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<sub>[Understanding Steem's Economic Flaw, Its Effects on the Network, and How to Fix It.](https://steemit.com/steem/@kevinwong/understanding-steem-s-economic-flaw-its-effects-on-the-network-and-how-to-fix-it)</sub></center>
I had the pleasure of [reading this](https://steemit.com/steem/@kevinwong/understanding-steem-s-economic-flaw-its-effects-on-the-network-and-how-to-fix-it) yesterday. @kevinwong seems to have a good understanding of the platform's problems. However, I don't think any of the solutions presented are going to help.
The ultimate goal is to make proof of brain a reality. We want the highest paying content to also be the highest quality content. This implies that we also want people to stop buying votes. It also implies that we want whales to stop upvoting themselves (unless those rewards are deserved).
The three solutions presented are:
1. Increase curation payouts (example: 50%)
2. Logarithmic rewards (soft capped rewards for a single post)
3. Increase flagging strength (double power or separate flag pool)
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### The second I made an account here I made the same claims.
>[It is my opinion that curator rewards should be doubled from (0-30 min; 0-25% reward) to (0-60 min; 0-50% reward).](https://steemit.com/steem/@edicted/steemit-virtual-government-declaration-of-independence)
I wrote that on January 3, 2018, two weeks after I first made an account here.
[Steem Power need for logarithmic soft caps explained.](https://steemit.com/steemit/@edicted/steem-power-need-for-logarithmic-soft-caps-explained) I wrote that on December 28, 2017. My very first post was Dec 18.
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At the time I did not realize that these were all bad ideas. I did not realize it was impossible to ban bots. I did not realize how easy it was for one person to control 100 accounts. I did not realize it was so easy to buy votes. The functionality of Steem blockchain makes it impervious to these so-called "solutions".
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This platform isn't going to get fixed by sweeping changes to the core code. That would only serve to send us into another tailspin just like HF20. If we want to change how people act on the platform we need to organize and take baby-steps toward the solution.
In addition, asking for these changes before SMTs have even been implemented is totally futile. Not only may an SMT provide a solution to the problem, but the dev team is overworked enough as it is.
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# Curation
Curation is a scam. It's a lottery. The ideal here is to find the quality content first and then lock in high curation rewards by giving that content a strong upvote. If the quality of the content is indeed top notch the idea is that the initial curator that gave it visibility with the high upvote can make even more money in curation rewards than they would of if they had self-upvoted.
From this perspective, it makes sense to raise curation to 50%. By increasing curation rewards you incentivize the lottery even further. All the greed monsters would stop upvoting themselves and actually try to find the good content that the non-greedy people are going to upvote.
That's the problem: this system still depends on people being not-greedy and the greedy people profit off of them. No greedy whale is going to upvote a post that's already been curated.
We shouldn't be doubling down on this scam. It needs to be abolished altogether, if anything. Now that vote buying platforms run rampant on the platform it is already quite easy for whales to exploit this mechanic. Vote-bots officially break curation.
<div class="pull-right"> https://cdn.steemitimages.com/DQmP9bL9iVXhB2jU2tFLFKiqqAjiwehqp5KE6wAAGSr4Hyp/curator.jpg</div>
### How?
A whale with a vote-buying service throws down a post. He upvotes himself for $20 after the 15 minute curation window expires. He's now locked in the majority of curation rewards for himself. With his own vote-buying service, he can buy votes at a discount AND leech most of the curation from those discounted votes into his own pocket. Imagine how utterly ridiculous this situation would be if we decided to double curation rewards? It would break the platform.
# Logarithmic Soft Caps
The only thing that a soft-cap helps with is fixing the broken trending tab. If whales want to maximize self-vote payouts they'll simply sell their vote, or self-upvote multiple posts to avoid getting capped. This would allow better content to be displayed on the trending tab, because there would be a lot less financial incentive to get there in the first place.
Regardless, it's not going to stop whales from self-upvoting. In fact, it will make whales who self-upvote even stronger because everything on the trending tab is recycling rewards back into the pool. Self-voting whales will leech even more rewards from the pool because they will avoid the cap while other users won't.
<div class="pull-right">https://cdn.steemitimages.com/DQmTMgNCLPS7DLRymvfjjDUMRDM4JfGtrAGzfJiaLMTnDLf/all%20the%20flags.jpg </div>
# Stronger Flags
Perhaps the worst idea to "fix" the problem being put forth is to create a separate pool for flags. I have already argued with @aggroed about this several times.
>You can't expect the platform to get better by cutting decentralization in half and giving whales twice as much power.
<sub>---@edicted</sub>
I can see why whales would want a separate flagging pool. Who wouldn't want to double their influence on a platform where they already control too much influence?
