![hf.jpg](https://cdn.steemitimages.com/DQmdgbY7AYf714oXVL5oKEWN4WZk63oMarGaSJLXUsJ6TQ8/hf.jpg)

There has been a lot of discussion about the upcoming HF21, but I feel there has not been a explanation of what any of it means directed to the community itself. I don't feel it has been explained in a way that everyone can grasp and understand while seeing the *goal* of the proposed changes. This may be due to different styles of communication or just a disconnect from the user base. Either way I believe it is an unfortunate oversight, and this post is my attempt to remedy that. As I feel communication is extremely important for any community, organization or business.
_{**Full Disclosure-** I am not a top witness and therefore am not considered in the "consensus" aspects of this hardfork. I am am active community member and a part of a backup witness team (c-squared) though, and due to my involvement of many projects on this chain I have been included in some "conversations" pertaining to this HF discussion. During these discussions I like to think of myself as a community advocate or representative. I try to ensure community concerns are heard and do my best to keep the community in mind through every discussion. Whether I am the best choice for that is up for debate.. but I figure if I am in such a position I should take it seriously and do my best to represent the community.

So with all of that being said, this is my attempt to explain the proposed HF changes to the community, the best way I can. My goal is to help get the correct information out and give the community a good understanding of what the HF consists of, why those supporting it think it's needed, and what happens next.

I will do my best to keep my opinions out of most of this post (I'll save them for a future one perhaps), but rather try to explain the idea behind these proposed changes... **from one normie to another.** Therefore I will not be focusing on algorithms or charts (I'll link to those for anyone who wants them though), but rather just try to paint a picture of what the ideas of the changes are as well as the desired effect.}
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# First Things First
### What is a hard fork? A hard fork is a when a change in the main protocol (or code) happens on a blockchain. This normally occurs when changes or improvements to the core code of the chain takes place. In order for these changes to take place, a protocol is released (traditionally by steemit inc here on steem) and then "consensus" must occur for the chain to migrate to this new protocol. Consensus is when 17 of the top 20 witnesses "accept" this change in protocol by beginning to run this new code and stop running the old one. Only then will these changes in protocol take effect. This will be the 21st Hard Fork to occur on The Steem Blockchain. Here is a [good description/analogy](https://cointelegraph.com/bitcoin-cash-for-beginners/what-is-hard-fork#the-dao) of blockchain protocol changes for anyone wanting more information. #### Please note- We are not to this point on HF21. **The protocol has not been released yet and there is no scheduled date for when that will occur.** Steemit inc did release a [Test Net](https://steemit.com/steemit/@steemitblog/steemit-update-hf21-testnet-sps-eip-rewards-api-smts) though where witnesses will begin testing the possible code to find any issues or errors so they can be fixed. The goal of this is to prevent possible issues from occurring (as we saw with HF20), but of course not everything can always be prevented. The test net is designed to help though and many witnesses are actively testing the code currently. Once testing has been done and they feel it's sufficient, a date will be announced.
![fork.jpg](https://cdn.steemitimages.com/DQmVXNCaH2zNJpLbkEksSHXEvbPRKSWnbkkzb7qggtBMhr9/fork.jpg)
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# HF21 - The Details This hard fork is made up of two very different and separate aspects - **The SPS (Steem Proposal System)** and **The EIP (Economic Improvements Proposal).** I will try to go through each one in a easy to understand way, while linking to more complex information for those that want it.

