The goal of this post is to start a conversation with the community and P-Reps. It is not a finalized proposal, but I hope that a fully specified IIP will be written following the output of this discussion.
This is not a proposal from the ICON Foundation. All ideas shared below are the result of aggregating fragmented short conversations with the community and P-Reps, as well as our own understanding of the incentives imbalance currently in place in the network.
Special thanks to @Benny_Options for drafting this text and laying down these ideas in clear.
Decentralization is one of the main goals of the ICON network. Unfortunately today the network is suffering from a strong vote stagnancy, and voting is a core concept of a DPoS consensus.
This is not a good thing for the network because:
- It discourages new P-Rep candidates to participate and compete and so the network does not have many nodes securing it
- While every nodes have very similar costs and produce similar amount of work (specifically, producing/validating blocks and storing a copy of the blockchain), their reward is vastly unequal
- It concentrates most of the delegated ICX into a few nodes at the top, making some nodes unprofitable while others excessively profitable
Impose a maximum percentage delegation per P-Rep node of 2.5%.
setDelegate function will first check the percentage of votes held by the P-Reps receiving delegation. If the P-Rep is above 2.5% of all delegation, setDelegate will revert.
In English terms, it means that a P-Reps cannot receive additional ICX delegation, if its current delegation represents more than 2.5% of the total delegated ICX on the network.
By limiting the max delegation to 2.5%, it redirects newly delegated ICX to look for another node. Therefore, sub and candidates P-Reps will receive more delegation. This encourages more ICONists to run a P-Rep node as it’s easier to compete with top nodes. There would be a minimum of 40 quality nodes securing the network as a result (2.5% * 40 = 100%). It also indirectly encourages ICONists to select their P-Rep in a more attentive manner, rather than choosing the top nodes by default.
Delegated ICX will be spread more evenly across different nodes. Therefore it increased decentralization (see the next section for a counter argument).
There is no economic, business or security purpose to having one node earning significantly more money than another node for the same amount of work and expenses. All P-Reps’ costs and work are very similar when it comes to running a node, therefore the reward for doing so should also be similar.
Upon reaching the cap, a P-Rep operator could deploy another node, incurring additional cost to access additional revenue. P-Reps who are looking for additional income could also build products or services on top of the network for this purpose.
It also makes ROI much easier to predict over a long period of time. P-Reps (and those interested in deploying a node) would compare the income generated by reaching the delegation cap to the cost of running the infrastructure.
- sICX is now a service that delegates to p-rep nodes. This service would need to be adjusted.
- Wallet UX will have to be updated to provide a smooth voting experience without voting failure.
- Top nodes will deploy multiple nodes in order to continue maximizing their reward, which could become a threat to decentralization if the top 22 P-Reps (main) are controlled by a few entities.
Please share your feedback on this topic.
Thank your for reading.