The hidden costs of middlemen
For a long time now I have had a delegation with @ocdb, the non-profit, whitelisted bot that is run by @ocd, a manual curation initiative. Over the last 2 years I have been far from a proponent of bidbots and was one of the earliest and most outspoken against them, however in a decentralized and stake-based platform, there is only so much that can be done.
While I would not delegate to any bot just for profit, I have so much respect for what @ocd does and tries to do on the platform that I became one of the earliest supporters and my stake was used in testing with very little return. For me, I don't sell Steem so I have used earnings from it to power up - it is funny how rare that seems to be these days for people to do. After the coming Hardfork however, I want to be able to utilize my downvote capabilities so will take some of my stake out and leave some in to keep earning until the waters are tested.
Over time, I have bought Steem off exchanges and delegated it to the bot for a return and watched as more people did similar and, the whitelisted accounts that used it grew their personal stake with the relatively static 10% benefit from the vote. At some point, A very large delegator (@freedom) added their stake to the bot which helps make the @ocdb vote one of the largest on the platform, which is what provoked this post today.
While I am not great with numbers, I do like to poke around and see what is going on around the place and today I decided to compare some of the bidbot returns. Because Freedom delegates both very large and quite even amounts of Steem across several bots, I thought it was a good place to start on https://steemworld.org/@freedom - and as I scrolled through the transaction in, there seemed to be quite big variations.
@ocdb being non-profit means that all value it generates goes to who it votes on and the delegators - there is no middleman cut for the management or maintenance of it. 10% for the buyers, and the rest including the curation goes to the delegators.
I know some of the others take a cut but I was curious to see what that might look like. I also hear that some of the bids run a loss for buyers due to the way they work, but I don't know how they work as other than @ocdb, I don't use the bidbots.
Looking at the numbers over the past 30 days of payouts that went to Freedom (with the help of a friend to pull the data I asked for, as I am inept), the differences are quite severe.
The "STEEM" number includes what was paid out in SBD and converted to Steem at today's price. While not perfect, it is close enough for these numbers today. The % return is the percentage on the stake for the last 30 days, and that would work out to about 18.5% for the @ocdb delegation in the year.
With @ocdb as the reference as the highest returner, we can compare the leakage from the others.
| bot | approx percentage difference |
|---|---|
| @bdvoter.pay | -12% |
| @appreciator | -15% |
| @rocky1 | -16% |
| @upmewhale | -18% |
| @therising | -19% |
In a year, @ocdb would return around 561,000 Steem to @freedom for the 3M+ delegation (and by default, all other delegators relatively). Now, "less" might not sound like much but then, if all things remain equal for a year we can see what these percentages means for the investment compared to if they all offered the same @ocdb deal.
| bot | approx percentage | Approx. Steem difference p/y |
|---|---|---|
| @bdvoter.pay | -12% | -11,000 |
| @appreciator | -15% | -42,000 |
| @rocky1 | -16% | -45,000 |
| @upmewhale | -18% | -33,000 |
| @therising | -19% | -53,000 |
These amounts are approximately the middleman "fees" for running the bidbot, a total of around 185,000 Steem a year (all things remaining equal. That is quite significant isn't it? Now, while I am sure there aren't many out there that cry for @freedom's lost revenue, all other delegators to these particular bots are being charged the same management fees and they differ quite a lot when using @ocdb as the reference point. And remember that these can offer a negative return to buyers, whereas @ocdb gives the relatively solid 10% positive return to every buyer.
Of course, while these are approximate figures, my math might be quite wrong also.
However, these are credit card level fee percentages. Seems pretty extreme for running what is also happily being run as a non-profit service.
Again, I don't know much about these things but after seeing such discrepancies between the delegations, those who are delegating to bidbots might want to consider the fees they are being charged for the service, as after all, these are used as investment vehicles by many. At the moment, bidbots aren't likely going to go anywhere soon and while everyone can do with their owned stake as they choose, I do believe that for the smaller delegators, they would be better off using their stake to build their network the best they can.
I think that after HF21 there is a good chance that the randomization downvotes will bring will disrupt the earnings on bidbots, especially if the largest users are voting on shitposts that the community feels don't deserve the value as this affects curation. This changes things again and hopefully in combination with the convergent curve and 50/50 curation encourages more manual curators back to Steem. I also think that the SCOT frontends without the bots generally have healthier looking payouts and Trending pages.
Perhaps at some point, the bidbots will run at a loss for all buyers as they will only be used as marketing tools by companies looking to promote their products across the Steem ecosystem of experiences.
What I like about Steem is that all of this information is out there and available and we can use it to hopefully find a better balance as a community of diverse people, with diverse talents and motivations. The other thing that I like is that while we all might have different ideas of what has value on Steem, many experiments of various kinds can be run simultaneously by anyone in the community willing. Personally, I am looking to the shakeup the EIP could bring to Steem and the development and innovation that the Steem DAO could encourage.
Taraz
[ a Steem original ]
1 !BEER Token for you
To view or trade
BEERgo to steem-engine.com.Hey @tarazkp, here is your
Do you already know our [BEER Crowdfunding](https://steemit.com/cryptocurrency/@beerlover/let-s-grow-and-update-the-beer-token-huge-crowndfunding-as-crowdsale)BEERtoken. Enjoy it!This is why Steemit, Inc has done nothing about bid bots. It should’ve delegated everything to @ocdb instead.