# Part One - The SPS The SPS, Steem Proposal System or Steem.DAO, is a worker proposal system that is coded into the chain itself. This will be an automated system (no "group" controlling it) that any member of the community can submit a "proposal" to through a front end interface. Stake weighted voting decides what proposals receive funding, and payments are sent out in installments over a time period, after a proposal has been "approved". The SPS was [proposed by blocktrades nearly 5 months ago](https://steemit.com/blocktrades/@blocktrades/proposing-a-worker-proposal-system-for-steem), and after an agreement from [Steemit Inc to fund the development](https://steemit.com/blocktrades/@blocktrades/blocktrades-beginning-development-of-steem-proposal-system), Blocktrades began building the code. ### What is the point? There are many blockchains in existence that have Worker Proposal Systems (or sometimes referred to as "DAO's) in effect. The idea is a decentralized and automated way to fund things that could improve or add to the ecosystem. This allows anyone from the community to propose something, and if it has enough support from stake holders then it can receive funding. ### What can be funded? Anything. Community members can submit a proposal for absolutely anything. There is a fee of 10sbd's to submit a proposal in place to try to prevent spam submissions, but anything can be submitted. This could be used for a marketing project, outreach, onboarding, developments to the UI/UX or any other site features. It could be used to hire a management team for the community, PR reps, or some other "role" the community sees as beneficial. It could be used to fund a project idea, a game, etc etc etc. Think of this as a way for the community to vote and fund projects they see as beneficial to the chain itself as well as the Steem Ecosystem. Therefore depending on Steemit inc. for these items less and less. It allows the community to redirect some of the shared inflation pool to things that could have a positive impact on the ecosystem and hopefully improve the overall value of STEEM. ### Where does the funding come from? When the SPS was originally announced there had been a discussion of Steemit Inc. contributing a substantial "seed funding" (as detailed in the link above), that amount is now discussed to be 200K STEEM. It is very important though for the worker proposal system to have sustainable funding to be successful, as well as the importance of it not solely relying on Steemit Inc itself. That means it is even more important that the community redirect sustainable funding from some other place to ensure this worker proposal system can actually provide a service to the community. **Proposed Sustainable Funding Source** On steem we have a shared rewards pool that is sourced from inflation. This pool is allocated to different types of "rewards" as seen below; ![rewards graph.png](https://cdn.steemitimages.com/DQmbKDdwCnhVSCZ9cQ6vuMhTjzM5S35uwpshcC9DtAiZCgA/rewards%20graph.png) The idea of this inflation pool is to use these funds to pay for things that add value to STEEM. Currently it's being used to pay rewards to authors/curators through post and comment payouts, a vesting interest reward and witness rewards (paid in SP). **The figures (when combined) look like this currently -**
#### Authors/Curators - 75% | Interest - 15% | Witnesses 10%
As you can see the largest part of the inflation pool is being used to reward content contributions.
**The Proposed Change-** #### Authors/Curators - 65% | Interest - 15% | Witnesses 10% | SPS - 10%
The idea is that since that is the group receiving the largest cut, that redirecting 10% of that inflation to the SPS would be a good place to start. Remember, the inflation pool should be used for what adds the most value to Steem and has the most long term benefit.. therefore improving the price of STEEM for everyone. Many feel the SPS could be exactly what we need to push Steem to where it needs to be, while giving the community control over what is funded itself.
#### TDLR Part One The SPS is an automated worker proposal system that was coded by Blocktrades. Proposed funding would be a combination of donations as well as redirecting 10% of the current inflation pool to the SPS itself.
**My Thoughts on SPS?** I think the SPS is desperately needed and could be very beneficial for the Steem ecosystem. I think that the inflation pool should be used to fund what adds value, or ultimately that inflation is actually contributing to a decrease in the price of STEEM. I left a comment on [this post](https://steemit.com/proposal/@netuoso/proposal-add-inflation-funding-source-to-the-steem-proposal-system) of my thoughts overall for anyone interested, but I won't include them here for sake of time and not wanting to include *too* much of my own opinions.
