RE: An Unstoppable Force And First Compelling Mass Market Solution
The first one is the growth rate. Presently, Steemit has ~43,331 registered accounts and has grown with ~10000 new accounts during the last week(an impressive ~31,25 %)
This is a misleading interpretation of the data, because you are not accounting for the abandonment (attrition) rate of new signups.
The data clearly shows that users active in the most recent 7 days are overall 15024 ÷ 43766 = 34% thus ~66% rate of attrition. I computed the attrition rate another way to be roughly 78% (which has now increased to (15,024 - 9479) ÷ (43,766 - 9479) = 84%!) before the recent surge of signups partially due to renewed+amplified coinmarketcap.com banner ad. Meaning that when the signup rate is significantly higher than the historic rate and the historic number of user accounts is small, then mathematically the attrition rate (in the first way I calculated it above, but not in the second way) will appear to be less than it actually is until that higher rate of signups is aged about 30 days.
I expected that my second method of computing the attrition rate would increase (as it did from 78% to 84%), because the attrition rate requires at least 30 days of history to compute accurately and the signup rate had surged in July. I expect the attrition rate to be about 87 - 94%, because this is the percentage of users who have balances less than $70. As you can see this correlates well with the attrition rate, because the entire motivation for joining Steem is to earn a lot of money. There are not other compelling reasons to be on the site. The white paper admits that quadratic vote power weighting algorithm is designed to fool users into overestimating their earning potential, so it is quite a “no brainer” to expect that most will become disappointed and quit (barring other compelling reasons for them to stay, which there are currently none other than some idealistic desire for blockchain and crypto-currency technology to gain a foothold with the masses).
This perspective is further supported by noticing from the data that the rate of attrition increases the lower the balance.
The attrition rate will approach 98% if the price declines by 90% (because that is the percentage of accounts which will have balances less than $70), which is what I expect for the coming implosion of Steem as the reality of the situation comes to roost and users power down in rush to the exits (most are powering up now because they don't realize the true situation).
Note I have confirmed some examples here and here of who and why users are abandoning Steem.
Thank you for the long and detailed thoughts @anonymint . I would say a couple of things in response.
Firstly, I think your caveat is relevant and should be taken into account when trying to present and comprehensive analysis of the data. Indeed, I would be very interested to read a thoughtful post discussing this particular data point.
Secondly, it's important to note that there is no misleading interpretation of the data. Indeed, the sentence where you quote me is just data. At worst, my analysis would be incomplete(which it might be), since it was not meant to be a complete explanation of all data points, but rather a raw overview on things.
Thirdly, while I agree with your basic premise that it's important to take the attrition rate into account in order to grasp true growth rate, it seems your other opinions regarding reasons why people would join steemit and how the algorithm might fool people and so forth, seem largely unfounded. Indeed, there seem to be lots of assumptions you make which are not warrented by data.
Lets assume for a second you are right, how long to you expect it will take until we will see Steemit breaking down? Would you be open to changing your mind if it doesn't? Do you see this as inevitable, or do you think there is any important step which if taken could prevent the "implosion"?
Anyway, as said in the essay, this is an experiment and a very interesting one. There is always a possibility that it could fail, but at the moment I can't see any good reason making this possibility a strong likelihood. Thus far, data seems to be pointing toward a positive scenario.
Agreed, I am employing a significant proportion of intuition and anecdotal data to support my hypothesis that Steem is not "crossing the chasm" (a known marketing concept) from its nerd (and one degree of relationship from it) demographic.
But you have not answered the most important part:
"Lets assume for a second you are right, how long to you expect it will take until we will see Steemit breaking down? Would you be open to changing your mind if it doesn't? Do you see this as inevitable, or do you think there is any important step which if taken could prevent the "implosion"?"
What are your thoughts on that?
I am watching for either daily or monthly uniques not growing according to the logistic function adoption of new technologies. The monthly uniques are not reported and I don't know if anyone is recording this data periodically so they can chart it. Or otherwise building blockchain analysis tool to extract the data.
Also some way to differentiate between bot (including duplicate Sybil) users and real human users w.r.t. to that data.
Also I'd like some stats on demographics, especially on females and those coming who had no interest in crypto before they arrived.
It's possible that the quadratic vote weight has changed a while ago during a fork, but I'm not sure. There were some articles and debate and then some changes to make the system more linear.
It was made more linear from the perspective of voters but the quadratic weighting across different posts remains. I think most in decision making positions see large payouts for winning/leaderboard posts to be a more useful approach overall than paying each post (to make up a number) $10. Which is not to say there aren't a lot of posts making $100-200 because there are, but overall the rewards are indeed concentrated with the top posts. It is a reasonable debate though, whether payouts across posts should be flatter.
