Steem is a blockchain that, according to the white paper, is designed to support community building and social interaction with cryptocurrency rewards. It was co-founded by Dan Larimer and Ned Scott. Larimer did the coding, his second blockchain after the creation of the decentralized exchange (DEX) Bitshares.
The goal of Steem was to enter the social media realm as a means of producing value for a community owned currency. Blogging was the main path with content creators mirroring what is done on platforms like Medium.
With the voting mechanism, called Proof-of-Brain (PoB), community members became curators, deciding what content it found valuable. This was based upon the voting weight as determined by the amount of the native coin, STEEM, that was staked. When this was done, it was converted to Steem Power.
The Steem White Paper was released in March of 2016. This outlined the vision behind the project.
Around that time, mining was started to get the initial coins created. This was a pre-mine which was open to anyone although few knew about it. Those who were able to engage in this manner were able to acquire significant holdings in their wallets before the chain actually went live.
In 2016, on July 4th, the conducted the first social media transactions. It was at that time when posts were possible and voting taking place. The model is similar to what other social media platforms utilize.
The first application was Steemit.com. This was modeled after another social media platform, Reddit. It sought to generate the same level of engagement and bring important discussions to the forefront of the Internet.
It was put out by the company that was formed for the project, Steemit, Inc. This entity took care of the base layer coding, with Larimer serving as CTO. The front end was open source allowing other versions to be created.
Steem was built using the Graphene technology Larimer developed when creating Bitshares. This offered the ability to scale while also having faster transaction times. It was viewed as a necessity for relevance in the social media world.
Justin Sun Attack
Steemit Inc was purchased by Justin Sun towards the end of 2019. This was not something that community expected. A private corporation being sold usually is not a problem. However, in this instance, the community was attacked due to the aforementioned pre-mine. Much of this was in the hands of Steemit Inc.
The challenge here is that Steem uses Delegated-Proof-of-Stake, another Larimer innovation. This means block producers do not use mining which was atypical of other chains at the time. Instead, the stake of the community is used to vote on governance issues, including who produces blocks. These individuals are called witnesses.
Block production occurs on a rotation basis. There are 20 witnesses plus 1 in the cycle. The plus 1 is taken, in order, from the nodes outside the Top 20. To have any changes in code requires a super majority, or 17, agreeing to the updates.
The situation with Sun turned confrontational. It was a time that the community was divided. Some were willing to give him a chance while other were against him from the beginning. No matter where the stance, Sun made his intentions clear to roll Steem into his other blockchain, TRON. This was a non-starter for much of the community.
Development began on a hard fork of Steem. On March 20, 2020 the genesis block of Hive was run. The code was reworked including the creation of a new coin, $HIVE, which was dropped on a 1:1 basis to the holders of STEEM. The one difference is the participants in the attacked were excluded.
Since it is a decentralized database of immutable text, the fork included all the data that goes back to Steem's genesis block. That is now included in Hive.
The pre-mine was also disposed of on Hive. This was put into a DAO, called the Decentralized Hive Fund (DHF), which is used to fund development and other initiatives the community deems valuable. This stake, which was an attack vector before, is now established to operate to the community's benefit.
Steem's story did not end with the fork. The blockchain continues to operate the same as before. Many question the decentralization of the chain since Sun still holds the massive stake that comes from the pre-mine. This allows him to basically control the witnesses, using his votes to control the ecosystem.
Posting continues with STEEM being distributed. The community is mostly Asian at this point, opting to side with Sun as opposed to joining Hive. Innovation is questionable since many of the developers were part of the group that exited Steem after the attack.
Applications also seem to be scarce. There are still some that were operating on-chain pre-fork. However, most of the commonly used ones migrated over to Hive. A few, such as Actifit, decided to support both chains and continue to do so.
There is little doubt the technology and concept of the Steem vision were successful. The main question is where it will fully be realized. Steem is lacking Hive according to most metrics, something that is rare in blockchain and cryptocurrency. Usually the forked chain still retains the value.
It is too early to declare how the idea of social media on blockchain, or Web 3.0 will unfold.
One of the lessons that came from Steem is the value in a community being able to fork out the founders. While Larimer and Scott exited the picture, we see how the new owner, with nefarious intentions, lost much of what he purchased. If the value is in the community, something blockchain professes, it is obvious what happens when it leaves.
Steem was founded upon the idea of censorship resistance in both content and financial transactions. This came under fire as Sun was able to personally freeze wallets and alter the activity people engaged upon. As the chain continues, the counterparty risk still exists.