![economics.jpeg](https://cdn.steemitimages.com/DQmYXRnW3kQwWDts7aimUnMQRse5V6qVQUAUscjNmtP1dgn/economics.jpeg)
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# Part Two - The EIP The EIP, Economic Improvement Proposal, is something that has come about due to *years* of conversations about how to improve the economics of the Steem Ecosystem. First conversations about such changes can be seen in [this post](https://steemit.com/steemit/@ats-david/make-steemit-great-again-fork-this-place) as well as many other places. This discussion has been debated among top witnesses, stake holders and community members since that time with no actual attempt in change being considered until now. The current proposal consists of three different components working together in tandem to hopefully improve the economics on Steem. You can see the details on [Steemit Inc's post opening up discussion about the topic.](https://steemit.com/steem/@steemitblog/improving-the-economics-of-steem-a-community-proposal)
## The Three Components of The EIP
## 1) 50:50 Split
#### What is it? This would be a change in the current split of content rewards from **Author 75%/Curators 25%** to **Author 50%/Curators 50%**. #### What is the goal? It is no secret that we need more content consumers on Steem. We have great content, we need people to read it and reward it though. The idea here is that individuals would actually **profit** by curating and upvoting said content, so they will do it, rather than other forms of earning a profit. Imagine if all those spamming could actually just curate to get a return on their investment? Imagine if large stake holders actually made a return by trailing some of the manual curation efforts? What if it was actually profitable for individuals to invest in steem and reward the valuable content? Would more people do it? *That's the idea.* **But what about those just spamming and upvoting themselves? No matter of the split they still are getting 100%, right?** Well that is where downvotes come in...
## 2) The Downvote Pool
#### What is it? The proposed downvote pool is designed to help counter this behavior by removing the "cost" of downvotes to a certain limit. Currently downvotes are not "free", in fact to use a downvote you are using the allocated "mana" that can be used for those 10 upvotes a day that regenerate. Essentially, to downvote something you are throwing away possible ROI you would receive by upvoting something instead. When an individual downvotes something their vote worth, as well as the same amount of reward on the content receiving the downvote is sent back to the shared rewards pool. There is a benefit to the chain of course, as this puts rewards back into the pool to be distributed to all authors, but the individual downvoting has given up ROI of possible curation rewards from casting that vote instead. This has led to a culture of downvotes not being used by the majority to fight abuse of the shared rewards pool. Leaving us with bid bot abuse going unchecked, self upvoted spam by large and small stake holders alike, as well as extremely overly rewarded content becoming the norm. Rewards are intended to show consensus from the community- **An Upvote** is showing a stake holder feels the contribution is worth more than the current reward. **A Downvote**is showing a stake holder feels the contribution is worth less than the current reward. At the end of the payout time period (7days) whatever the community consensus is, is then allocated to that specific contribution. It is really that simple. #### How will it work? The proposed pool would just allow 25% "free" downvotes. This means that a separate small pool would be consumed by the downvotes prior to consuming voting mana. Meaning an individual could use a limited amount of downvotes before having to use their "allocated votes" as we see today. *There is no "reward" for downvoting, there will just now be a few "free" downvotes to use.* #### What is the goal? To encourage downvotes to be used as a curation mechanism, as well as abuse fighting on a larger scale. The goal is for those large stake holders to now be encouraged to go and downvote bid bot abuse as well as self voting spammers who are removing rewards from the shared pool while not returning value. The idea is that if someone who is currently posting spam and upvoting it now as the option to curate instead and earn a profit(50:50), they may be more likely to do so.. rather than spam and risk being downvoted. This also applies to bid bot users. If someone is abusing bid bots and is constantly downvoted by the community for doing so they will loose money, as they have to pay for those votes. If it is no longer profitable, they most likely will not do it anymore. The idea is to reward the behavior you want to see, and sometimes that means showing distaste for what you do not want to see.. and that is accomplished through downvotes.
