Concentration of votes

General Discussion
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Two weeks into decentralization, one major problem we’re facing is the concentration of votes. This leads to all sorts of problems from skewed reward distribution, excessive inflation, to the rich get richer phenomenon etc. Besides educating the public on the importance of even vote distribution, as P-Rep teams we can also help mitigate this problem by collaborating on a few efforts. Let me elaborate,

  1. Lowering i_rep. This is the first decision we made, but we can’t make much impact individually. We have lowered i_rep to 40,000 for the time being (note that each P-Rep can adjust ±20% of their i_rep from the previous term). The rationale behind lowering i_rep is twofold: first, it has a much greater impact to the higher ranked teams, sort of like taxing heavier on the rich; and secondly it can control to a certain extent w excessive inflation rate, before inflation is necessary. We want good inflation that increases growth and ultimately drives our ecosystem to a fuller capacity. Ie. the additional issuance should be properly spent for things like building dapps, marketing initiatives, node infrastructure etc. We don’t want bad inflation that devalues the dollar for poor purposes such as rewarding voters or re-staking to your own nodes. I guess the mentality is that, we’d much rather see teams with full intentions to build and request for funding (or increasing i_rep), than having teams with excessive ICX lying around looking for good ways to spend.

  2. Reallocation of I-Score. ICX_Station’s original plan was to spend 10% of its earning on staking, this however was a projection based on a more evenly distributed vote. Our delegation rate today is 9% of total supply, the reward rate is excessive for us at this point. We plan to reallocate more of our earned I-Scores to lower ranked but deserving teams. This also requires a collaborative effort to make a greater impact, us alone can hardly cover all the good teams out there.

  3. Grants Program. We also proposed the grants section on this forum to fund teams (not necessarily just P-Rep teams) directly through a grants program. For details of the application process visit this category: https://forum2.icon.community/t/about-the-grants-category/170
    We hope with the grants program in place, teams will be able to help the projects directly before DBPs and EEPs kick off operations. Many teams have also expressed interest in funding other teams through grants program, we’re hoping to see some collaboration here as well.

We also have a few other plans in the pipeline currently in discussion, including acceleration and incubation, which will also help us fund other teams directly with our rewards.

Love to hear your thoughts on other improvement ideas.

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We, for instance are in process of establishing a legal entity to cover our operation and are unable to touch any of the income in compliant manner until this is finished. Before then, we restake 100% on us.

I imagine, ideally P-Rep would spend 80-90% of its income to expand the ecosystem - whether that’s by own work, or giving out grants / subcontracting. However, in current conditions (especially in ranks 17-22) any P-Rep actually spending its ICX risks falling out of Main P-Reps …

Honestly, I fail to see how ICX Station is currently unable to allocate its earnings. You currently make less than $40k / mo in SF area, have 4 people (fulltime employees?) on the staff and your purpose is to accelerate startups? Typical pre-seed investment is in $10’s of thousands and presumably, so would be total of your monthly salaries. Makes it extremely difficult to even combine those two.

I do not currently see a need to lower i_rep. We receive $9k / mo and risk falling to half of it once we actually start investing. Hiring a single top dev talent here, in Czech Republic, would cost us ~ $9 - $12k / mo in total employer’s cost.

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Let’s consider your situation specifically, with some hypothetical numbers. If we were making 40k per month in rewards, and you making 10k per month. Combined we’d have 50k per month, assuming even distribution, both of our teams would make 25k each. This in my opinion is a better (not perfect, but better) scenario than us having 40k and you having 10k. If I can completely dictate the numbers, it’d come somewhat close to these figures, based on your contributions at blockmove.

Realistically speaking though, having a high i_rep won’t get you anywhere near it (highest i_rep is hardcoded to be 90,000 btw, which won’t even double your current earnings, and that also requires every top 22 to vote 90,000 over time). i_rep with its current design, unfortunately only works as a whole, so increasing/decreasing will always hurt a party or two.

Point is, we need better reward distribution, and that either comes with balanced votes or re-distribution of rewards. Re-distribution obviously gets the job done much faster, so that’s what reallocation of I-Score is for, and that’s what the grants program is for.

With that said, we’re all under different positions here, team size differs, geolocation is different, cost of living is different, offered domain of expertise is different, how do we quantify and value each contribution? We can’t. At some point we still need to make subjective calls, iconists are already making the calls by voting to their teams, we’ll be doing the same based on our evaluation and our I-Scores will be distributed accordingly. This can never be perfectly fair, but it is what it is, we can only try to improve it.

Now if we’re looking at the actual rewards, sure we can easily put the $40k into good use, but the mentality is, I’d rather have proposals thoroughly discussed and approved, before requesting for the funding. ie. I’d rather not be compensated in advance for future work, plus i_rep can change everyday too. Don’t get me wrong though, I am only against poor reasons to inflate, but if its inflation for good reasons, let’s issue ICX as much as necessary.

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Just to be clear, I’m not for increasing i_rep either. I just find it alright where it is right now and prefer to increase our $ rewards by gaining more votes / ICX appreciating / protocol level change in distribution.
We’re thankful for what we currently receive and can use that to build operation with solid foundations. Hiring best of the best is something I’d like to be able to afford further down the road though.

