I'm a Steem user who today operates with ~200,000 Steem Power, which is worth ~$250,000 at time of writing. The table above are my total rewards per week. I have not been posting on this main account for personal reasons, so the rewards above are purely from curation. That's ~123 Steem Power per week, which is about ~$165 at current prices.
Now, I want to make it clear that I'm not claiming to be some super hardworking Steem user who's contributing to the platform all the time to deserve massive rewards compared to all the frequent posters and bidbot entrepreneurs. In fact, 70-80% of my votes these days are automated. Call it account curation. I shift my votes around every now and then using SteemAuto as a vote management tool.
Alright so from doing what I do, which is pretty much 70-80% passive at this point, my returns is ~$165 with $250,000 total in Steem Power locked up in current prices. That's 0.066% per week. Roughly extrapolating and assuming Steem's price stays the same, that's $8,500 per year with ~$250,000 locked up. A whopping 3.6% returns per year in the beginnings of a high-growth platform. Being sarcastic here.
How to earn a minimum of 6x more than $8,500 per year with $250,000 locked up as Steem Power?
Truth is, even the most active and effective curators and curation services with the same amount of Steem Power as me (or actually any amount of SP under the current model) would earn just 2x more at most under Steem's current economic model. To earn substantially more than 2x in the order of 6x minimum, I can dedicate my Steem Power for the following:-
Post more to self-vote more.
Vote trading (selling to bidbots, buying from bidbots, be the bidbot, delegating to middlemen that promise ~100% returns or exchange votes with other users).
By dedicating my Steem Power this way, I get to earn about $13.91 (100% vote) x 10 (times a day) x 365 (days per year) = $50,771 per year minimum from just paying myself to post anything at all. That's a minimum of 6x increase from actually curating content and accounts on the network. Not bad, if I'm actually posting stuff that adds to the platform all the time. But statistically, 90% of self-voted posts will just be counter-productive for the platform.
Yes this is the majority of Steem's activities right now.
The effects of Steem Power maximisation under Steem's current economy.
Based on the above: since (2) fuels (1) effectively as they're really the same thing, all this really amounts to is posting more for the sake of it. It can also be automated. This is terrible for user experience and Steem's economy in every sense:-
Both author and non-author types force themselves to post frequently, even on days or weeks or months when they have no good content to contribute at all.
This results in massive spamming, making it way more difficult to curate content and accounts on the platform (and ironically it also looks like curation is the worst way to earn on Steem at the moment).
The platform is worse off from everyone maximising their Steem Power this way. And let's admit it: 90% of people can't be posting all the time because not everyone's fit to contribute posts on a social content platform, just like how 90% of businesses flop 90% of the time.
But Steem's price could increase.
You may say that my estimated earnings per year is based on a static Steem price, which doesn't reflect potential massive earnings if I just hold. Look, Steem may go up to $100 or down to $0.10 or whatever. Due to reasons (1) and (2), I think it would be fair to say that the price wouldn't skyrocket. And that's besides the point. The point is that the economy's incentivising what is considered to be bad behaviour for a social content platform.
Make Steem Power attractive.
For it to be attractive, the economy needs to avoid incentivising behaviours (1) and (2) the most. This can be achieved by making curation a profitable game. Voting for the sake of it is much better than posting for the sake of it. In short, voting spam is much more manageable for community self-regulation if compared to posting spam. Voting as a game can be shaped to improve the platform.
Further for Steem Power's attractiveness, it needs to be working in favor of the platform while providing good returns for its holders. Steem is actually a massive multiplayer game of content and curation. With an economy that encourages more voting instead of posting, the community can shape the voting game and come up with curation services over time to improve the network as a social content platform. Great curation is a skill. Content creation too. They're trainable, but don't be mistaken that everybody can do it at all times.
Now Steem Power is just not very nice to hold, since it's mostly fueling activities that doesn't add to the platform as a whole.
Make Steem a 50/50 money.
A simple observation of how human nature handles money is that most people love to earn something back from a business transaction. So let's just make it intrinsic to voting. Give users ~50% of their votes back just from curating if they play the game right. Roughly-speaking, doing so will net anyone $25,000 per year by locking up $250,000 and exercising their votes. That's 10% returns per year on a potential high-growth platform in the early years. Not too bad, and not too crazy.
The current Steem economy is providing curators with ~1-2% returns per year while the rest is going to non-curation activities, which yields far superior returns in the order of 20% or more. It's no wonder why the chain is filled with spam and abusive behaviours. Changing Steem's economy will bring the gap closer to the region of ~10% - a middle ground and close to the ~8.5% annual inflation rate at time of writing. I think investor types will be happy with this setup without resorting to post spamming all that much.
To achieve this, I'll echo the proposal here:-
50% curation rewards. This doesn't automatically make Steem a 50/50 money as it doesn't guarantee that 50% of votes given out are returned, just like our current economy of 25% curation rewards that actually returns ~13% in average.
Capped modest superlinear. This encourages curation on great content as it provides far greater returns if the game is played right. Steem Power holders can also opt for skilled curation services to provide better returns over doing curation on their own. This should yield ~50% voting returns in average. Also, there will be less spam because post spamming and self-voting wouldn't yield results that are as good under Steem's current purely linear economy.
Increased downvoting incentives. This is the way to shape voting behaviour on Steem. The capped modest superlinear proposal above also will congregate abusive votes on spams and will be much easier to stomp out and be regulated by the community. Under Steem's current linear economy with costly downvotes, rewarded spam is distributed flatly across the network, making it hard to manage.
For a much more elaborate take on the matter, check out my previous post about this matter: @kevinwong/are-you-seeing-the-truth-what-is-your-vision-of-steem
Thanks for reading!
At the time of writing, both Steem and Tauchain are two of my greatest interests in the blockchain space. Both of these projects have good potential if done right: Steem as a specialised application with proven usage, and Tauchain as a truly dynamic general blockchain that could overcome the bottlenecks of mass collaboration (new website coming soon). Please smash that follow button and subscribe to @kevinwong for more.
Note: earlier this post had an annual curation earnings error by a factor of 4.5x, so I've changed the figure from $2,000 to $8,500. Thanks @crypto-econom1st for spotting the mistake.