A proposal about proposals

in business •  2 months ago  (edited)

A heretical conversation about stewardship on the Steem blockchain


Introduction

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Pixabay license from Vaughn Smith at source

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.

Drawbacks

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.

non-drawbacks

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.

Conclusion

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?


Left as an exercise to the reader, instead of a corporate hierarchy, what would it look like if we used a decentralized "social technology" like holocracy or sociocracy to govern the SPS?


Thank you for your time and attention.

As a general rule, I up-vote comments that demonstrate "proof of reading".




Steve Palmer is an IT professional with three decades of professional experience in data communications and information systems. He holds a bachelor's degree in mathematics, a master's degree in computer science, and a master's degree in information systems and technology management. He has been awarded 3 US patents.


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Pixabay license, source

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Interesting idea to go for some sort of 'Managed Entity'.

But, if the 'steemholders'/directors of the entity were to be selected based on stake holding (ie SP) then the effect would basically be the same as opening the SPS/DAO up again to work under its existing structure.

Sadly there is not enough diversity of stake holding at present to achieve an outcome that the majority of the community might be content to live with.


There was briefly a body set up with a view to managing funds (from Steemit) for development on Steem. If I recall it was called the Steem Foundation. It had a board of directors, and I believe it started the legal processes to be formally set up and structured.

That was some months before the 'troubles'. I think it withered away in the end...

I cannot remember what the process was to select the board members but it was not based on stake - more on popularity I suspect...

So maybe there would be another way?


It would be interesting to envisage what (positive) impact it would have on the price of STEEM if all that big pile of SBDs were converted to STEEM and burnt...?

That would be one heck of a big bonfire !

Yeah, I vaguely remember the Steem Foundation, though I didn't participate much in the process. I thought it was a good idea, but I'm not sure what it delivered, if anything. And then some of the same people who were involved in that also involved themselves in the later attacks on the blockchain. It might be interesting to look back and try to assess what happened there.

But, if the 'steemholders'/directors of the entity were to be selected based on stake holding (ie SP) then the effect would basically be the same as opening the SPS/DAO up again to work under its existing structure.

Maybe, but I think having a single person as the point of focus would change the dynamic a little. As with any management position, a big part of their job would be negotiating with stakeholders, balancing competing interests, and achieving compromises that are more difficult without a managing interest.

There's definitely a lot to think through.

You have touched on an interesting topic.

I believe that @steem.dao funds can and should be effectively used to improve the blockchain. But for this, the 2,200 SBD that are deposited into the account daily is quite enough. It would be best to burn all the funds that are already in the account, while accompanying this process with advertising.

We already have a kind of board of directors, these are witnesses. Unfortunately, I, as a regular user, have no idea what they do. I've tried reading a few of their posts in the Witness Activities community, but I haven't found anything big, or I just don't understand anything since I'm not a programmer. Also, all the witnesses are working separately on their own projects, I don't feel a team spirit for the future of this platform.

Overall I like your board of directors idea. I think that it is possible to choose, let's say, 5 people. In advance, you need to make a list of criteria that each of them must meet. If people meet these criteria, it will go some way to guaranteeing that they will manage their funds honestly.

But there is another problem. Has anyone tried to submit an offer in the last few years?

But for this, the 2,200 SBD that are deposited into the account daily is quite enough. It would be best to burn all the funds that are already in the account, while accompanying this process with advertising.

Personally, I'd rather see it retained than burned. Basically, if it's in the SPS, it's out of circulation anyway. But if we figure out a way to manage it effectively, it could still be a very useful resource.

But there is another problem. Has anyone tried to submit an offer in the last few years?

There actually was a proposal submitted back in May. At present, it probably requires use of the CLI wallet, but it is (apparently) possible to submit a proposal.

There actually was a proposal submitted back in May.

Yes, I saw that proposal, you reminded me.

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Does that mean it got funding?

I think that "Started" just means that the time/date when the proposal begins has passed and the end date hasn't yet been reached. In that particular case, today's date is between May 1, 2022 and May 1, 2023.

In order to start receiving SBDs, the proposal would have to receive more votes than the "return proposal", currently listed in the first slot (i.e. more than 47.2 million SP would need to vote for it).

One point that may not be obvious is that the proposal can bounce above/below the "return proposal" any number of times, so it is possible that funding starts, stops, and starts again repeatedly as people adjust their votes.

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I think the issues with the proposal system are aspects of the governance issues we also see in other aspects of the chain. The concentration of stake into the hands of a few amplifies the problems of stake-weighted voting. And practically I don't see how the community could select a board of directors any more effectively than we can select witnesses.

Well, we already have a defacto board of directors -- it's the ten or twenty account holders that can block a proposal or push it through. By my reckoning, Steemit has about 25% of staked SP, so they are dominant, but they don't have complete control.

TBH, I think the bigger challenge is the apparent disinterest in the blockchain's health from the other large stakeholders. Still, I agree that this is all sort of "pie in the sky" unless the large account holders are willing to make it work.

it's the ten or twenty account holders that can block a proposal or push it through.

One problem is the lack of granularity on the voting system. Since the big votes have to vote on something to keep bad proposals out there ends up being no point in anyone else having an opinion.

