Helpie HF21 Position
There is a new set of changes around the corner, and now that it has been officially announced and explained we wanted to let everyone know where 
The summary of changes is:
- Steem Proposal System, funded with 10% of inflation redirected from rewards (which is reduced from 75% to 65% of inflation).
- Economic Improvement Proposal
- 50/50 author curator split.
- Convergent linear rewards curve.
- 25% subsidized downvotes.
The very short summary is that we support all of the changes. There are some concerns that it may not function the way we envision it, but we believe in the goals behind the proposal. Let's dig into the details.
Steem Proposal System
This is simply put, an accountable funding system, decided by SP staked voting. Every proposal is simply a description of work, cost, and an account to transfer funding to. At each round of funding, some portion of the treasury is distributed to the highest voted proposals, in order of rank, until there are no more funds.
In the beginning, likely only a single proposal will be active: a "return to treasury" proposal that returns all funds to the treasury account. This is not enforced right now but would be a controllable way to slowly shift the budget over time as more proposals come in. Of course, all large stakeholders need to agree to send that one to the top.
Another likely use is a "burn proposal" that sends the funds to null. This allows for contraction of supply if necessary, reversing some of the dilutions that happens with inflation.
The funding is all done with SBD, which has proven itself to be more stable than Steem, even though it is not a true peg. And that stability is a desirable property for funding.
Funding Source
Now we get to the funding source. It is to come from a part of the inflation. And some of it comes from the reward pool. As of current writing, it looks to be 10% of inflation. Meaning, before the reward pool was allocated 75% of the inflation. Now it is 65% inflation, and SPS is 10%, and all others (15% vesting, 10% witness) remain the same.
One thing to keep in mind is that this is a far superior system to what utopian has going, and it just seems better to be able to grant funding for projects in a way that is transparent and fair. There's concern for example that the way utopian allocates its stake is completely lopsided, over-rewarding various things while not rewarding actually valuable contributions. Here proposals indicate a funding amount, and if agreeable, stakeholders can bump it to the threshold of funding.
So we envision a future state where SPS is to be used instead of Utopian. This means for example that something that used to be allocated from the rewards pool can adjust to using the SPS instead, and thus this shift need not be a 'cut' to authors at all. In the end, we can cleanly separate rewards for content creation with rewards for contributions to the platform.
Economic Improvement Proposal
Downvotes
The first thing to note is that use of downvotes is critical to the goal of properly evaluating content. To see why granting free downvoting can affect things, a basic thought exercise can be found here.
The specifics of how it works is that there is a special mana pool that is 25% the size of your main mana pool, regenerating to full at 5 days. When deciding what power to use for downvotes, however, it will take from your downvote mana pool first, and otherwise, it will deplete the remaining downvote mana pool and take the rest from the upvote pool. There are a few more details missing about what power is actually used, but I would not like to complicate this much more. Point is, effectively you can use a little more than 2 full power downvotes a day without depleting the upvote mana pool at all.
But when choosing how best to allocate the downvotes, it is advantageous to knock out the other highly paid votes, especially if it's an indifferent whale. This introduces an interesting dynamic that is harder to predict than if there were no free downvotes.
We acknowledge the fact that whale bullies have more, should they choose that route, but the potential upside for this change we feel outweighs the downside. Note that when they choose to bully, their stake is already overwhelmingly larger than their targets, and 25% more doesn't affect this outcome at all.
50/50
The next on this list is the 50/50 author curator split. Our motivations for this are simple. We believe in adding additional incentives to curate. There's a common misconception that this just makes it easier to just auto curate. It doesn't. Curation is actually a much harder game than you think, due to the curation curve, as well as the auction timer. Autovoting can only get you so far because everyone is competing to try to front run every other auto voter without sacrificing too much back to the reward pool.
The incentives are set up so that you are motivated more to find something that will be popular that isn't popular yet.
We also believe that this change will be disruptive to the voting systems such as bid bots, which we view as a poor use of inflation allocation. If incentives adjust to make alternatives attractive, then this will change for the better. The short of this is that 50/50 doubles the curation leaked to the outside (not the bidder, and not the bot). And even if some delegators choose to withdraw their delegations for better alternatives, that itself is disruptive.
So while the downside clearly is an initial hit to authors (all else being equal), we think the post-equilibrium state will result in a better distribution overall.
Convergent Linear
Convergent Linear is a slight adjustment to how posts are scored and eventually paid out. All else being equal, lower share posts would be given a lesser share of the rewards pool. But, as the distribution of posts equalize, it can actually get better, because for example, if the high-end posts actually get downvoted, that will skew the shares back to the others. This is also viewed as an incentive to curate as well because identifying the higher-voted posts before others will reward you that much more with the curve.
From the details of the chosen parameters, the immediate effect is around a 50% cut at the low end, and 50% gain at the high end, with a cutoff on posts hovering at around 12 STEEM in payout. But this is just the start. Once behavior shifts, there will be a new equilibrium for how rewards are distributed. I anticipate that many low-effort and low-end farming will be out of the equation, leaving more rewards towards larger shared posts.
Note that the curve makes it so that upvotes and downvotes alike are more powerful on larger posts. Consequently, it makes downvoting highly valued posts more efficient, which means less free downvotes are required to do the work.
The curve here all else being equal looks like a cut in the low end. But again, if post distribution shifts, it results in a healthier system.
Think of it this way-- instead of making little off of low-effort low-content posts, you can instead contribute to the curation, and that will ultimately help with highlighting actually good posts and mitigating abusive ones.
Philosophy
The main point when it comes to these economic changes is that every piece has a specific target behavior in mind for what it wants to incentivize, and we feel these are all in the right direction. We've evaluated the common critiques for why people are against it and ultimately came to a consensus that these adjustments will improve the platform in the long run.
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