Topic: Steem pyramid scheme revealed - page 29. (Read 107064 times)

Fair is a loaded word. I was using it in a sort of specialized but value-neutral way to mean that it isn't being inflated/diluted away the liquid STEEM is. With a position in SP, if the platform gains in value as a whole (market cap), you investment will gain in value as well. That is not true of STEEM, where you also have to beat inflation (not impossible that this ever happens, especially short term, but certainly a lot harder).

I agree that locking it up makes this a less attractive play for many traders. One of the real obstacles that Steem has always faced is being structurally investor-unfriendly. This is especially true because, even though as SP investor you have voting rights, the SP is so concentrated with insiders that the voting rights to a new investor, even a fairly large one, are all but meaningless.

It's impossible that this wasn't already considered during the design. We are not given multiple hundreds per cent per year in SP for the lolz. If that happened (increasing SP), and if the price didn't drop, it would be a sure-bet where everyone simply multiplies their money, 300-400-500-600% per year.

The fact that in a year I'll have, say 20-25k SP instead of 5k, is an admission that the price will be diluted and the investor will be compensated with more SP.

They could have made it deflationary, in the sense that there is a fixed pool of shares and all users pay over a year 10% of their holdings in order to pay witnesses, content, etc. But then you'd have accounting issues with exchanges and people saying they lost coins. But it would be the same thing more-or-less, except for people's perception that "we are going doooooooownnnnnnn".

The current design isn't without problems either: I don't think the reverse split option in a couple of years will be without a hitch. Doesn't this create problems for investors, exchanges etc? You'd have to completely rename the token for all people to be (forced to get) in sync and don't do something stupid like thinking "oh price is unbelievable right now (after the reverse split), let's sell". But that's ahead of our time.

It is not a fair bet to traders because as you say it is a "forced" position, traders have to lock their steem and this is the worst thing for a speculators. There is no way to speculate on steem without getting hit by the inflation which is why traders are not buying it.

What matters to people is the value of their account, which is why I think the growing steem balance is not having the intended effect anyway, at least not for smart traders/investors.



>there isn't generally a large appetite for major changes

When the price hits 0.001$ they will probably reconsider, they will have nothing to lose at that point. A very low price is where we are heading and it's not going to go back up because many people have already powered down in anticipation to the next rise. That's what happens when you inflate a currency so much no one wants to hold it.


>I'll definitely bring your idees to the attention of the devs if I ever have the opportunity to discuss this sort of thing with them

Thank you

I agree with this. But, still, you don't suffer from the inflation. So you have a position that is basically a fair bet on the platform like any other crypto token that isn't hyper-inflationary. A forced long-term position, but still a viable position potentially.

I'll definitely bring your idees to the attention of the devs if I ever have the opportunity to discuss this sort of thing with them. Understandably there isn't generally a large appetite for major changes, but the more their ideas are apparently rejected by the markets the more there could be some receptivity. Maybe (in fact there is often a tendency to dismiss short term price movements as not indicative of much of anything, and there is a lot of validity to that).

The way I see it is that Steem Power is a tool to play the steemit game, to participate in the steemit economy, the more you have the more you can get. So there you have your incentive. I would gladly lock my steem if I know I will be getting more and most importantly if the price of steem is solid. People don't care about locking their coins if they are confident 2 years from now the price will be good.

Also as Dan said it is only a psychologic incentive because in reality you don't get any benefit from locking up your steem power. (not suffering from inflation is not a benefit)
To me it would be much better to allow investors/traders/speculators to be able to buy and hoard steem at 10% per year ( the fundamentals will probably make up for this inflation ) and everyone who want to earn more steem can convert to steem power.

The price of steem is an indicator to how many people the platform can handle, if the devs don't allow steem price to grow by having unecessary inflation then steem can't grow. Investors/speculators are seeing the short comings which is also why they don't invest.

I agree with you that the lock up period should be a lot shorter and I also think that the inflation should be the minimum possible which is around 10%. They could also increase curation reward to increase incentive to convert to steem power .

If you could bring this up to the dev I'd appreciate it. Im convinced that it would solve many issue that steem currently faces and will face in the future

The main reason is probably to incentivize locking up coins in SP, which is is needed for a variety of security reasons including reputation but even double voting (if you can instantly move your coins from one account to another you can vote again with the second account).

