Steem: A Blockchain for Decentralized Social Media

Overview of the Steem Blockchain

Steem, commonly referred to as the “social blockchain,” was designed from the ground up to power blockchain-based blogging and social media platforms. It is the core technology behind popular apps like Steemit and Dlive. Before we dive into the breadth of platforms built on the Steem blockchain, let’s take a look at the specificities of its technology.

The Steem blockchain has a claimed throughput of 10,000 transactions per second (TPS) and a three-second block time. Steem utilizes a Delegated-Proof-of-Stake (DPoS) consensus mechanism that sees 10% of block rewards dedicated to “witnesses,” who are the validators of the Steem network. Unlike other DPoS blockchains, 75% of newly generated staking rewards are sent to a rewards pool that compensates users who create and interact with content on Steem-powered decentralized social networks and decentralized applications (dApps). This rewards pool is split evenly between users who create content and the users who moderate and curate content.

The Steem founding team believed that the platform’s rewards pool model is a better fit for decentralized social media than the micropayments, tips, or paywalls that can drive readers and other users to free alternatives. Further, the Steem model rewards its users for producing, voting, and commenting on content. You can also earn rewards based on how well you moderate content, as well as for discovering Steem apps before they gain popularity.

Steem Cryptoeconomics

The Steem blockchain relies on a trio of native digital assets: steem (STEEM), steem power (SP) and the steem blockchain dollar (SBD). This method is intended to encourage stakeholders with rewards, while still having a unit of account and a stable store of value. The Steem blockchain started without a pre-mine in 2016, and initially distributed STEEM at a rate of around 800 per minute with a starting inflation rate of 9.5%, which will decrease approximately 0.5% a year until inflation reaches a static 0.95% per annum. Let's look at how the Steem crypto ecosystem of assets functions:

• STEEM: The primary asset of the Steem blockchain, STEEM is used as the block reward for its DPoS validators, with the majority of newly minted STEEM being dedicated to a pool for curation and content-related rewards. STEEM is the unit of account and cryptocurrency of the Steem blockchain.

• Steem power (SP): Steem power holders have more influence with their upvotes as to where rewards go. SP holders are also rewarded with 15% of the newly minted STEEM every year, although this specific figure is subject to change. The primary way to earn SP is by staking STEEM for a minimum of 13 weeks. This relatively long-term vesting schedule converts STEEM to SP and is known as “powering up.” You can also convert your SP back into STEEM in installments, which is known as “powering down.”

• Steem blockchain dollars (SBD): Soft-pegged to USD, SBD is intended to be a stablecoin that tracks the U.S. dollar. SBD can be converted to STEEM, and the amount of STEEM you get in return is dependent on market forces.

STEEM Crypto Rewards

While you can purchase Steem-related assets on exchanges or earn them as a DPoS validator, you can also earn STEEM cryptocurrency by investing time and effort in a blockchain social media platform powered by STEEM. The more upvotes you receive, the more rewards you will receive. This crowd-sourced curation is considered vital for user interactions and network growth. The amount of steem power you hold also plays an important role in the Steem ecosystem, with more SP giving you a higher upvote reward payout.

SP holders who vote less have more weight behind each vote, whereas those who vote more often have their vote weight split up proportionally. Upvote recipients earn rewards as an equal split of SBD and SP; this structure is designed to give content creators both an immediate monetary reward and a stake in the network itself. Creators also have the option to receive 100% of their rewards in SP if they choose this payout method.

Free Steem Crypto Transactions

The Steem blockchain leverages free transactions to cultivate network growth. Steem’s creators believe there should not be barriers to entry for users interacting with and commenting on content on a decentralized social media platform. Studies have shown that even microfees can produce user anxiety and deter potential adopters of blockchain-based social media platforms from engaging. Further, even blockchains with microfees (under $0.01) that enable micro-tipping tend to have fluctuating transaction fees that could preclude content-tipping when fees rise. Steem cryptoeconomics are partly based on an understanding that users demand predictability when it comes to costs, and that many users are simply accustomed to these types of services being free.

Since there are no transaction fees to deter spam attacks, the Steem blockchain utilizes a bandwidth-limiting mechanism to prevent such occurrences. Users have a limited amount of bandwidth each week to participate in actions such as commenting, reacting, or transfering coins, while viewing content doesn’t consume any allotted bandwidth. Users with more SP have more bandwidth.

What Is Steemit?

Sometimes confused with the Steem blockchain, Steemit was the first dApp on Steem. It allows users to earn crypto for creating and curating content. Launched in 2016, Steemit is the longest-running blockchain-based social media platform. Steemit is used worldwide, and while popular with English speakers, also features content in other languages. A significant portion of Steemit users produce Korean content.

In March of 2020, Justin Sun, the CEO of TRON, executed what’s often referred to as a hostile takeover of the Steem blockchain after a partnership between TRON and Steem resulted in Sun owning a majority stake of the network’s tokens. Sun then blocked a user-led soft fork of the network. This led many developers and stakeholders to leave the project, some of whom transitioned to a new Web3 blockchain called Hive.

Other Steem Apps and dApps: Past and Present

While Steemit may have been the first dApp on Steem, it was far from the last. With a goal of supporting an expansive decentralized social media ecosystem, numerous other platforms jumped onto Steem to enter the competitive blockchain social media landscape. Here are some Steem dApp honorable mentions:

• D.tube: Perhaps the first blockchain-based social media video platform, D.tube positioned itself as a decentralized YouTube. D.tube was originally built on Steem and the InterPlanetary File System (IPFS), and rewarded users in STEEM for participation. Once established on Steem, D.tube transitioned to running on its own blockchain called Avalon, and now uses it native dtube coin (DTUBE).

• Dlive: Dlive is a video-centric blockchain social media platform focused on livestreaming. While Dlive also emerged from the Steem landscape, it has gone through multiple ownership changes and has switched chains several times. Dlive first migrated to the Lino blockchain and then moved to running on TRON.

• TravelFeed: TravelFeed is a curated travel blog that allows creators to monetize their content and even use their own domains. Originally on Steem, TravelFeed is now running on the Hive blockchain.

• 3Speak: A livestreaming and video platform prioritizing free speech, 3Speak was built on Steem and the IPFS. Like many other Steem dApps, it migrated to the Hive blockchain following the TRON takeover of Steem.

• Dlike: As a dApp for sharing social media posts, Dlike has sections for trending and new content, as well as the ability to filter by topic. Somewhat similar to Steemit’s layout, Dlike can be thought of as a decentralized amalgam of Medium and Instagram.

Things Are STEEMing Up

While it was designed as a blockchain-based social media platform, Steem’s feeless transfers and high throughput have attracted dApp developers across decentralized exchange (DEX) platforms, gambling dApps, blockchain-based games, decentralized crowdfunding, and a host of other applications.

While many of these dApps have since migrated to their own chains, the Steem blockchain still supports combined assets with a market cap routinely in the several hundred million dollar range. While many Steem-based projects have migrated to their own chains, such a process is somewhat common in the crypto space. For example, many of the projects initially built on Ethereum have found homes on other chains, or on their own. Despite the controversy surrounding the 2020 takeover by Tron, many projects, dApps, and enthusiasts remain committed to Steem and its ever-growing ecosystem.