## 3) The Curve
#### What is it? The curve is a proposal to go from the current linear curve to a convergent linear curve. Steemit Inc's own Vandeburg did a very technical analysis of it in [this post]( https://steemit.com/steem/@vandeberg/reward-curve-deep-dive) as well as an updated diagram from Steemit Inc. [seen here](https://steemit.com/steemit/@steemitblog/steemit-update-hf21-testnet-sps-eip-rewards-api-smts) for anyone wanting a technical description of it. **I am not going to talk about the algorithms or the curve.. rather just my perceived goal behind it...** ![curve.png](https://cdn.steemitimages.com/DQmfCodwqYZvBrtBwS9acckeJKWyRAUG7yWsGuCWwjva8Zp/curve.png) *Pretty isn't it?* #### What is the goal? One of the goals within this EIP proposal is to encourage organic content discovery by discouraging negative behavior. One of these negative behaviors touched on before is when individuals spam and self vote to gain a profit, while adding no value in return. While the downvote pool as well as 50:50 are designed to encourage them to do otherwise, downvotes can only happen if the abuse is seen. #### Abuse Fighting One idea behind this curve is that it discourages those individuals from spreading their stake and this abuse over multiple accounts in smaller reward amounts to avoid being caught. Due to the curve changes making that not profitable, the idea is abusers would be pushed to aim for higher returns and then downvotes could be used to counter said abuse. If this abuse is no longer profitable, the hope is individuals will turn to other ways that are profitable with less risk attached.. as in **curation**(50:50). Imagine if all the abusers just cast a vote on content instead.. *that's the idea.* #### Curation An additional aspect to this curve is that it gamifies curation a bit as well. Consider with the change to 50:50 that more and more individuals are encouraged to curate content, as they can actually make money doing so. Currently many just jump on a post they know has a big vote coming through auto votes, and sort of race to that "optimum" ROI time. Currently any vote cast before 15mins has a bit of a penalty to it, as before that time they are forfeiting a piece of their curation rewards pie.. but they also need to get there first. So many individuals forfeit this CR just to be there first, but when curation is now worth *more* they will be throwing away a good return and will most likely change that behavior. So when all the popular posts now become a race to the bottom.. as the race to become first now means you are throwing away rewards.. and the earlier and earlier the votes are cast, the less ROI they receive. The goal is that at this point it will be more profitable to find posts that don't have a large number of votes on them, aka the undiscovered gems. The idea here is to encourage the voting of the minimally rewarded content, as that is where the best profit will be. This could mean an increase to those content creators who go relatively unnoticed or unrewarded, as now it is actually beneficial (and profitable) to vote them.
### TDLR for Part Two - The EIP The EIP is a proposal consisting of 3 components designed to work together to get the desired effect - Improve Content Discovery while discouraging negative behavior.
#### My Thoughts on The EIP? Many think I am against the EIP, I even was accused of having "resentment".. I am not either of those things. What I do dislike is how this is coming to be as well as the push to include so many economic changes within one hard fork when we cannot know what affect they will have. With all that aside though, I believe Steem needs an overhaul. I believe we need to encourage individuals to invest in STEEM and contribute in a positive way to the Steem ecosystem. That means we need to give them a reason to, that benefits them. I believe that having a system where we depend on altruistic behavior does not work, and most definitely is not sustainable. I believe we need to reward the behavior we want to see with our upvotes as well as our downvotes and make it actually profitable to contribute to the ecosystem in a positive way. I believe The EIP is an attempt to do these things. I also feel it is important to note that we don't know that these changes will have the impact that is desired, and we won't know until we try them. As there is no way to predict human behavior, all we can to is attempt to design a system that encourages the behavior we want to see.
--- # What Happens Next
### - Test Net Currently Steemit inc has a test net in place where witnesses and community members are testing the proposed code. Discussions are still being had about details, but at this point I believe they are as stands with the idea that further changes can be made when needed. ### - Hard Fork Date Scheduled When individuals feel the testing is sufficient, a date for the hard fork will be released. ### - Consensus On the scheduled date of the HF, there must be a consensus. Which means 17 of the top 20 witnesses must "approve" or "agree" to the new protocol by implementing the code, which will migrate the blockchain to the new protocol. Then and only then does the HF go into affect.