If you do lock up your coins you don't suffer from the crazy inflation, so as I commented to iamnotback above, you can't really count both as disadvantages. Pick one or the other.

A much shorter luckup period would probably still solve most of the problems. I didn't design the thing

Smooth, I am addressing this question at you since you are a witness and seem to be knowledgable about steemit.

Why is 300% - 100% yearly inflation necessary when the actual inflation needed to reward content and miners is about 10% per year?

I wrote a post about this here https://steemit.com/steemit/@snowflake/5a2p2k-why-not-inflate-steem-by-only-10-or-whatever-reward-pool-is-instead-of-having-this-crazy-printing-going-on

If anyone else has an answer I'm all ears and yes I have already read the whitepaper.

My thought exactly. Steem is not attractive at all for traders because of the insane printing. Steem market is not healthy as volume shows.

Price speculation is one part, but there are also the fundamentals. What's the ETC use in the real world? What is its network effect? What about ETH-dominating-the-market uncertainties ? What about uncertainties that other smart-contract platforms will do what ETH/ETC can't effectively do without creating multiple clusterfucks?

Of course we can "speculate" that one day ETC might be useful for something, but STEEM is already proving its usefulness *right now*. People are writing, people are getting paid *right now*. The speculation regarding STEEM is not whether it'll ever be useful for something, but how much it will scale.

ETC has a marketcap 2.5x compared to STEEM and nobody knows if it will ever be used.

Yes, we can say ETC (and ETH) are much more speculative. But the fundamentals will eventually catch up. Not necessarily through the price of STEEM going through the roof, but through a combination of a large number of coins x a small value, producing a high marketcap. That's also the bottom line for SP holders. If price per STEEM goes down 2 times and their SP goes up 4 times, they are in the green.

Looks like those behave orthogonal... Only a very small point of correlation...

I'd speculate that 2nd degree connections are a good portion of the population as a whole, and certainly a huge portion of the population with any money to spend.

Most people could count a few dozen to hundreds of "friends" and acquaintances to whom they could introduce a social platform if they wanted to (especially if doing so on existing social accounts). Square that and it is between 1000x and 50000x the number of directly involved crypto-heads. You don't really need to reach much beyond second degree, if the product is compelling enough to grab and hold interest once people are introduced to it (currently, Steem is not).

Even if these numbers are wrong (first degrees will have a lot of second degrees in common, for example; I don't know the numbers), reaching the second degree is a sort of proof-of-virality in a way that reaching the first degree is not.

I'd also speculate that Steem has not done very well in reaching the second degree, outside of some particular niche cases like professional bloggers recruiting each other to come and collect thousands of dollars per blog post when that was the case.


This is double counting. If you do lock up your investment then you don't have the massive inflation. Especially since liquid supply is now over 10%. SP are now effectively deflationary (though one risk is there is no guarantee that continues for any particular time into the future).

"Rube Goldberg", I kind of agree with and actual market remains questionable. I wouldn't say it is as clear from underlying principles that there is no market (as opposed to just a flawed/incomplete implementation and/or bad marketing), which in the case of Bitshares is something I argued with r0ach about way back in his Bitshares pumping days.

Note still a looong ways from capturing the typical mainstream person who has no (even 2nd degree) relationship to crypto.

To get the mainstream market interested, you can't possible be expecting them to blog or even curate.

Mainstream people don't use social networks to blog nor to curate. Duh. Common sense thinking like this is I think what cryptonerds lack.

Ethereum (Classic) is estimated to have higher speculation upside for numerous reasons.

• Another DAO is waiting to happen because it is a programmable blockchain.
• You don't need to lockup your investment for 1 year weighted average cashout in order to speculate.
• You don't have this massive inflation.
• There is a plan to move to some form of PoS and stop or significantly reduce inflation.
• Everyone who runs Dapps needs ETH to play.
• Charles Hoskinson is involved again.
• Etc...

Sorry the utility of Steem for social blogging while it looks pretty on the screen (and it captured the interest of some females and those one or two degrees removed from the male cryptonerd), just doesn't even compare at all for a speculation vehicle. If they removed the 1 year weighted lockup and put more ecosystem programmability into it, then maybe we could say the two (ETH and STEEM) aren't light years apart in terms of speculation value.

