Steem
An incentivized, blockchain-based social media platform.
Daniel Larimer, Ned Scott, Valentine Zavgorodnev, Benjamin Johnson, James Calfee, Michael Vandeberg
March 2017
Abstract
Steem is a blockchain database that supports community building and social
interaction with cryptocurrency rewards. Steem combines concepts from
social media with lessons learned from building cryptocurrencies and their
communities. An important key to inspiring participation in any community,
currency or free market economy is a fair accounting system that consistently
reflects each person's contribution. Steem is the first cryptocurrency that
attempts to accurately and transparently reward an unbounded number of
individuals who make subjective contributions to its community
Abstract
Table of Contents
Introduction
Recognizing Contribution
Ways to Contribute
Capital Contributions
Steem (STEEM)
Steem Power (SP)
Steem Dollars (SMD)
Minimizing Fraudulent Feeds
Mitigating Timing Attacks
Minimizing Abuse of Conversions
Liquidity
Sustainable Debt to Ownership Ratios
Interest
Setting Price Feeds
Subjective Contributions
Distributing Currency
Voting on Distribution of Currency
Voting Collusion
The Story of the Crab Bucket
Rate Limited Voting
Delayed Payouts
Payout Distribution
Rewarding Parent Posts
Payouts
Consensus Algorithm
Consensus in Steem
Mining in Steem
Mining Rewards require Steem Power
Mining Algorithm
Botnet Resistant
Mining Pool Resistant
Eliminating Transaction Fees
The Problem With Fees
Micropayments Don’t Work
Fees are a Barrier to Entry
Changing Fees
Sybil Attacks
Full Reserve vs Fractional Reserve
3 of 44
Iterating Beyond Micropayments
Example Implementation
Case Study: Bitcoin
Impact of Capacity
Maximum Number of Unique Users
Comparison to Fees
Account Creation
Justifying Minimum Balances
Adjusting the Reserve Ratio
Effectiveness Relative to Fees
Renting vs. Buying vs. Time Sharing
Performance and Scalability
Reddit Scale
Allocation & Supply
Impact of Token Creation Rate
Impact of Token Creation Rate Greater Than Ninety-Percent
Accounting In Steem
The Power of Steem
No Micropayments, Tips Optional
Value is in the Links
Solving the Cryptocurrency Onboarding Problem
Solving the Cryptocurrency Liquidation Problem
Censorship
Solving Organic Discovery via Search Engine Optimization
Shifting Toward Blockchain-based Attribution
Replacing Advertising with Blockchain-based Content Rewards
Conclusion
Introduction
Collectively, user-generated content has created billions of dollars worth of value for the
shareholders of social media companies, such as Reddit, Facebook, and Twitter. In 2014,
Reddit hypothesized that its platform would be improved if everyone who contributed to
reddit.com by posting stories, adding comments or voting were rewarded with a fair
share in Reddit, Inc . Steem aims to support social media and online communities by
1
returning much of its value to the people who provide valuable contributions by rewarding
them with cryptocurrency, and through this process create a currency that is able to reach a
broad market, including people who have yet to participate in any cryptocurrency economy.
There are some key principles that have been used to guide the design of Steem. The most
important principle is that everyone who contributes to a venture should receive pro-rata
ownership, payment or debt from the venture. This principle is the same principle that is
applied to all startups as they allocate shares at founding and during subsequent funding
rounds.
The second principle is that all forms of capital are equally valuable. This means that those
who contribute their scarce time and attention toward producing and curating content for
others are just as valuable as those who contribute their scarce cash. This is the sweat equity
principle and is a concept that prior cryptocurrencies have often had trouble providing to
2
more than a few dozen individuals.
The third principle is that the community produces products to serve its members. This
principle is exemplified by credit unions, food co-ops, and health sharing plans, which serve
the members of their community rather than sell products or services to people outside the
community.
The Steem community provides the following services to its members:
A source of curated news and commentary.
A means to get high quality answers to personalized questions.
A stable cryptocurrency pegged to the U.S. dollar.
Free payments.
Jobs providing above services to other members.
1 Reddit’s Cryptocurrency, Forbes, Erika Morphy, October 2014,
http://www.forbes.com/sites/erikamorphy/2014/10/01/reddits-cryptocurrency-could-have-many-uses/
#4e07b05332b9
2 Sweat Equity, Investopedia,
http://www.investopedia.com/terms/s/sweatequity.asp