the better solution to making steem relevant again, more akin to ethereum, just without the gas etc.
The problem with that is that the blockchain would grow as big as with Bitcoin so it would require multiple SSD disks just for the blockchain. No single SSD drive can handle that large amount of I/O. Both Bitcoin and Ethereum are I/O heavy.
Why is that?
Even if all apps on top of Steem blockchain would have own tokens, at some point those tokens must be converted back to Steem as no exchange will list all tokens. It will also attract low-quality content that adds "noise" to the blockchain, information that has no value to most users.
True, but look out our usage capacity right now...
https://blocktivity.info/
We have a lot of runway for these things and they are the only way a content community could work. The current setup of one reward pool funding every community isn't likely to work.
Blocktivity statistics don't tell the whole truth... What is important is the distribution level of the coins... In normal economy 90% of the currency is in possession of 10% of the total user base. In same manner, we should evaluate how much of the daily trading volume is by that same 10% of the users and how much of the new coins generated each day ends up to the same 10%.
The distribution level will be something each community/app can focus on. If they get it right, their token will do well, if they get it wrong, their coin will suffer. They can always adjust if needed. The important thing is that steem is the base coin with low inflation that benefits if any of the other apps/businesses built on top of it do well.
That pretty much implies Steemit itself would also need to have separate token or coin instead of using Steem Dollar or Steem... Maybe it will be Steem Power, maybe something completely new... The point is that the current system of having three separate tokens for one website is overkill.
Yes. That is exactly what I am saying. Steemit.com should absolutely have a different coin than steem. Steem is just the fabric that all apps are built upon. The steem coin gains value if/when other valuable applications are built on top of it.
Inflation doesn't just go to one app. Busy, steempeak, partiko etc are equivalent apps to steemit.
I like your idea (I think), by the way. Although, I do have questions like @ura-soul did about just transferring problems with inflation from steem to the various SMTs.
Sort of. They are more like different UIs as opposed to different apps. They have the same economics and whatever is posted on one shows up on the others.
This is one of the best ideas I’ve heard, and I think would go a long way to support the price of Steem. I think this should be seriously considered and implemented shortly after SMTs go live. And Steemit, along with all the other Steem dapps should have their own SMT.
Yep, I think so as well. I don't think any amount of tweaking the economics is going to save steem like we are doing with the coming HF. We need a radically different approach to make steem sustainable (and attractive to investors) over the long run.
I second this.
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I was hoping we would see a little more support on this... My only concern would be that if we remove the ability to earn steem via keyboard mining, is there going to be enough demand for people to want to own it? That would only come if we truly got some great apps built on steem.
Though, if we just keep down our current path it doesn't look like it will work either...
I dont see why not. This would just make steem into a base token with low inflation whose value would be derived from the use and value of apps built on it. It would have a trading pair with all SMTs.
Instead of having a pay yourself scam going on, a platform rampant with abuse, spam, garbage and junk content we would have a token that would pay a small dividend to a holder when powered up and the STEEM model could be copied into the STEEMIT SMT or any other SMT where the platform, developer would have control over all the crap that is happening right now.
But this would mean a big change and Steemit.inc doesnt seem too keen to drop this system no matter how broken it might be.
I might agree with you... but if you dont know people that know people i dont think this would stick.
Yep, I like the sound of that a lot. In fact I could see the price of steem going way up in this scenario...
I'm not 100% clear on how SMTs and Steem will inter-relate and be displayed in steemit.com at this point, but it sounds like the suggested model would mean that there would no longer be a way for holders of one token to vote on all posts - they would have to buy tokens in each sub community to vote on their posts - is that right? I think a lot of people would lose out on votes if that were the case since some people would not want to hold a community's tokens just to vote on the odd post here or there. I definitely don't understand how SMTs/posts/Steemit are intended to interact in future though - so if anyone can fill me in I'd appreciate it.