As r0ach has said, Dan Larimer builds these complex Rube Goldberg machines that obfuscate that they don't really address any viable market. Bitshares Open Exchange was similarly a complex thing without a market.

They are good programmers though.


It seemed in the past there was a lot of arguments about which projects were scams or poorly designed or what ever, as everyone was fighting for pitching their ICO or P&D to the n00bs here.

It seemed once XMR, ETH, and STEEM all made their 10 baggers, then that animosity has died down for the time being.

I have concluded that men are very stressed and will fight viciously when they have money bet on something. So I am just entirely avoiding any of those discussions.

I am interested in discussing the design of Steem, because I am still interested to make a social network block chain.

This is the only truth, stop arguing about the system or TPTB, WE ARE THE SYSTEM, this is like the ending of a rare movie which ends by main character realizing that the one he believed to be fighting with, is himself.

EXACTLY this.  Speculation is the only reason why many blockchains have any value at all.  For the sake of crypto, I hope Steem can fix it's current model and develop into a successful project.

The more blockchain products that become successful the easier it will be for future niche chains to gain adoption.  No reason for all the hate around here when everyone has a common goal.

The price will drop, otherwise I'll become a zillionaire with my ...5k SP



The above is a calculator that I made in order to estimate the rate of inflation in my SP (which presumably is 9/10ths of the total inflation). I watch how much SP I have in a certain time period, then in another, then check the seconds elapsed and I have both the rate and the extrapolation into the future (based on compounding by the second). I then added a curation calc (SP+curation income) / a blogging calc (SP+cur+bloging income), and a curation-standalone.

I put my blogging performance or my curation performance and it extrapolates how my SP will be affected based on the current rate of what I'm making. Blogging is unreliable but curation is less so. SP growth is also unreliable in the long term (it should drop). But anyway, running rates are pretty high.

I have ~5k SP, and based on current SP growth and curation efficiency, these should be ~13k in 6 months and 35k in 12 months (with the current rate). Now if 5k SP goes to 35k, that's 7x. (+594%). So, if, say, I have 1k USD usd, that will make it 7k usd - if the price just sits at 20 cents.

People are not getting paid all these SPs for fun. It's because there is plenty of dilution going on (if I'm getting ~14.5% in SP growth then the monthly rate of dilution should be ~16%)

The bottom line here is that I can't focus on the price. I can only focus on what I'll have (holdings x price), because the holdings are going upwards due to inflation, curation and blogging - and all the while these are all compounded by their continuous increase and this means that their numbers, over the long run, become astronomical. My 3 year ROI is +73000% based on current rate of SP growth alone, and +232000% if I co-factor curation. In the 232k %, my 5k SP would be ...11.73 mn SP in 3 years which at a price of 0.2$ would fetch me .... 2.35mn USD

These astronomical numbers obviously necessitate a devaluation of each steem as a unit.

However, as a marketcap, the situation is different. In my view, as far as cryptocurrencies go, there is nothing that can convince me that Ethereum is more useful than Steem. I can't see any reason whatsoever on why Ethereum should have a marketcap multiple times higher than Steem. Of course there are big institutional whales behind it, which is THE reason, but the fundamentals regarding its actual use cannot compare with Steem - which has actual, real life use. Either Ethereum should crash, or Steem should go higher. The price is not reflecting the fundamentals which should be reversed. Steem should have a higher marketcap than ETH - no matter how that is achieved.

The devs cannot dump everything at one time because a good portion of their steem is tied up in steem power. They could dump what they have right now in steem, but with only 55 BTC of buy support on Polo and about 17 BTC on Bittrex, that probably isn't overly tempting for them.

It was at $0.21 a little while ago. i don't think it will drop much below $0.20 but the idea that the devs could just dump everything at any given time makes me feel extremely uneasy.

Remember I wrote a blog about that:

https://steemit.com/steem/@anonymint/blog-rewards-can-t-be-widely-distributed

Linear math for the voting rewards can't prevent Sybils. We already covered this in great detail upthread.

Sorry the problem is rewards via voting. That can never be an objective system. Either you have Sybils or you have whale extraction. There is no other mathematical option.