Hey everyone, I wanted to write a short and clear explanation of how things work now since the EIP, mainly to have a post to link to those wondering and complaining about downvotes on their bid botted posts. After drawing this on mspaint real quick I realized that I suck at infographics so will just attempt to write under it as clear as I can how it affects everyone involved with the curve the increased curation rewards and why we need to not allow profitable bid bot votes if we want honest curation and content discovery to work on Steem.
Bear with me.
Alright, so let's assume for a minute that with 50/50 post and curation rewards most accounts are now incentivized to properly curate instead of self-vote low effort posts to reach the ROI they used to have. This is assuming they aren't actively vote-trading which was similar to delegating to a bid bot or self-voting 10x per day pre-EIP.
We have 10 daily votes so pushing out a few low effort posts daily and those not getting much more votes than your own is now not worth it. Curation sniping (voting on popular posts by front-running other votes at 3-4 minutes) even though it's the lesser evil is something that many do and over time is a self-correcting process when the front-running reaches it's limits and people voting after either stop or you reach a point where you have to vote so early that the curation rewards are just not that good anymore than voting on most other posts instead. Checking tools like steemworld.org that shows upcoming curation rewards and their efficiency (return based on steempower+voting strength) you will find out that by doing curation sniping you can earn better returns that pushing out a few posts that not many will reward, this again, changes if you are actively votetrading in voting rings which undermines the EIP, content discovery and gives you an unfair advantage of visibility no matter the content, more about that later.
Now about the important part and to address all of you wondering why you are getting downvoted on your posts that you boost up by purchasing bid bots. Although a lot of steempower has been undelegated from bid bots there is still a lot that's left there passively/unchecked/unaware of the changes.
So let's assume for simplicity that there is only 10 million steem power in bid bots and 10 million steem power in honest curation and that the rewardpool gives out rewards to those 20 million combined steem power daily only.
Bid bots main drive over the years has been that they sell votes for promotion/advertisement. They used to sell votes in bidding windows and still do if you look at steembottracker.com, the difference is that if enough people wanted to buy votes withing these windows it would end up costing them. Not much but they would not end up making a profit either way and that would be successful advertisement, purchasing advertisement is not supposed to make you a ROI on top of the content you advertise, that is completely unsustainable but has occurred for years on Steem.
Now that there are not that many eyes on Steem and especially with free downvotes there are not many using bid bots for actual promotion. Meaning to purchase the bids early so they get a lot of attention on hot and trending on steemit.com, they don't do this because they know they will get downvoted for having purchased that spot. A very low amount of accounts do this, one example lately is @dtube who wanted to advertise their token sale and to avoid getting downvotes they sacrificed their post rewards which does not take rewards from every other author on the platform. This was also a successful advertisement and something the bid bots are going to have to strive and market themselves to to get.
The wrong way to use bid bots is to only use them to gain a profit from the vote. Bid bots are still selling votes for a profit, why? Well because they still make much higher returns than just curating.
Let's look at honest curators, if they do a good job curating daily with their 10 posts they can hit an APR of 15% approximately. They've either used their own voting power to vote on posts that the majority of other stakeholders agreed deserved the votes and voted after, it didn't receive a lot of free downvotes thus didn't reduce the curation rewards and at the same time content discovery and rewarding valuable content worked in this scenario.
For delegators delegating to bid bots though, they received a bid for their vote, say they received 100 steem to give out a 100% upvote on a post. That post now has a pending payout of 220-250 Steem (because they are giving out profitable votes) if this post is not downvoted, the buyer will earn 110-125 steem on their 100 steem bid, not only that but the bid bot will receive curation rewards on top of the 100 steem. This means that the delegators delegating to the bid bots will receive part of the curation rewards and part of the bid which will outperform honest curation.
The reason bid bot owners don't decrease the ROI of bids is because they want this, most of them they take a cut on each bid and curation rewards. In most cases they don't even care if the posts got downvoted or not because they still made their % of the bid but of course they want to keep their customers coming. If the customers don't keep on coming their voting power will hit 100% and they will be forced to "curate".
So users purchasing bid votes will enable them to continue their services, they will not be looking into joining the EIP and attempting to curate instead, there will be no interest from investors to delegate to curation projects like @curangel or @ocdb instead which give returns on curation rewards if they can earn a higher percentage from bid bots who receive both bids and curation rewards.
Many bid bot owners have thankfully understood what this is about and have either switched to curation or plan on doing so and only sell nonprofitable votes that are only meant for promotion. I have also let many of them know that I personally have nothing against them selling votes for promotion, but it has to be for promotion's sake. Them being unprofitable and voted on early for the attention they need as advertisers, then let the community know if they want to downvoted it on top of them being nonprofitable based on the content or what they are advertising. This is the future where I can see promotional bid bots co-existing with honest curation.
Of course all of this can also be easily made worthless if Steemit.com decided to remove trending or the current trending and how it works as many would then not feel the need to promote their posts in the first place or would go back to using the promoted feature steem has on the blockchain level, by sending steem/sbd to @null and being featured on the promoted tab.
I realize there are some people who feel the downvotes are unfair but most of them seem to not understand that them buying profitable votes and beating the curve tax is unfair to the rest of users who are not purchasing votes. In general from what I've seen most bid bot votes that we have been downvoting have been for the sole purpose of receiving a profitable vote and ending up with a profit as the content has been questionable at best and almost always a couple days late, meaning it was never meant for promotion/advertisement.
We also understand that it's hard for certain bid bot owners to let go of the ROI they were earning, even though with the increased curation rewards and who knows how much they are keeping from that or returning to delegators you'd think they would be okay with the change but some keep fighting and justifying that promotion needs to exist but don't want to adjust to making it cost the buyer from the beginning. They say that downvotes should be used to make it cost the buyer but I'm under the impression that they should cost from the beginning because there is plenty of downvotes to still be used on voting rings and other shady voting/value extracting activity that we could use them on once we are done with these bid votes. If anything they can always be used on disagreement of rewards and normalizing them. Every downvote brings back those rewards to the rewardpool which in turn go back to everyone else earning that week and you know how the old saying goes, if you aren't asking someone why they are upvoting your posts then you also shouldn't be asking them constantly why they are downvoting them.
Now of course there is also a lot of retaliation and abuse to the free downvotes and I am hoping we will have some solutions to that in the near future as well. It's not easy to run a decentralized platform and make it as fair as possible but we've learned that not having any downvotes is just a race to the bottom cause those in power and in position don't seem to care much about the value of their investments as long as they can continuously extract value from new investors and speculators coming into steem. They ma as well have given up on their current SP from ever being able to sell it at for anything and have either already made a huge return or just don't care what happens to the ecosystem anymore and will continue to extract whatever they can. That's why we've needed these downvotes and we've needed them a long time ago. Let's try to make the most out of them and use them well for the future of our currency and to make Steem as unique as possible from other dpos/pos coins the way it was meant to be.
Feel free to discuss in the comments what you think about the EIP, bid bot votes nowadays and how they can co-exist in the future and maybe the best way forward.
I'm hoping this post will be able to be used when explaining downvotes given to bid vote purchasers who aren't using them for promotion but mainly to benefit of the profitability.
Thanks for reading!
PS. If someone would like to make an easier infographic post explaining how the effect of bid bot votes and extraction from the rewardpool compared to honest curation, etc. I'll gladly reward you with a vote and resteem if you are up for it and managed to understand what I'm talking about in this post. :P