<div class="pull-right"> https://cdn.steemitimages.com/DQmdUFzPiHHS1H8aTs3dvBV2tVWvJJiyGdWxTLBqjsyJsn6/man_waving_red_flag.jpeg</div>
A separate pool for flags does just that. It's such a bad idea I can hardly wrap my brain around it. As it stands now, the penalty for flagging is exactly equivalent to an upvote of the same proportion. Flag someone for 100% you just lost a 100% upvote. If you create a separate flagging pool, that all goes away. All of a sudden there is no penalty for flagging. Do we really want to create a system that turns this platform into a never-ending flag-war? Worst idea ever.
# Stronger Flags Reloaded
Okay, so what if we just doubled the strength of a downvote instead of creating a separate pool? I'm much more open to this idea, but again, I feel like it throws the entire ecosystem off balance. Do we really want to [feed the trolls](https://steemit.com/flag/@edicted/the-trolls-will-make-us-rich-but-at-what-cost) by making flags twice as powerful? What good is making flags twice as strong when you can circumvent the entire system by selling your vote? What's the point of upvoting when downvoting is twice as strong?
As it stands now, upvoting is a good defense against flags. Double the weight of flags and that all goes away. Again, we see that this is not a solution. Not only that, it makes no logical sense. A flag is simply a downvote. Why would a downvote be worth more than an upvote? We value taking away rewards more than we do granting them? Seems like pretty bad Karma to express to the world that we value destruction more than creation. This imbalance will only create more problems.
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# Occam's Razor
All these solutions are bandaids on a festering wound. They will solve nothing. They will create even more problems.
Many of you know Occam's Razor as, "The simplest solution is often correct," but this is a very dumbed-down over-simplification. The Razor of Occam is used to shave off variables of complex problems. The more variables you can safely shave off, the more correct your answer will likely be. This is why control groups exist in experiments.
# Solution to Steem's problems.
And so, Steem's solutions to the problems we face are staring us right in the face. Pick the simplest answer! Every time we conclude that we need to make the platform more complicated, we are wrong. Adding complication to the platform means we're adding more rules to it. Higher curation, logarithmic rewards, stronger flags. Complicate, complicate, complicate.
Who's going to come out on top? The whales of course! By adding more rules to the Steem blockchain and making it more complicated the average user is going to get more exploited while the whales will weave a web that circumvents the new rules. The results of complexity are simple: more problems.
# @edicted's Hard Fork
My hardfork would involve making the Steem blockchain even more simple.
1. Abolish curation. It's too easily gamed.
2. Move the static 15% reward-pool inflation away from SP holders and into the saving account.
3. Create a new curation system that rewards re-bloggers.
# New Curation System
The current curation system implies that the best people at determining quality content are whales. This is a silly assumption. Instead give curation rewards (flat 25%-50%) to re-bloggers. Anyone who clicks a resteem should view that post with a traditional referral link attached pointing to the account that shared the content. If the referral link post get's upvoted send 25%-50% of the reward to the one who shared it. This is a simple way to accomplish curation that makes WAY MORE SENSE.
Whales have more followers than most, so this system still works in their favor. It also allows everyone to participate in curation, even those that have zero stake. On top of all those benefits, it also lowers the incentive to plagiarize content because you can simply reblog the original content and still make money off that action.
The way curation works now assumes that the trending tab is the correct way to view the best content. In reality, any developer can choose how the blockchain is viewed. I'm working on a project that will accomplish just that: custom trending pages. This is yet another reason why logarithmic soft caps make no sense. Soft caps are a bandaid solution for the trending tab; an exploring mechanism that requires radical reworking, not a bandaid. Steemit's trending tab has nothing to do with the Steem blockchain, yet many people are saying the problem with the trending tab needs to be fixed with a hard fork. This is ridiculous.
# Give bank accounts the interest rates.
It makes no sense that we dedicate 15% inflation to interest rates, and we have savings accounts, but then we are awarding the interest rates to vested stakeholders instead of to the bank accounts. Why? Just allocate the interest rates to the savings accounts. This won't change much really. It just makes more sense.
<div class="pull-left">https://cdn.steemitimages.com/DQmRKqit6tikB7M2ZeJ7ZWtueVYpbW32BhvsRjYVXNu5biR/fork-in-road.jpeg </div>
It will have the effect of making our votes worth more, because Steem will be powered down into the savings accounts, but we'll also stop receiving the passive income provided by the inflation rates. This should even out to increase our vote strength just enough to make up for the lost inflation. If not, this means one should power down into the savings accounts because there is more inflation to be made there than in vesting Steem Power.
For example, if there was only 1,000,000 Steem total across all savings accounts, but 15% inflation of 8% inflation of 280,000,000 coins was being allocated there...
