Sometimes you build something for one purpose and the market takes it and uses it in a way that you never expected. When this happens we are left with a choice of fighting the market or embracing the unexpected. For the past month or more the Steem Sports posts have been garnering a large portion of the reward pool. This is neither good, nor bad, but simply a reflection of what the majority of the voters want to do.
Disclaimer
That said the current interface on steemit.com is not well suited to the application. A much better interface would allow people to simply "click" to cast their vote and would have a simple interface for funding a bet. Their wallet would allow them to view the current status of all bets they have cast.
Meanwhile the Steemit.com bloging infrastructure would filter these kinds of posts into their own dedicated section to make the main page more appealing to those looking for content to read.
Should we Support Steem Sports
As a community we should either embrace this market segment or actively choose to downplay the these posts. If we were to embrace it, then STEEM would morph into more of an entertainment platform that could attract sports fans from around the world. While this could be a huge opportunity it does come with some risks.
Placing bets on sports is much riskier from a regulatory perspective; however, doing so with a virtual currency almost makes it a pure game that keeps score with virtual points. Under the current Steem Sports set up the posters are taking the risks. If we were to customize our interface to support this use case then we would end up taking slightly more risk.
Custom Blockchain Support
The current implementation of Steem Sports has a lot of rough edges:
- most of the payout is held in VESTS of poster
- participants must trust the poster and his algorithm
- the interface isn't well suited
- posts are not well indexed / sorted / displayed for users
- posts use unreasonable portion of reward fund
- posts spam those not interested in sports
I would propose that the blockchain add native support for the Steem Sports use case and make the entire process as trustless as possible. This would involve adding a new custom post type with custom rules for dividing results.
- Anyone can create a new sporting event, just like anyone can post
- Anyone can vote for an outcome and upvote the event at the same time
- Voting for an outcome is economically equivalent to betting with an amount equal to
post_reward * vote_rshares / total_vote_rshares - Anyone can fund their vote with additional money
- After the event is over, the losers can concede voluntarily and receive a small reward for conceding.
- Those who do not concede voluntarily get no consolation reward when a decisions is ultimately rendered
- In the event of a dispute, witnesses can vote on the winner.
The idea with these rules is that a rational loser will concede and receive his consolation reward rather than risk his consolation reward in the hope that he can manipulate the voters. The winners would never concede because they would give up their real reward. A dispute would be easy to identify by looking at the ratio of concessions from both sides. As long as the community actively polices abuse attempts few will attempt abuse.
Benefits to On Chain Solution
Under this approach the system would be self governing and distributed. The rewards could be paid in full immediately after payout. The market would automatically identify the events that are most interesting and the blockchain would subsidize the rewards.
A new kind of Market - Negative Rake, 0 cost Sports Betting
Where else on the internet can you bet on sports and win money without having to put a dime of your own money on the line? Where else can you have a guaranteed edge in a series of 50/50 bets?
Auger may be doing it all wrong. We don't need full fledged prediction markets with all the complexity involved. We just need a simple, fun, no-cost betting system.
Does this fit within the Scope of Steem?
If Steem is a blockchain designed to distribute currency as rewards for user participation and encourage growth of a social network, then I think we could easily argue that Steem Sports fits. Sporting events drives discussion and betting puts people's skin in the game. The effect of the bets would be to generate useful market odds for observers. Demand to increase individual bets would drive SBD purchases and STEEM token value.
Further Work
There are many additional variables that could be considered. A portion of the rewards should go to the person who started the bet. It might even be sufficient to allow this individual to be the de facto judge rather than the witnesses. Only the most trustworthy individuals would get upvoted and those who cannot be trusted to judge the outcome the right way would earn negative reputation and no longer be able to earn rewards by starting new events.
In general I think the simplest possible solution can enable a wide range of fun games and might just tap a huge market that is currently unaccessible to Steem.
What are your thoughts?