@smooth, please contact me on bitsharestalk if at all possible. I need to round up some people with large stake to see how interested they are in an idea that would likely add a huge amount of value to steem...and maybe even a couple other projects.
I'm not on bitsharestalk. Since there is no PM on here yet you can PM me on bitcointalk as smooth or reddit as smooth_xmr
Per our discussions at BCT, I think possibly they can't be made flatter (or significantly closer to linear) in the current design of the differences between STEEM versus STEEM POWER, without causing a game theory collapse of the incentives to not game the voting.
Orthogonally the option of removing voting and paying a flat fee per blog would open a Sybil attack vulnerability.
I don't see why 'flatter' is incompatible with the game theory; 'flat' would be. Would n^1.5 rather than n^2 be a disaster? (Setting aside the marketing question as to the value of big numbers on the front page.) I don't think so.
Achilles Heel of Steem
This is a complex question and I might mess up the analysis, because frankly I am not even confident I know what the current algorithm is. I've seen mentions of curation rewards being a function of both total author reward (which is afaik a function of the square of the total votes) and of that the earliness of your vote matters in some non-linear way (note for curation rewards and afaics not for author reward). That seems to indicate that a whale who votes for his own content will earn the author reward of at least the square of his/her vote power, regardless of how early or late the whale votes.
But the overriding factor seems to be that the debasement of STEEM POWER is apparently less than 4% yearly (and note I'll probably be making a blog post soon on the precise math), so there isn't much incentive for anyone to vote for themselves because offseting that debasement by voting your share to yourself for whales is not worth the cost of failure to the system it could cause. And for dolphins, the 4% is nominally so low that it is a pita to vote for anything other than your conscience.
So it seems even a linear weighting might be safe, except there is the consideration of the power of compounding in that whales who can automate to offset say 4% compounding advantage versus whales who vote their conscience, will over time become the controllers of the system (all other factors being equal, which might not be the case).
We also have to consider that upvoting drives other voting by raising ranking and thus viewership. Thus whales can influence which content gets the most rewards, thus upvoting their own content seems to make the most sense if that content is of otherwise equal potential to receive upvotes as any other content. Thus the game theory seems to be a power vacuum that will suck in the controller who can organize stake to vote for successful bloggers (to obfuscate this from other whales who might downvote the phenomenon) which pays back some % of the author rewards to the organized voting stake (power).
From one perspective the quadratic weighting seems to make this game theory more profitable because the one who captures even a slight advantage in this power vacuum can take exponentially more of the author rewards. However, the quadratic ranking also means that the dolphins can't benefit from organizing themselves to vote for their own posts collectively, because they would be at a quadratic disadvantage compared to the whale controller.
Thus I conclude that the quadratic weighting is necessary to squelch dolphins organizing to game the system, but it hands the control (and eventually the entire system) to the deviant whale who realizes this is a winner-take-all paradigm. We end up with a system of serious bloggers who work for the master whale and the rest are subservient minnows and dolphins who are beholden to the groupthink control over economics of the system.
That is why I have redesigned this concept so there can be linear weighting which the dolphins can't profit on by organizing themselves (as I add a cost to voting but not taken from the user's wallet, yeah that will really make you think!) and which whales can't game either because I squelch whale voting power (everyone becomes a dolphin in terms of voting power); and note this depends on very strong Sybil attack resistance on account identities and that whales won't trust other people to hold their money for them.
Additionally in my design for a Steem-like system, I have also added another reward vector which greatly reduces the incentive and ability to take control of the system by gaming the voting reward algorithm.
Edit: to clarify that with linear weighting, the dolphins would be incentivized to band together in order to upvote each others' posts in order to get amplification of rewards due to raising the attention their posts get. Of course if users band together then they lose the relative amplification effect, but that is the point that the game theory incentivizes them to band together until there are too many banded and then the site's voting is one (or several) groupthink(s).
I'm really not as sure here. I don't think that the only reason people join is to earn a lot of money. I joined because @officalfuzzy told me that there was interesting tech stuff happening, and did end up earning some money. Better still though is the fact that the money causes people to:
.....
And the rest, that's not written yet. The users who abandoned, should come back for the content, and if they want to earn, they should practice, practice, and practice their writing. Writing is really difficult and we're not all going to be successful in steemit terms at it from the get-go. That's alright.
What about coming for the idealism of not giving Facebook the control to censor our content which they are doing?
So we don't build up our following and then have someone else in control of that asset we invested to build. No one else should own and control our investment of effort, time, and creativity.
That's the main thing I noticed people do understand, regardless of their background, that this is different from Facebook because it open and decentralized.