The vote selling experiment
Two weeks ago I wrote an article about voting experiment to be held. Now after full week of vote selling and then another full week waiting for Steemit to calculate my curation rewards I finally gathered the necessary numbers. What can I say…the situation looks grim, even though we all have probably already knew that.
I opted for the actual experiment instead of just mere calculation for one reason. As the Steem prize is ever changing, so is our weight of vote. If the weight of vote remained stagnant, it wouldn’t be so hard to calculate the possible profit. With its ever-changing nature, it was safer to just participate in vote selling for that one week.
Steem’s incentives
Every crypto assets needs to directly incentivize its holders to hold it if it wants to gain value in time. This is in 100% times achieved by financial incentive. In other words, the holder of the token has to either support a platform that manages do deal with some kind of a problem, therefore more people would be incentivized to join the platform and whoever was there “first” would profit from the increase of popularity, or the holder has to have an option to do some kind of actions with the token, which lead to income generation.
Steem has had for its whole lifespan one “action-based” financial incentive – the curation rewards. The system was set in a way that 25% of ALL THE REWARDS would go to the curators of the content. With the linear rewards though, many more action-based methods occurred. It is now viable to lease out the SP, sell the vote, or self-vote. That was not possible prior to linear rewards, because the vote was simply too weak when it was casted by a sole investor.
One of the main aspects why Steem generates value is the quality of the content. It’s of course not the only aspect and it is also impossible to measure how big of an impact it actually has on the decision making of possible investors. We all will probably agree that it plays its role (whether it is significant or a minor one is up for a debate…it actually can’t be objectively measured). In order to support the content of high quality, authors have to be incentivized to create it (around 75% of all the rewards – not counting in the witnesses now) is I’d say more than enough. Also the curators need to be incentivized in order for them to spend their precious time to find good posts. It only is profitable when one has a large stake AND a either luck (to find the good articles first and actually be lucky enough so that others vote for it too) or a good bot and curation strategy (I know some whales that truly do spend a lot of time to ensure that their bot seeks out more or less quality content. Out of those 25% majority is taken by wealthy users anyway, because they are simply eligible for bigger portion of the rewards due to their stake.
The problem
As of now it is much more profitable to opt for any other “income generating strategy” on Steem than the old-school curation rewards. That is quite a big problem, because the main incentive that was there to support the curators in their efforts of finding high quality content is pushed to the background by more profitable methods. That will naturally lead to less incentivized curators. Don’t get me wrong, the trending page was full of utter bullshit even prior to this change. Now it is just even fuller of the self-promoted bullshit, either by huge self-upvotes or by usage of bid-bots (vote selling).
Now it’s important to understand that for many, the content doesn’t matter anyway. For many it is just a broken system that allows you to harvest free money if you invest. For those people the content is irrelevant. It is merely just one transaction in the Blockchain that can be upvoted by another transaction and will reward them in time.
The system had problem even prior the change. There were a lot of “bad whales” that cared only for short-term profit instead of cultivation of the platform. It was due to the fact that in order to maximize curation reward, one just had to continuously vote for the same author that others continuously voted for (whether they created bullshit or not). The system now actually incentivizes such a behaviour EVEN MORE, by making methods that hardly ever lead to curation of really good content. Most people (not all of course) just abuse the voting bots. They are just paying service to heftily upvote their transaction… Try to check out those posts heavily upvoted by bid bots. Do you see mainly quality in there? I thought so.
I think that changes for HF20 are already set. My opinion is to wait till it’s online, give it a month or so and then have a great discussion. Where do we want to go with Steem (as Steem investors)? How do we want to accomplish that? Which incentivizing methods should be incentivized on the platform? Those are all super important questions, if we don’t want to be eaten by competition in the future. Do not sleep on our laurels. Just because Steem is working, profitable and nice looking now doesn’t mean that for example Dan’s “Steem on EOS” or narrative can easily take down Steem in one month. This is cryptocurrency. Everything can happen here.
The actual numbers
I do try to more or less maximize my curation reward. I don’t go as far to curate shit in order to do so, but I can snipe several trails upvotes, because I have access to them. I though also reward those that are in my eyes under rewarded. Thus said I do not blindly try to gain as much as I can. I try to find a healthy balance. Such practices allow me to generate about 3,5 Steem weekly (with 1400 SP).
How much did I gain by selling my votes? Much more… I have gathered 5,455 SBD + 1,3Steem from curation rewards!
That is right now 6,755 Steem from vote selling in one week compared with the 3,5 Steem from curation rewards…Almost DOUBLE THE INCOME. I have no idea what my account voted for, but as long as there is a lot of people that only deem the content as random rewarding transaction, the Steem platform can be in quite a trouble.
