PROOF-OF-STAKE IS NOT IDEAL FOR SOCIALFI

in #hive-1679222 months ago


Recently, my airdrop-hunting endeavours have pushed me towards exploring many other SocialFi projects aside Hive, and like most SocialFi projects, they struggle with curation and rewards. This is mainly due to these platforms' consensus mechanisms, often proof-of-stake--those with stake determine how rewards are allocated and distributed.

My major concern with POS and SocialFi is that it doesn’t incentivise the best practices for social media projects whose key markers are engagement and attention. From my understanding, POS offers participants ownership of the network based on stake. There is little to do with merit--based on the customers' preferences-- which have historically proven to be the leading factor in determining if a social platform goes mainstream or becomes successful.

What happens on SocialFi platforms operating on the POS consensus model is that over time the reward allocation system becomes heavily opinionated and the opinions that matter are those of the largest stakeholders who are usually indifferent about the health of the platform and focus more on APR. In a nutshell, those who have the most state in the growth of the network become its problem.

Manual and automatic have worked for Hive. It keeps running into the same problem: it skews the creator's posting habits and in the case of manual curation very few are involved in the process. Since creators need curators' votes to earn, they write what they deem would get them the most upvote. This eliminates the likelihood of real content consumers getting any form of utility because creators are not creating for consuming but for curation rewards.

Yesterday I logged into one of my favourite social platforms and it was a total spam fest. That won’t happen on a platform like X (or make it to my feed) because not only would the algorithm filter such content away, but the spamming won't make any money from the platform because it would not get engagement. Also, the reputation of the creator will shrink to zero and they will be flgged as a bot.

As I have said in the past, socialFi founders need to learn how to separate the interest of their stakeholders and that of the platform which consists of creators and consumers (and adversities, etc). Mixing these has never worked and will never work because it skews things to favour stakeholders at the expense of the platform.

A stake-based platform is mainly about stakes and tokenomcs. Everything else is built around it (this cuts across the entire Web 3 space). There are positives to this (decentralisation, ownership) but the negatives outweigh it. Stake should only apply to governance and not the curation of content. On a social platform, every vote should have the same value or weight. To counter the actions of a bot, platforms create a strong reputation system which also factors in stake but doesn't make it a dominant factor.

In addition, integrating an Oracle into the blockchain that determines who gets what from the reward pool based on not the quality of their post but engagement will improve the quality of content on the platform to meet the consumers' appetite. The activities of the Oracle can be supervised by the users to spot and report things like spam and plagiarism.

In conclusion, functional SocialFi brings in external investment, crypto communities, new users etc and that helps the tokenomics of the blockchain. This is how I think SocialFi can thrive. The current model isn't profitable or suitable–growth-wise–in the long run. I also acknowledge that most of the ideas shared in this post are not entirely foolproof, but i think this is a conversation what having.


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Thanks for the insight. I just gotta ask: Can you tell us which other SocialFi projects have you tried? I recently read a book with the ones making it in this momentum on Gumroad, but I am curious about your insight, because you seem to have lots of experience.

In addition, integrating an Oracle into the blockchain that determines who gets what from the reward pool based on not the quality of their post but engagement will improve the quality of content on the platform to meet the consumers' appetite. The activities of the Oracle can be supervised by the users to spot and report things like spam and plagiarism.

We try something like that in here but it is difficult since many people still fight against this type of thing.