RE: What I Really Think of Steem - Truth Talk

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RE: What I Really Think of Steem - Truth Talk

ethereumalist in #freewrite • 5 years ago

First, appreciate the reply.

I have nothing against ETH, but I do believe it will need to make improvements to solve the issues of congestion as well as high gas prices that make running many Web 3.0 aspects not feasible longterm. RCs are actually an interesting way to over come those issues specially, and I think that gives Steem a good chance at being a base for the technology.

So it is not my intent here to debate or anything, but I notice that a lot of people on Steem/EOS believe that the "free" transaction thing is more scalable than the fee market system and, I'd like to say why I am confident that is not true.

We can look at how the two systems work:

ETH2 minting/fee system looks like this:
Validators > Users > Validators

Steem minting/fee system looks like this:
Witnesses > Holders > Users > Holders

No one experiences RC scarcity because RCs are extremely cheap, but that's not how it is at the mass adoption stage. The profit holders are hoping to make would be coming from people buying RCs from their RC generating Steem Power. This is a rent-seeking profit model, token holders perpetually earn value without putting new value into the marketplace.

Transacting on Steem only has the feeling of being free because new people are delegated 15 SP for free by Steemit Inc. in hopes that they will buy in later. But long term, Steem transactions are not free at all. Every action that requires RCs is not free at all and would require people to pay something to someone holding SP. It really only appears free because the Steem blockchain is not busy enough for RCs to be expensive.

One way or another you always have to pay for the security. But on Ethereum you only have to pay 1 party, on Steem there are 2 parties that make money off users.

5 years ago in #freewrite by ethereumalist

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justineh 5 years ago (edited)

I agree with you to a point, except why RCs are truly “free” is due to the fact that they regenerate, not due to the fact of the initial delegations.

Yes you are absolutely right that the actual cost of each transaction will increase as transactions on the chain do. Meaning when mass adoption levels took place it would cost a lot more RCs to transact than it does now, as you said.

They are free because while I have to have an amount staked to use the chain, I am allocated a certain amount of RCs to use based on the staked amount.. and they regenerate each day.

So yes if I was a person who wanted to build a game let’s say, I may need to invest 100k SP (random number there) to allow my users to transact. But at any time I can power down and remove that 100k SP.. it doesn’t cost me something out of pocket for each transaction. It’s more like a deposit to use the chain, imo.

You’re right, the value comes from RCs needed to use the chain, and you’re right it’s sort of a pay to play model.. difference is you get you money back.. just simply cash it out.

My understanding of ETH is it’s a pay per transaction set up, and it does not regenerate. You pay for each one, out of pocket.

I understand that ETH’s transaction volume is much higher and therefore the cost of transaction is. I just wanted to explain what I meant by “free”, as it wasn’t due to them being cheap (as you are right, that changes with increase of transactions), rather that they actually regenerate so costs nothing out of pocket in the end.

Also, just wanted to be clear - I’m not debating either, or saying which is better.. actually I quite enjoy the conversation, so don’t think you are offending or anything! 🙂

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ethereumalist 5 years ago

I understand how you see the RC system and it is a legitimate viewpoint.

You might have the opinion that it is similar to buying a solar panel for your roof, which then provides access to energy over time. That certainly sounds reasonable. But solar panel businesses seek for supply to match demand, STEEM is not like that.

Here is my concern. The game is not about getting rich by selling everyone 50 SP for sovereign blogging, but about being early so that they can charge people for RC delegation. I believe the RC delegation will cost more than ETH2's fee market because in Steem there is a middle-man (RC delegator) involved.

A self-sovereign blogging platform allowing people to have censorship-resistant free speech is important, so Steem is valuable. But what if the majority of Steem Power ends up in the hands of a small group of entities? If they can choose who gets RCs and who does not, then you have a deplatforming issue all over again.

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