I'm compiling a series of thoughts about the economic proposal a lot of people have been talking about here. I don't expect to convince anyone of anything, but I hope to at least motivate why these choices are being made. For those of you sick of hearing about it... I'm sure... This will be the last I post about it. Probably.
As a summary, the EIP has the following elements in it:
Let's go through a few thought experiments and toy examples.
A small thought experiment in a world of only farmers.
Let's say everyone was just self voting themselves. You got 100 people, posting 10 posts a day for 7 days, and upvoting them with full power.
Let's now look at if the new rules can break this equilibrium. Initially was going to look at everything, but instead let's just focus on the 25% downvote pool.
The dynamics are immediately interesting, because it's clear that to maximize they need to downvote. But who? They get more also by ganging up on others.
So let's assume that 20 of those farmers are downvoted out, meaning 80 have used all free downvotes on the other 20. Now what?
Those 20 will now see that upvoting their own posts is a waste, and will stop doing so, looking for curation opportunities and also exercising their own downvotes.
From here, it's not clear to me what would happen as votes shuffle back and forth. Even in a world where there is no content. Those kind of dynamics make things much more exciting and having something akin to content or engagement quality can serve to highlight that behavior above the rest. I mean there's nothing that makes anyone choose content quality as a guide but certainly the better networked you are, the better you will do. And that is arguably an important metric for how valuable you can be to an information network.
There's a lot missing here also. Starting distributions can definitely affect things. You don't want to be in a situation where the top user(s), with 25% has enough to lock out everyone else. I think 25% is chosen with that in mind.
If we add convergent linear to the mix, there's a slight incentive to consolidate votes. In a cooperative world, that would be where they all vote on a single post and split the spoils fairly. But we know this cannot happen on a global scale. On top of that, the curation curve makes it so that earlier voters get more.
As mentioned before, the intent of convergent linear is to make it unprofitable to create thousands of posts with small votes in an attempt to hide from everyone. You can still do it, but the curve will penalize it. Also, from the way things are looking, it's not going to be highly nonlinear at the bottom. It's going to start near the middle and end linear. Meaning that it doesn't completely kill small posts. But it will still penalize low end farming.
When people study the curve, they need to understand a very crucial point:
As an illustration, consider a simple case where in linear, two people have 1000 1 rshare posts. Together in linear, 2000 rshares of posts, and if it were distributing 20$, that's 1 cent per post for 10$ each.
Let's use the curve (r^2 + 2r)/(r + 4). Assuming they don't change, each post has a score of 3/5, for a total score of 1200. With 600 each, and 20$ to distribute, that's again 1 cent per post for 10$ each.
But let's say one of them reduces to 500 posts with 2 rshares each. Now one person continues to have a total score of 600, while the other has 500 * 8/6 = 2000/3 or around 666. That means with 20$ to distribute, one gets $9.48 while the other gets $10.52.
At an extreme, let that other person go to 10 posts with 100 rshares each... This becomes 10 * 10200/104 or around 981. Now the distribution looks like one getting $7.59 and the other $12.41.
In any case it's clear, even with a mild curve, it can really shift incentives away from low level post farming.
Why do we care about that, you might ask? It makes it much easier to downvote with the freebie downvotes, which as mentioned above, everyone has incentive to use. They will have to balance hiding in the shadows to exposure to downvotes.
Of course, this is a simplistic example and a lot of things depends on the curve parameters and distribution of other post values.
But it's clear that it becomes that much more important to exercise downvotes to make sure the ones that deserve rewards get the rewards.
I don't have much to say about 50/50. But I will remind you that as with above, the payouts are dependent on the distribution of votes on posts. Even if at the moment of flipping the switch it cuts by 1/3, the equilibrium will shift over time as the incentives kick in and people adjust. And there's certainly a lot to think about in relative terms. Curation getting a boost, despite the skepticism about it not doing anything, will incentivize a broader distribution. People will be encouraged not only to post and leave, but also to go find and vote other content based on the potential gain. I don't think everyone necessarily benefits relative to before. But I think the result will be more fair.
In case you couldn't tell, I am pro EIP. Though you might also note that in all cases, downvotes are the key. I would be okay with just downvotes too. But I like the thought behind the other initiatives. Anyway, let's make incentives work better for the platform.