I think the original vision for the blockchain was that there would be people who would opine on technical questions like who makes a good witness (or what proposals are good) and people would make their judgements based on commentary from people they trust rather than evaluating technical stuff themselves (just like we can pay attention to political news rather than read the text of bills). But we're in a receding-tide-swamps-all-boats kind of situation, there's just not enough going on for those analyst style roles to be a viable niche.

This is a big part of why I raised this topic.

I think the original vision for the blockchain was that there would be people who would opine on technical questions like who makes a good witness (or what proposals are good) and people would make their judgements based on commentary from people they trust rather than evaluating technical stuff themselves (just like we can pay attention to political news rather than read the text of bills). But we're in a receding-tide-swamps-all-boats kind of situation, there's just not enough going on for those analyst style roles to be a viable niche.

First, I don't think that vision ever worked very well, and second, we need a new vision that fits the current platform. Meanwhile, the software libraries for open source development are slowly decaying while this fund sits there, untapped.

Steemit's curation efforts are fantastic, but for their own reasons they have decided not to prioritize the development landscape.

So, to me, the question is whether we - as a community - can find a way to modernize that doesn't require Steemit to sit in the first chair? Certainly, we can't accomplish much without having them in a supporting role, but that doesn't mean they need to drive the effort.

A lot of updating and building can get done with $3 to $9 million, but it needs to be done strategically. Thus, I am imagining a managing director for the SPS who sets a strategic direction based on conversations with the large stakeholders (our defacto board), and then recommends for or against proposals, depending on how they fit the strategy.

First, I don't think that vision ever worked very well, and second, we need a new vision that fits the current platform.

I agree the old model was questionable, but an atmosphere of growth and excitement tends to mask those sort of flaws, so they're more apparent now.

Meanwhile, the software libraries for open source development are slowly decaying while this fund sits there, untapped.

Are they decaying? Or just not being actively developed? Personally I suspect that the exchanges are not super keen on supporting Steem hard forks so any development would probably have to deliver some good benefits.

So, to me, the question is whether we - as a community - can find a way to modernize that doesn't require Steemit to sit in the first chair?

Maybe the problem would be easier to consider from the other direction. Maybe instead of trying to figure out a workaround to the "who decides?" question, if we had some solid ideas for what development was actually needed (eg what new features, etc.) and got community buyin on what should be implemented then maybe it would be easier to get consensus on who to fund to implement them.

Are they decaying? Or just not being actively developed? Personally I suspect that the exchanges are not super keen on supporting Steem hard forks so any development would probably have to deliver some good benefits.

I'm not worried as much about the blockchain itself (at least until there's a security exploit), but rather the supporting software that developers need like the cli wallet, steem-python, steemdb.io, steem-js. etc...

I guess one could argue that it's not decaying, but just not being maintained, but I see it as a form of decay when the underlying Open Source libraries are falling out of support, and the tools can't be operated on the latest operating system versions.

if we had some solid ideas for what development was actually needed (eg what new features, etc.) and got community buyin on what should be implemented then maybe it would be easier to get consensus on who to fund to implement them.

Agreed, but I'm not even thinking about new features at this point. First we need to manage the basic "blocking and tackling". I think that just getting software libraries up to date would make the platform more attractive to developers. I could be wrong, but I think there would be fairly broad consensus that these things are needed. After that, we can start thinking more about new features.

Here's an idea that potentially looks more decentralized: a person with a good reputation in the community can create a proposal that's something like "I want to offer a dev bounty for [insert needed dev support here]". The proposal gets funded, they accumulate the funds in their wallet, and they just hold it there until they're ready to pay out the bounty. An aspiring dev (if they exist) then doesn't have to face the nebulous "how do we convince people to pay us for this?" question, they have the face the potentially more tractable "what do I need to do to satisfy X's bounty?" question.

This might give the unilateral decision-making clarity of a CEO, but it doesn't have to look like the CEO of the whole blockchain, it's just one person among many running their own DAO-funded project.

Yeah, I've thought about that as a possibility, too. It's definitely a reasonable idea. Along the same lines, another possibility I have considered would be for an influential stakeholder to publish a "Request for Proposal" (RFP) in order to attract someone who could fulfill a need to submit their own proposal.

The drawback to the bounty is that you have to trust someone to hold the funds (unless it's mixed with some sort of escrow/multisig arrangement). The drawback to the RFP is that the person publishing the RFP may not be able to guarantee that any proposal would be approved.

Somewhat depressing is the fact that the board of directors was going to manage the blockchain. On the one hand, there is no way without management, on the other hand, the blockchain should not be managed in essence. A paradox is brewing. But it's more in the minds of people. The mass agrees to everything as long as there is a profit, the same and large investors, the time factor will give short-term income with the death of the distant future, or there is a variant of a constantly changing management principle. The main management should lie with all members of the Team, with full responsibility for their actions and the actions of other members, the same supervision, and the coordinating council, if necessary, takes one-time management measures. And advertising! Without advertising, there will be no growth, no matter how much extra tokens are burned. And the whole thing must constantly change according to the principles of management, according to the possibilities of influence.

Although steemit has had some ups and downs, it remains valid and this speaks of the trust that users have in the platform

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