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# What does this mean for the community? I think it's important to note that Steem in itself is an experiment, and that is not a negative thing. We are creating an economic society that has never been done before. We are doing revolutionary things... and with anything that has never been done before, there will be trial and error along the way. But without the courage to try new things, explore and experiment, we will become stagnant and *not* be a part of the revolution. **I believe we are attempting to work towards something better, and these changes are part of that.**
### What to expect While no one can "predict" what things will look like after the HF, I think it may be helpful for the community to just have a possible "idea" of what it will look like and what the "hope" is. **Author Rewards** With the implementation of the SPS and 50:50 component of the EIP, author rewards percentage of the pool will be decreased somewhere around 42.2%. The goal or idea is though that with the combined components of the EIP taking effect, there will be less spam taking rewards and more individuals curating (as it's now profitable to do so). Which could mean even though the author rewards percentage is lower, the reward pool will be bigger (less abuse taking it) and therefore the actual rewards an author receives will actually **increase.** I believe these changes will take time to balance out, as with any changes, so I personally think we should prepare for an immediate decrease in the post payout we see. But to keep calm and let the system begin to take it's new form. It is my hope that over the few weeks after the hardfork, authors contributing positively to the ecosystem will begin to see their rewards increase again. *This is the goal.* **Curation** Do I believe that large stake holders who have been relatively inactive or in "set and forget" mode will all of a sudden start manually curating? **No.** Sorry, I just don't see that. **BUT** if it is actually profitable for them to delegate to curation groups or follow manual curation trails, then why wouldn't they? It makes sense that individuals will always act in their best interest, and if it is in their best interest to use their stake to curate content (on their own or through a trail), it seems logical that some may do just that. *That's the hope.* This also applies to small accounts who are posting spam daily just to farm rewards, with the downvote actively being used to fight this, it will now be in their best interest to do something else... and curation is a possible source of revenue. **Downvotes** I think the community is scared of this aspect and I can understand why, as downvotes have been used in an abusive manner in the past here. But I actually think that individuals need to consider what the majority does here rather than a few and when you begin to think that individuals will do what is in their best interest.. knocking down some of the abusers that are essentially taking rewards from everyone else is beneficial.. and with the downvote pool, they now no longer have to give up ROI on vote casts to fight it. I believe the first week will be a shit storm, I am not going to lie.. I think it will get a little ugly.. but I don't think "average" users have anything to worry about, as the targets will be set on bigger accounts. I believe the trending page will get a bit of a shake up, but only on the aspect of bid bot abuse. I believe DRAMA will moon, so stock up! **My Advice?** Relax, stay calm, don't panic if a bunch of whales are downvoting each other as quite frankly that just means more is going to the rewards pool that will be allocated to...who? **The Content Creators!** It's the way the system was designed.. consensus on rewards through up and downvotes, as we all share that inflation pool. So, continue being you, keep doing what you do and let the dust settle. Then we can establish where we are, and decide on the most beneficial direction going forward.
The Steem Community is strong, and we have survived 20 Hard Forks, we will survive this one too and hopefully thrive. *That's the goal.*
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I hope this post is helpful. My goal here is to simply provide the community who maybe want less of a "technical analysis" style post and more of a "friend to friend" style conversation. My answers are based on my understanding and opinions on the proposed concepts, and should not be taken as anything more than that. (I do want to thank those who have put up with my constant questions and debates at an attempt to fully grasp these proposed changes and their goals. Including themarkymark, Eonwarped, Smooth, Crimsonclad and others.) If you have any questions or want to yell at me, please feel free to do so in the comments. :)
Much Love and Steem On, Justine
*If you appreciate my contributions to the Steem ecosystem, please consider voting for our community focused witness [Here](https://app.steemconnect.com/sign/account-witness-vote?witness=c-squared&approve=1)*

**Edit-** I will be promoting this post using the [Steemium Promotion Service](https://steemium.com/#/promotion) to ensure it is seen by those who may need it most. I have spent 100SBD to do so.

gdwcoins