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I think that the issue is quite different here. You are absolutely right that the centralization of votes is a problem, however the main problem with that is that a major part of those is wasted at the wrong place

Im also not sure if the ‘grants’ system would help as that further incentivizes the centralization of votes -even if the top preps do not have anything meaningful to work on, their are re-delegating a part of their rewards to the same competitors that they have won their votes against and would take the credit for financing their work. It could also work the other way around of course - they are being pressured into ‘granting’ to the lower ranked preps and do not execute the plans that they were having, but get accused of not being able to utilize their rewards.

Imho the grants system is a strange one and its not the proper way to deal with the centralization of votes given the fact that with it the preps are incentivized to just fight for votes and are getting rewarded if they get them, no matter if they contribute afterwards or not.

What I think we could do to improve the proper allocation of votes is:

  1. Contact Icon Foundation - if I remember correctly, one of their pre-decentralization promises was that they will only go in with 20 mil icx delegations and that they will advise all Iconists to not vote for them so they could stay at 20 mil. They have also advised that in case that this happens and they get extra votes on top of that, that they will re-distribute a part of their 20 mil delegations to other preps, so they could stay at the same level. They are now at 27 mil so its probably a good time to address that

  2. Force the inactive preps to update their plans. We have Symmetry (6 mil) with zero contribution plans towards the system. We force them to present such plans or free up those votes. We also ask all preps to present short- and long-term plans for the system and confront the ones that do not plan to utilize their rewards. If they refuse to do so or stall too much, we discuss further measures to free up those votes as currently any time lost means lost value to the system

  3. Discuss, design and vote in an improvement of the delegation system. I think that I saw Russell (Ubik) yesterday discussing a tiered reward option - that could be a nice solution if we design it well. We might need to re-do some parts of the system so we can ensure that no matter what the distribution of votes is, all preps are getting rewarded in a fair way for their contribution and are not abusing the system for personal gains.

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Overall I agree with your assessment of the problems but in my opinion the proper fix is to be designed at the protocol level. Points 1 and 2 are quite centralized solutions to the current situation. Point 3, I couldn’t agree more.

As for grants, I think you must have a misunderstanding of the Grants category, or maybe I am misunderstanding you. The grants category is meant to be a centralized version of the EEP until that is built. Anybody can apply for a grant and anybody can fund a grant. This is not the trading of delegation in exchange for work, it’s the payment of a grant in exchange for work on a specific grant proposal. This is a fairly common concept. (example 1, example 2, example 3).

As for fixes at the protocol level, I’m going to flesh out potential short term and long term enhancements to the current system in a separate thread specifically dedicated to this topic.

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Maybe Im not understanding the Grants correctly (I sincerely hope so), so I will try to explain my understanding of it and what I see wrong with it.

  1. On theory this funding should be from anyone to anyone, but in practice, there is no incentive for the Iconsists to donate (as that is what this essentially seems like) their money for a project, so I expect that the funding of Grants will be done by preps and/or the Icon Foundation/Iconloop exclusively.

  2. The preps at top positions are put in a pretty awkward spot by this initiative. They have earned delegations which should be used for the improvement of the system and because of their plans and capability to do so. Ignoring the grants option could create a backlash that they are hogging the system improvement resourses, funding them might result in them being accused of subcontracting their resourses

  3. On the other hand, this could be used as abusive PR - if a prep has funded a Grant, if the project is successful, it could be used as an achievement for the funding prep: “(we have almost nothing else but) we have funded the X project, which lead to…”. If its not, it could be used as an excuse: “we have funnelled a large part of our resourses to the project of prep Y, but they werent able to put them to good use - we will know better from now on…”

  4. Working with Grants would give little to no consequence for not contributing and would shift focus to vote gathering. If you manage to get votes, you are funding the same projects that your competitors have proposed and did not get votes for and you get rewarded by even more voter trust if they are successful. That is a huge conflict of interest imho and sends the wrong message.

The difference with the other chains imo is the ‘contribution’ element that should be an integral part of our chain. This is what also creates a conflict with the Grants section though - as it removes the need for a prep to contribute if they got good PR

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Honestly I agree with you, but I see your qualms as symptoms of another issue. The Grants category is and should be viewed as something genuinely altruistic. A place for people seeking funding to get funding. The Silicon Valley of the ICON Republic, and a decentralized version of this will be the Contribution Proposal System.

But given the current structure of IISS I could see your concern of this becoming politicized. P-Reps are driven to get more votes, ultimately that is what is most economical at this point. This is something I would support changing. Having said that, all I care about at this point is getting people building on ICON and getting this ecosystem going. So concerns aside regarding politics, I still want to see the grants page flourish.

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I agree with you completely - I am very happy that there is an option for extra incentives to be funded and I also sincerely hope that this with be done with the best intentions in mind.

I have expressed my concerns as I think that it is important that we are prepared for as many of the possible pitfalls as we could and take measures to prevent them, instead of hoping that they will not happen. I trust that by us being aware of the potential problems, we could take actions in advance and not have to stomp out multiple wildfires in the future

Hope for the best, prepare for the worst is imo even more true in decentralized structures, where if something goes wrong, it could easily spiral out of control and there is no centralized entity to stop it.

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