The last decade has seen a burst of social media on the internet. Facebook, Twitter, Reddit have collectively generated billions of dollars for their shareholders. Their contributors, who post, like or comment, don't receive any direct benefits from these platforms. Instead, they need to behave according to their opaque internal policies.
Steem aims to change that by rewarding contributors directly for their value generated in the system. It provides an economic incentive via cryptocurrency to address the adoption and monetization of a social media-based economy.
A New Kind of Reward:
Facebook, Reddit uses scoring algorithm and ranking to reward good contents. But, people have manipulated them to reward themselves either web traffic or censorship. Widespread abuse of such scoring system has caused people to lose faith in the perceived fairness of the economic system. The platforms filter and block abusers to prevent that from happening.
In a perfect world, the community members would rate each other's contribution, and the system would derive a fair compensation for them. The system would also be resistant to intentional manipulation for profit by contributors.
The fundamental unit of account in Steem is STEEM, a cryptocurrency token. The system operates by one-STEEM, one-vote policy. Members who have contributed the most to the system influence contributions scoring.
It operates with the notion that meaningful contributions should be recognized for the value it adds. If people are recognized, then they continue contributing, and the community flourishes. Any imbalance is not sustainable.
Principles & Design:
The principles used in designing Steem are:
- Everyone who contributes should receive a proportional ownership, payment or debt in the business.
- Everyone's contributions should be equal. The people who invest their scarce time and attention should be equally valuable than those who contribute their scarce cash.
- The community should produce products that serve its members.
Based on the principles, Steem is designed in such a way that the reader no longer needs to pay for someone from their own pocket. Instead, you vote up or down, and Steem will decide the individual rewards based on the votes. It has enabled effective micro-payments.
Tokens in Steem:
Steem is the fundamental token on the blockchain. All other tokens derive their value from the Steem token. It is a liquid currency that can be traded on a crypto exchange.
Steem Power (SP):
Steem wants to build a community controlled mainly by those with long-term commitments. Users who commit their STEEM to a thirteen-week vesting schedule receive Steem Power (SP). They receive benefits for doing so.
When users vote, their influence over the distribution of the reward pool is proportional to the amount of their SP. Users with more SP have more impact on the distribution of rewards. The system pays the holders of SP on the balance of SP that remains vested.
"Powering up" means transferring STEEM to SP, where are "Powering down" is vice versa. After the initiation of powering down, the funds are transferred to STEEM over a period of thirteen weeks via 13 equal weekly payments.
Steem Dollar (SBD):
Steem dollar was designed to bring stability to the world of cryptocurrency and to the individuals who use the Steem network. Creating SBD requires a combination of a reliable price feed and rules to prevent abuse.
Voting is crucial to allocate the payments to contributors. Every vesting user casts a vote on currency distribution. The money gets proportionally distributed to the vote where everyone with a net positive gains something.
The possibility of gaming the system is high if there are vote abusers. For any work that is getting a high number of upvotes, there is also a downvote. It deflects the voting power of a collusive group or defecting large stakeholders. The use of negative voting helps keep the people from abusing the system.
The system distributes payout in such a way that the network offers large bounties for good content while still rewarding smaller players for their long-tail contribution. The payouts are received in the form of 50% SBD and 50% SP. SP provides the user increasing voting power, and SBD provides an immediate benefit in the stable currency. A user can also opt to get paid in 100% SP, as well as decline payout on posts.
People with vested interest in the future of Steem are responsible for creating blocks in the public record. Voting is also weighted proportionally to the vested interest.
More facts about Steem:
- Steem eliminates transaction fees and instead requires a minimum balance to transact in the system. Hence, all Steem accounts are pre-funded with a minimum balance during account creation. The minimum balance is simply the balance required to earn enough interest to pay a fee in a relatively short period.
- Steem is capable of handling a large amount of transaction. It is designed to scale.
- Steem is a decentralized network where all user actions are recorded on a public blockchain. No single entity can censor content valued by STEEM holders. Individual websites like steemit.com may censor content, but content published on the blockchain is publicly available.
Steem combines the best parts of cryptocurrency and social media. It provides an opportunity for creators to earn rewards directly correlated to their contributions.