That is likely true yes. Every app and community will likely have their own token. This is ideal because then you don't have different communities/apps competing for the same tokens. We have had that with steemit.com for 3 years now and it hasn't gone that well overall.
Now, creating value for the SMT will be the tricky part for the community/app.
In the above scenario steem would no longer be paid out to content creators. Instead it would just serve as the base layer where everything is built on top of it. Most likely this gives steem a lot more value, but it will be dependent on what gets built on top of it. IE, we will need valuable communities and or apps built on steem to give it value. The current inflation model doesn't seem to work and I don't foresee it working in the future either. I think eventually we will need to make this change.
Currently steem isn't really used much for trading - I'm not really clear who is buying all the steem that content creators and others are selling on the exchanges. In any case, I'm not sure what use Steem would be perceived to have in that situation except as a stepping stone to buy SMTs - which might then be inflationary themselves. If SMTs are their own token with their own supply - essentially disconnected from Steem's value - then the inflation problem would just get passed on to each of the SMTs and it wouldn't actually go away. If the price of Steem goes up as a result, that's fine - but why would you be holding Steem if you wouldn't be able to use it to upvote posts?
I can see the benefit of stopping inflation for rewards altogether, in that it stops the value of the token constantly dropping automatically - but there would need to be a pretty ingenious replacement put in as a way of providing rewards that equals proof of brain at the very least. Personally, I still think that taking serious steps to stop bid bots is the best first step here.
You would hold steem because every new coin/smt that is created would have to first buy SP in order to create it. Steem would be the base coin with which every other coin is traded/exchanged. Communities and Apps would also need to purchase SP for the Resource Credits needed to run their app/community. The bigger their community gets the more RCs/SP they will need to get.
The reason an investor would buy steem is because he could gain exposure to every single app built on steem instead of just buying one specific app's coin. Plus he would get SP interest as well for holding.
So, you have people/businesses buying SP for their apps and communities and you have people buying steem to gain exposure to every app built on steem as well as collect some interest along the way. I think we would see a radical shift in the price trajectory of steem if we made this change.
If I buy Steem to hold SP to then access SMTs that themselves may have an inflationary function - how does that protect Steem? Either the inflation of the SMT also effects Steem or if it doesn't then I am only temporarily holding Steem before exchanging it for SMTs (as Steem Engine works currently). Surely I can't buy Steem, use it to access/hold an SMT and then expect to somehow walk away with the Steem I had originally at a similar value, regardless of what happens to the price/inflation of the SMTs I hold... Or are we talking about apples and oranges somehow?
I haven't looked at the cost of creating accounts in RCs recently, but I think that the amount needed currently to grow a community rapidly is pretty high. I think it is going to be more practical for each user to buy their Steem to access RCs than it is for a community to centrally somehow access a large amount to pay for new users (in most cases anyway).
We are talking about two different things. I am talking about demand from communities/apps. You are talking about a specific user.
Every community/app that needs a token will have to go through steem to create it, and then also own RCs in order for it to function. Both creating demand pressure for steem.
It will be interesting to see exactly how much demand/buy pressure an individual mildly popular community (with an SMT) actually creates for steem. Of that I am not exactly sure. It will likely depend on how exactly the creation mechanism of the SMT will be tied to steem, as well as if future inflation of that currency is also tied to steem somehow.
I was talking about both the user and also communities in different parts of what I said, but I wasn't thinking about SMTs themselves requiring any more RCs than usual Steem usage would require anyway. I haven't seen anything on that yet from the developers.
I'm not really clear on how the idea of dropping the inflation process for Steem itself would really help Steem due to the constraints that are likely to exist in the relationship of Steem to SMTs - but obviously we don't really know how it's going to work out so we probably need to wait for SMTs to launch before reconsidering the whole concept!
Correct. Though one could assume that a lower inflation rate would mean it would require less demand to move prices up... all things being equal anyways. Which would mean that SP purchased/tied up for SMTs/Communities/Apps could be more impactful.
Why talk about it lets do it
I would support it.