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I didn't think there would be such a big difference between them but for example, at 19% with the same delegation the difference would be 106,000 Steem in the year.
STEEM would perhaps be more valuable because @ocdb is not content quality agnostic.
Yep, this is an important factor for the content perspective and hopefully later, it will come to the fore.
I think that's false assumption.
The higher your standards, the less competitive you become. Because it takes more work/talent to write a good piece, and in the current economy, no matter how good the article is, there's not enough votes that are genuine to want to go towards it, so it's a race to the bottom.
On those whitelists / blacklists / standard-setting. It's mostly just to virtue signal and hope the standard isn't so low that it attracts downvotes.
Ocdb is the lesser evil as it doesn't take too much middleman fees, but the economic forces under the current setup remains. It'll become more apparent as the price gets higher.
What you mean too much fees :DD
oh i dont mean ocdb as the middlemen, but in this case its shifted into the buyers, basically undercutting sp valuation (same thing)
Not quite I think. There has to be a range of content (at least on the blogging side) to attract consumers and only having shit upvoted highly isn't going to cut it. If this was only Snapchat, perhaps it would be okay to only have crap there.
Later of course, these paid votes on content (other than advertising) should disappear altogether but, we aren't at that point yet so - gotta align other parts of the system first.
the biggest part of my delegations are therefore to ocdb as well, both for the project and for the returns... its not often that the best is also the most profitable
It is going to be interesting to see what happens after the hardfork and how affected the waters will be.
I have about 20% of my stake delegated to @ocdb and had been thinking of upping it to 25 or maybe 30% but you raise a valid point about using stake for downvoting. Damn, there are a lot of variables to consider.
Perhaps there will be a bit of both worlds possible, we'll see. ;)
The landing pages could stay kinda normal forever if the view would rank based on actual upvote & click numbers instead of revenue. But would that be natural for a Steem based platforms? Kids like cookies, not vegetables.
Meanwhile, the bots are fastly adapting to the tribes and history will repeat itself, eventually.
Actual upvotes is a terrible metric unless it is is one person one vote. There are hundreds of thousands of bot voters out there. The counter was taken away because it was so easily gamed, as it is on other platforms too.
This post is manually curated by @azizbd and received an upvote from @SchoolForSDG4
School For SDG4
A School For Social and Educational Development of Underprivileged Children
Damn, the difference is pretty big, I thought some others in there were non-profit as well (or so they've been addressing themselves).
It's going to be interesting with HF21, if anything I wouldn't mind if non-profit distribution bots like OCDB were the last ones standing and if that were to happen I would want to stop accepting bids altogether and focus on higher curation reward returns for the delegators instead.
Yep, I could see it clearly without even working it out but, i wanted it to be relatively accurate.
Perhaps if there is enough flagging going on on the worst abuse, while it won't kill the bots, it will make them behave in a more healthy manner. It is amazing to think how much they have taken over the last two years in fees though.
Thanks for investing your time in putting down this insight @tarazkp. Upon learning about them earlier this year, I have had my biggest delegation with @ocdb. It is nice to see some support for it being a better decision than I knew. My primary purpose (as appears to be the case with you) was less as an investment and more in support of other Steemians.
With all that has been written in attempting to project what changes HF21 will bring about, we are at long last very close to finding out. Should be a "fun ride!"
P.S. Got a vote today from @babytarazkp! Are you going to be writing some sort of different content on that account?
You are welcome and from what I have seen, many of the authors who have used @ocdb have powered up and are engaging with their communities, which is the purpose of it for me. I think it has helped keep some people here.
HF21 is going to definitely bring in at least some new things to complain about :)
The baby account has most of my Staked Scot tribe tokens on it and it follows me. I curated your post on SteemLeo and the baby follows with a 100% vote without costing me a lot of Steem VP (otherwise I would be at under 50%). This means it is a manual vote by me, but has a Token trail on it. I don't plan on using it for content.
Okay @tarazkp, thanks for the input on the baby account. Makes sense as I have read through the various options people have been using to attempt to keep track of all of their tribe tokens. When I have more time, I'll look into figuring out what I am going to do with them ...
My option is quite simple and works pretty well so far, for example:
That is my LEO VP in the blue, the top is the baby Steem VP (it doesn't have much). So it votes at 100 percent no matter what percentage I use on the tarazkp account.
Because many use the Pal Tag, it gets hammered:
Creativecoin
neoxian
I delegate these coins to the baby so it can vote.
Okay thanks for the additional detail @tarazkp, as that is helpful. A few weeks ago I managed to claimed two account tickets on SteemWorld. I thought they might be useful to have someday, so maybe a baby roleerob is off in the future somewhere ...🙂
Certainly a large difference and this is just a portion of the advantages that blockchains provides and will use to disrupt traditional systems. I think projects will ultimately come in and compress those margins more cia competition so that more stays with the investor over time.
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As an investor into something where the returns are quite static, a 19% difference is massive. And if powering up, that is compounded in both directions. A loss for the investor, a gain for the owner.
Definitely changing my delegation. I'm removing it from therising, I only did it because I had a bunch of stake and knew I wasn't going to have as much time to spend on the platform. I'm definitely going to swap it over to ocdb or dlease for better returns.
Hopefully after HF21 and on, the gap will start closing and people will become sensitive to voting again.