image from unsplash.com by Fernando Venzano
It has been suggested that SMT's will unlock the ability to add value to Steem in new ways. They may also enable the formation of new communities and enable the onboarding of existing communities to Steem. That all sounds really positive and no doubt, having sub-tokens (whether they are within a dapp on a general purpose blockchain network like EOS, or on an application specific blockchain network like Steem,) will provide added value and flexibility to emerging sub-communities and scope for additional utility.
However, in the case of SMT's for Steem, I have a grave concern.
As the majority of Steemians are aware, there exists presently, an extremely serious and disruptive imbalance within the economic incentives that govern the behaviour of participants on Steem. The imbalance is primarily due to Steem being massively centralised alongside an imbalance in economic incentives between upvoting and flagging content, positive and negative curation.
This imbalance means there are a large number of losers and a small number of winners on Steem. What's more, less scrupulous accounts exploit the network to make huge parasitic gains, growing stronger and potentially gaining influence, whilst everyone else grows relatively weaker. Other strong accounts who might do something about it are either paralysed by the punitive incentive model, passive or joining in to keep up.
I ask you, does this sound like an experiment that is complete and ready as a platform on which to build further economic complexity and risk? Is this a platform on which people should be investing in sub-tokens or moving their existing businesses and communities onto, given the often abusive power and influence hanging over them? A community using SMT tokenX may not be aware of abuse happening on Steemit with Steem, but they will sure feel the effects. All economic potential flows down and out from Steem, which is at the top of the pyramid. Even if Steem is highly valuable, that will make the current centralisation worse and the potential effects even greater. Given the problems within the steem economy, I think launching SMT's are a very bad idea.
The SMT Whitepaper refers to Proof-of-Brain.....
"Two unique properties align incentives and make SMTs “smart and social” compared to other tokens (such as bitcoin, ether and ERC-20s). The first is a pool of tokens dedicated to incentivizing content creation and curation (called the “rewards pool”). The second is a voting system that leverages the wisdom of the crowd to assess the value of content and distribute tokens to it. These two unique properties when combined are referred to as Proof-of-Brain, which is an entendre based on Proof-of-Work, meant to emphasize the human work required to distribute tokens to community participants. Proof-of-Brain positions SMTs as a tool for building perpetually growing communities, which encourage their members to add value to the community through the built in rewards structure."
The name Proof-of-Brain is somewhat disingenuous for at the time the SMT whitepaper was written, I believe the authors were well aware that the current flawed process by which the reward pool is allocated is not that smart and borderline anti-social. What's more, how much of the reward pool is distributed by "human work" rather than bots, trails and payvote services? Communities cannot grow perpetually in a system where the backbone economics is so flawed and though some of the effects may be occluded from view through the use of communities and tokens, eventually the centralisation will become apparent and will have severe consequences. The risks of building a sub-community using a sub-token on such a platform are profound.
The SMT whitepaper focuses heavily upon turning steem into an ICO machine like Ethereum. Does anyone else question this path? There is barely any mention of the potential regulatory compliance issues that may arise and entangle the Steem network. ICO's are widely regarded by regulators as securities offerings and subject to scrutiny.
If the imbalances within the Steem economy could be addressed before SMT's were launched, that would go a long way towards addressing many of the use cases for SMT's. The regulatory compliance issues are something else.
There is a way I think Steem's imbalances could be addressed and I've written about it in several posts already....
I believe the solution is to put a massive amount of Steem Power into the hands of the Steem community, entrusting hundreds of community elected curators to deploy that power to combat 'abuse.' The definition of abuse would be defined by the community and the curators would be held accountable for their adhesion to that definition. The only source of Steem large enough for this and with an outside chance of being deployed in such a manner, is that held by Steemit.inc. The steem held by steemit.inc was always mean't to nurture the Steem blockchain and to support the fledgling community, what better way is there to accomplish those goals?
I would be very interested to know if you share my concerns or if you believe SMT's will not be affected by the present imbalances in the Steem economics.
For an alternative point of view, and I respect 
.....and of course, please don't forget to read the SMT whitepaper !
Happy Steeming