A protocol for enabling smart, social currency for publishers and content businesses across the
internet
Steem provides a scalable blockchain protocol1
for publicly accessible and immutable content,
along with a fast and fee-less digital token (called STEEM)2 which enables people to earn the
currency by using their brain (what can be called “Proof-of-Brain”). The two building blocks
of this protocol, both blockchain and token, depend on each other for security, immutability and longevity, and are therefore integral to each others’ existence. Steem has been successfully operating for over a year, and has now exceeded both Bitcoin and Ethereum in number of transactions processed.3
Compared to other blockchains, Steem stands out as the first publicly accessible database for immutably stored content in the form of plain text, along with an in-built incentivization mechanism. This makes Steem a public publishing platform from which any Internet application may pull and share data while rewarding those who contribute the most valuable content.
In the field of crypto-currencies, the unique properties of STEEM make it both “smart” and “social”compared to others, such as bitcoin and ether. This stems from two new token features. The first is a pool of tokens dedicated to incentivizing content creation and curation (called the “rewards pool”). The second is a voting system that leverages the wisdom of the crowd to assess the value of content and distribute tokens to it. These two unique properties when combined
are referred to as Proof-of-Brain, which is an entendre based on Proof-of-Work4, meant to emphasize the human work required to distribute tokens to community participants. Proof-ofBrain positions STEEM as a tool for building perpetually growing communities, which encourage their members to add value to the community through the built in rewards structure.
In addition to these advancements in blockchain and token technology, Steem as a system provides additional advanced features to enhance the user experience, such as Stolen Account Recovery5
, escrow services, user promoted content, a reputation system, and savings accounts. This is all done while providing users with three second confirmation times and zero fees on all transactions. All of this allows it to support the mission of bringing smart and social currency to publishers and community builders across the Internet.
Token systems that reward users as they contribute to a token-based community system require
mechanisms for establishing and evaluating content’s social value: we call this “Proof-of-Brain.”
One of the most innovative (and most misunderstood) aspects of the Steem blockchain is the “Rewards Pool” from which tokens are distributed to valuable content creators. In order to understand what the Rewards Pool is, one first needs to understand that tokens are produced differently in DPoS blockchains than they are in PoW blockchains. In traditional PoW blockchains, tokens are produced regularly but randomly distributed to the people whose machines are performing work (“miners”).
Different from PoW-only cryptocurrencies, tokens in Steem are generated at a fixed rate of one block every three seconds. These tokens get distributed to various actors in the system based on the defined rules of the blockchain. These actors, such as content creators, witnesses, and curators, compete in specialized ways for the tokens. Unlike the traditional PoW means of distribution, where miners are competing over raw computing power, the actors in the Steem network are incentivized to compete in ways that add value to the network.
The rate that new tokens are generated was set to 9.5% per year starting in December 2016, and decreases at a rate of 0.01% every 250,000 blocks, or about 0.5% per year. The inflation will continue decreasing at this rate until it reaches 0.95%, after a period of approximately 20.5 years.
Of the supply of new tokens created by the Steem blockchain every year, 75% of those tokens compose the “rewards pool” which are distributed to content creators and content curators. 15% are distributed to vested token holders, and 10% are distributed to Witnesses, the block producers cooperating inside Steem’s DPoS consensus protocol.
The users who produce content are adding value to the network by creating material that will drive new users to the platform, as well as keep the existing users engaged and entertained. This aids in distributing the currency to a wider set of users and increases the network effect. The users that take time to evaluate and vote on content are playing an important role in distributing the currency to the users who are adding the most value. The blockchain rewards both of these activities relative to their value based on the collective wisdom of the crowd collected through the stake-weighted voting system.
Steem operates on the basis of one-STEEM, one-vote. Under this model, individuals who have contributed the most to the platform, as measured by their account balance, have the most influence over how contributions are scored. Stake can be bought or earned. Users can not gain additional influence by owning multiple accounts, since one single account with an amount of stake will have the same influence as two different accounts sharing the same amount of stake.
The only way for users to increase their influence in the platform is to increase their stake. Furthermore, Steem only allows members to vote with STEEM when it is committed to a 13 week vesting schedule called Steem Power. Under this model, members have a financial incentive to vote in a way that maximises the long term value of their STEEM.
The Steem blockchain serves a dual purpose of being a digital token processing system, as well as a mainstream social media platform. The features offered by the blockchain need to support both purposes, and provide users with a world class experience when using both aspects of the platform.
Primitives Designed for Content Applications Steem offers users the unique ability to publish and store different types of content directly and permanently into the immutable ledger of the blockchain as plain text. Once stored in the blockchain, data becomes available publically for developers to build from. Developers are able to interact with the content directly in the blockchain using the available APIs. Several of the blockchain primitives developers can build from include Account Names, Posts, Comments,
Votes and Account Balance.
Wallet addresses used by many blockchain technologies, such as Bitcoin and Ethereum, have
historically consisted of long strings of random letters and numbers, however, these wallet addresses can make it difficult to transact with other users in a typical online-social-media context because users are unable to recall the long-string addresses from memory. The Steem blockchain uses each participant’s user name as their wallet address, which bolsters the user experience for participants who attempt to send tokens because they can verify the addresses from their own memory.
Many users who are introduced to cryptocurrency struggle to comprehend how “magic internet tokens” awarded by the platform can actually have real world value. In order to help bridge the gap between more traditional fiat money systems which mainstream users are used to, and the cryptocurrency tokens which they are awarded through the platform, a new currency called Steem Blockchain Dollars (SBD) was created.
