A heretical conversation about stewardship on the Steem blockchain
Let's talk about Steem's blockchain stewardship. As the largest stakeholder, a lot of us - myself included - tend to look to Steemit to act as the "stewards of the blockchain". To a degree, this is reasonable. However, it's important to remember that Steemit is a corporation, and as such, their fiduciary responsibility is not to "the blockchain", but rather to their investors. Due to the size of their stake in Steem, there is a lot of overlap and as a result their responsibility to their owners/investors bleeds into blockchain stewardship. But, in the end their primary concern must be the health of their own company, and if the two goals come into conflict, Steemit should favor its owners/investors over the general health of the blockchain.
So, if not Steemit, then who is responsible for the health of the blockchain? The flippant answer is that it's decentralized, and "the community" shares in that responsibiity. Years ago, though, I worked with a guy who would always say - on project management calls - "If everyone owns it, then no one owns it." I think that applies here, too. The simple fact is that most STEEM holders have no effective mechanism to look out for the health, growth, and development of the blockchain, so we shrug our shoulders and hope that Steemit does it.
Understandable, but there should be a better way. Enter the Steem Proposal System (SPS). Long time Steemizens will know that the Steem Proposal System is a Decentralized Autonomous Organization (DAO) that was implemented in HF21 to enable the blockchain to fund efforts that were greenlighted by the community. However, it has been nearly idle for the last several years. I say "nearly" because even though the SPS has funded no proposals, it has still been receiving funding. At this moment, the @steem.dao account has 2,934,372 SBD in its wallet, and it continues to collect 10% of blockchain inflation every day (roughly 2,200 SBDs at current prices, if my calculations are close). At the blockchain's internal price, this is $2.9 million plus $2,200 per day (~$800k per year). At external prices, it's 3 times that amount.
To be honest, if the choice is between the SPS the way that it used to be, or an idle SPS, I vote for keeping those funds locked away. There's no denying that it had - shall we say - challenges. But, I want to imagine a different way of running the DAO, modeled after a tried and true decentralized model that has existed in our society for centuries: "The Corporation". So, in the rest of this essay I'll consider the possibility of learning lessons from "the corporation" to reactivate the SPS in a more productive way.
In the next section, I'll discuss my impressions of the SPS as it used to exist. Next, I'll discuss its likely future under existing DAO paradigms. Then, finally, I'll discuss the topic at hand, organizing the DAO around a traditional corporate hierarchy.
The past and present of the SPS
The SPS was activated in 2019 as part of hard fork 21. I'm not digging through the archives, but from my recollection, it quickly saw adoption. As I recall, it provided funding for existing applications, creation of documentation for Steem's Open Source code, and some promised new applications. It was also suggested to make use of those funds for marketing, although - to my knowledge, that never happened.
In the end, up until it was locked down during all the drama in 2020, I'd give it a mixed review. Some of the uses were useful for the blockchain, but in my opinion, far too much money was distributed to anonymous "fly by night" operators whose only achievement was to gain popularity with the whales who voted on the proposals, and eventually some of them even used that distribution in their attack on the blockchain itself.
When the drama occurred in 2020, the largest stakeholders locked down the SPS, presumably as a defensive measure, and locked down it has remained.
Possible futures for the SPS under existing paradigms
Basically, I see three possible futures for the SPS under the traditional narratives. First, it can remain locked down the way it is. No harm, no foul. This is probably the path of least resistance and lowest risk. The drawback to this course of action should be obvious, though. Three to nine million dollars of capability to grow and improve the ecosystem remains undeployed.
Another possibility that has been bandied about is to dismantle it and burn the funds, possibly after first converting SBDs to STEEM to take advantage of the high external exchange rate. To me, this has two drawbacks, though. It feels a lot like cannibalizing the ecosystem, which is opposite to the direction we want it to go. Additionally, as with the first scenario, it leaves $3 to 9 million of development capability untapped.
The final possibility is to open the spigot back up and hope that the good uses will outweigh the bad ones. The drawback to this path is that it is really difficult to ensure accountability from the people who receive funding. In short, it's too easy to game it.
So now what? From among those three options, my vote would be to leave it locked up the way it is now. But what if there's another option? Let's move to the next section.
The SPS as a managed entity
In the cryptocurrency space, we like to think that we're pioneers in decentralization - and we are. However, decentralization is not entirely new. Corporations have had decentralized structures for centuries. The shareholders own the company, they appoint a board of directors, and the board of directors hires a Chief Executive Officer to manage the day to day affairs and look out for the interests of the shareholders.
Would it be possible to manage the SPS in the same way? Imagine this.
Instead of shareholders, we have steemholders, and the most influential of those steemholders could be considered as a sort of board of directors. So, if these folks got together, they could hire a CEO to manage the SPS budget. The CEO would have the goal to grow the value and reach of the blockchain by soliciting and considering proposals and recommending for or against them to the board (and all Steemizens, for that matter). The CEO would also be responsible for ensuring that proposals actually deliver what they promise or to recommend shutting them down as soon as its clear that they're failing. In exchange for these activities, the CEO would receive a salary from the SPS. Like any traditional corporation, the CEO could even submit proposals to hire additional staff.
Periodically, maybe once per month/quarter/year, the CEO would submit a proposal (forward looking) to meet payroll, and if the board is happy with that person's performance the proposal would be approved.
Of course there are drawbacks. As inflation goes down, the growth rate of the SPS also goes down. Additionally, I haven't completely thought through how the changing price of STEEM would effect the number of SBDs that are distributed to the SPS. So, the incentive structure would need to be fully evaluated.
I can already anticipate a simplistic ideological objection to this idea, "It's not decentralized.", but that's just incorrect. It's a decentralized community cooperating to accomplish a goal, just like every corporation in the world. If enough of the community doesn't like the direction, then the CEO could be eliminated or replaced. It is, in fact, a decentralized governance model.
Perhaps the biggest drawback is the simple uncertainty that's associated with trying something that hasn't been done before.
So, there are my thoughts about decentralized stewardship of the Steem blockchain. Is this a good idea? I honestly don't know, but I think it's worthy of discussion and further consideration.
Whether we go with this approach or some other approach, I believe that now, while the drama has settled down and the crypto markets are in the doldrums is a good time to talk about finding a way to bring the SPS to bear as a growth and development tool.
What do you think? Should we ramp up the executive search committee?