After the events of season 2, Billy keeps his promise to leave Max and her friends alone - only, he doesn't include Steve on the list of Max's friends. He starts to bully and belittle Steve, increasing in intensity over the school year, until Steve is firmly ousted from any and all of his friends and allies at Hawkins High. Isolated and tormented, Steve gets desperate to escape from what feels like a never ending deluge of trauma.

+Steve's allies are concerned, but Steve can barely admit that he's being bullied, much less seek out help from them.
+Billy is a nuanced villain but not in any way redeemed or sympathetic.
++Steve does find some new friends - maybe he meets Robin or Eddie early? Preference to Robin though.
++Steve gets Carrie'd (or there being some major bullying event at prom)