>280,000,000 * 0.08 = 22,400,000 <sub>Steem will be added as inflation over the next year.</sub>
> 22,400,000 * 0.15 = 3,360,000 <sub>Steem will be allocated as interest over the next year.</sub>
> 3,360,000 / 1,000,000 = 336% <sub>APR; massive incentive to power down into savings accounts.</sub>
This isn't a big solution, but it is a simple one that makes sense. Greedy self-upvoters will power down into savings accounts to avoid the possibility of being flagged. We could even create another type of account that had the same type of [13 week power down schedule](https://steemit.com/steem/@edicted/fixing-steemit-with-baby-steps-part-1) if we were worried about these funds being too liquid.
# WTF you haven't solved anything!
Well, in a way I have. I've solved the problem of needlessly overcomplicating the platform. No sliding-scale curation, bank accounts that make sense, equal weight upvotes and downvotes. Simple.
When it really comes down to it we are a DPOS platform, and as a DPOS platform, we are operating perfectly. It is impossible to implement the whole proof-of-brain fantasy by hard-coding extra rules into the platform. Extra rules only benefit rich programmers who know how to circumvent them. You can't circumvent POW, POS, or DPOS. That is what gives these models their power: simplicity enforced by encryption.
The only way to make Proof-of-brain a thing on a hard-coded level is if you had an algorithm, impossible to game, that determined the value of content. This would take AI, and that AI would have to be smart enough to rate content but then dumb enough to not be able to create content. Impossible.
# ROI Fallacy
The biggest fallacy that @kevinwong and many others (including myself) propagate, and base the entire argument on, is that self-voting is the best way to maximize investment. This is patently false. It would be true if you were simply trying to acquire more Steem coins, but there is another much better way to increase our investment by 1000 fold.
That solution should be obvious: don't try to acquire more Steem coins by exploiting the system; raise the core value of Steem coins themselves. That's why it's absurd to ask for a hard-fork before SMTs get here. SMTs increase the value of Steem, and adding complications doesn't.
We say that the problem is rooted in a flood of greed that can't be stopped. For every one person willing to flag abusers ten other abusers will take their place. This is also false.
<div class="pull-right">https://cdn.steemitimages.com/DQmTCxXEyFuo9DJbe4ascw8ziH2v4gMS6DiKqdmf5xN2KKH/organize.jpg </div>
# It's time to organize!
Because value is subjective, the answer to these problems is not hard-coding a solution attached to DPOS. [The solution is to build subjective systems on top of DPOS.](https://steemit.com/reputation/@edicted/silk-road-dark-web-trusting-anonymous-sources-with-decentralized-reputation) The solution is to identify trustworthy users and create political parties that believe in the merit of proof-of-brain.
We need to look to the future instead of trying to change the past. Stop trying to figure out how the core of this platform needs to be changed because it doesn't need to be changed; it's working perfectly.
[As I've already pointed out](https://steemit.com/flag/@edicted/flag-redirection-contracts) I believe we can reach proof-of-brain consensus by force. Greedy people aren't smart. Well, okay, they might be smart, but they aren't cooperative. The only way to combat the greed of this platform is to reach consensus.
This is a hard thing to do, because the tenants of decentralization make it difficult to organize and pick leaders. If you're serious about improving this platform, you'll stop trying the find problems in the code and instead focus as bringing people together with common goals.
If the common goal is to stop whales from upvoting trash then create a group that does just that. Greedy whales that don't care about anything but their own profits are not going to organize against us. They've twisted the platform into a system of competition. They aren't going to then turn around and work together to even further devalue the platform. You can trust them to act in their own best interest.
<div class="pull-right"> https://cdn.steemitimages.com/DQmfEJ2t1i3WxzJDkGVrbCkmYapbd6275kkxv8tyQUKeP15/synergy.jpg </div>
If their best interest is to join a proof-of-brain political party that is flagging them into the dirt, then they will do it. One by one, we can pick off the greedy whales and incorporate them into the fold. We can reverse the bad-actor domino-effect with proper organization. Cooperation beats competition. This is why I'm on team @fulltimegeek. Out of every single account with stake on this platform, his is the only one I've seen that legitimately cares about trying to make proof-of-brain a reality.
Stop complaining about reward pool exploitation when there is very little organization happening to prevent it. Organize the solution on top of DPOS. Attempting to twist DPOS into POB isn't going to work at the blockchain level. It requires the unified support of the people to become a reality. Show me that group. Spoiler alert: it doesn't exist yet. To me this makes zero sense. There should be a very large group out there struggling as much as they can to make Proof-Of-Brain a reality because accomplishing that feat would make this blockchain go x1000.