Steem is lessons learned from BitShares. But we seem to have gone from one bad extremity to another bad extremity, while the ultimate solution might be a combination of those two.
BitShares, since the very beginning, was configured the way a mature company operates: costs are aimed to be balanced with expenses.
It turned out to be a big mistake. This approach has effectively stifled BitShares growth, as funds for further development and expansion quickly dried up. The system was meant to be profitable from day one which is an impossibility. It is analogous to treating a baby like an adult - it can never work.
We've learned our lessons and here we have Steem as the glorious outcome.
But did we really draw the right conclusions?
Steem is configured the way a start-up company operates: rapid expansion is the priority, regardless of the costs. It's like launching a nuclear reactor: you need to put a lot of energy to start the process.
And here is the problem: we seem to be making yet another mistake, similar in nature to the one made with BitShares. This approach assumes Steem will be constantly in the start-up phase - burning its resources like crazy for the rest of its life. For most investors, this is psychologically quite unbearable, even if the economic theory is sound, as it implies that Steem is never meant to mature and be profitable. Instead, it looks like it is meant to be continuously expanding, which, as a concept, is totally unfamiliar to our daily experience.
The actual lesson learned from BitShares should be this: the system must not be fixed, it needs to evolve in time. Infinitely staying in the the start-up mode is equally destructive as applying a mature business model to a start-up.
What's the solution? Steem's inflation rate needs to gradually decrease as time goes by. It doesn't need to hit zero, but it needs to be asymptotically aiming at zero. This gives the signal that the business model is meant to mature and be sustainable in the long run.
And this sustainability does not need to be factual. Reality does not matter. Perception does. Investors are human beings: they need to see an end goal which they are able to perceive as sustainable. We can endure something negative for a long time, as long as we know there is going to be less and less of it.
Bitcoin got it right: decreasing inflation is a feature which has been absolutely crucial to its success. Bitcoin's genesis was an experiment in collective faith. It's safe to assume this experiment would have never taken off, if it had been configured by Satoshi the way Steem is: with never ending inflation.
If we keep the current setup, our main premise - if Bitcoin makes sense, so does Steem - loses a lot of its weight. I'm not saying infinite inflation is fundamentally flawed (I don't know this) but surely this is an economic model which nobody has ever attempted before, not even Bitcoin.
If anyone can give a valid reason why we need never ending inflation set a fixed level, please let me know. Otherwise I conclude that we shoot ourselves in the foot (by scaring off investors) while we achieve nothing significant in return. If Steem is to survive and market cap grows, there will be plenty of funds to distribute, even with inflation decreasing and close to zero in the very long run.