IISS 3.0 Proposal

Governance
#23

Decision: Approved

Comments:

Our stance from the beginning is that to improve the DPoC model, all ecosystem problems need to be addressed. We have a strong belief that a combination of IISS, CPF and PoC variables is needed to solve the centralization and vote distribution, transparency and accountability and finally the voter’s apathy.

The proposed IISS is a step in a good direction and while it may not be addressing all of the problems, it is a way forward and a sign that Foundation is aware of the situation and most importantly willing to act to improve it.

CPF

We have strong support for a higher fee as we believe a strong initiative is needed to divert the P-Reps and contribution seekers to the CPF. CPF is a backbone of the system and it will stimulate teams to provide a better, more transparent and accountable project and overall business plan.

The proposed changes to the fund fee did surprise us a lot, especially after going through the numbers. To be honest, we were expecting more of the cosmetic changes not a solution like this. We are positively surprised by the bold move of foundation to go straight after the B1 rewards and redirect them into the fund. This has our full support as it is a clear sign Foundation is ready to do what is right for the ecosystem. Well done guys!

Bonds

The bond requirement has our support from the start. It is a great initiative to rule out a lot of potential bad actors from the game. We were supporting the higher bond requirement, the one that relates to the higher period needed for a node to generate the required amount of reward ICX. We don’t mind going up to 12% bond which would represent a year-long reward commitment. Why such a high bond %? The only reason is to provide extra stimulation for the P-Reps to go through the CPF to fund their projects. As mentioned before, we don’t lack the funds, we are lacking good ideas and the projects.

Governance Slashing

This may be the only part of the proposal we are unsure about. While we support removing the 6% burn fee from the voters, we are unsure if the governance slashing is the right way to go. We have a strong belief a DPoC model should be more focused to stimulate the contribution and not try to penalize the lack of it. We will look forward to seeing other available options to get around this problem. Our best intention would be to stimulate the passive voters to be more included in the voting process and let them penalize the teams absent from the governance process.

To include the voters, an indicator of the team contribution needs to be presented to passive voters clearly and visibly. We support the idea of adding the PoC indicator to the wallet directly related to the P-Rep list. If CPF does work in an intended way, it will be much easier to track and evaluate contributions.

In the current IISS 2.0, teams can use your money to work on something only they know, for the salary they choose, with the unknown budget to deliver something they want.

In the current IISS 3.0, teams will seek approval to use your money to work on the project they propose, for the defined salary with a defined budget, to deliver something network needs and approves.

5 Likes
#24

Request for more information

I have some questions on the contribution proposal system:

  1. How many proposals do we expect to have on a monthly basis once this system is implemented?
  2. Will P-Reps be responsible for verifying the activities of all of the on-going contribution efforts on a regular basis in addition to awarding new proposals? If so, will P-Reps have votes to continue or DQ contribution proposals that are ongoing activities?
  3. Will there be a scoring guide for this system, or is it a simple yay/nay vote based on P-Rep opinions?
  4. Will it be ICX based (current proposals are USD based).

Thank you.

1 Like
#25

Approved.

Thanks for all the effort in setting up an improved system and we look forward to hearing more details.

3 Likes
#26

Hello, thank you for asking this question.

  1. So far, on average, 5 proposals are registered each month. If the system is more active, the number will increase further. It’s hard to predict the exact number at the moment.

  2. Yes. Main P-Reps will have responsible for verifying the activities of all of the on-going contribution efforts on a regular basis. Each proposal must submit a report to prove their progress regularly and Main P-Reps should check the report and vote to assess the repost. This is the same as the current ICON Community Grant Program. We will provide the yellow paper with more details soon.

  3. The ICON Foundation will provide a framework for assessment. However, it is just a reference for P-Reps. Main P-Reps will have the option to vote to approve, reject or abstain. More details regarding this question will be included in the yellow paper as well.

  4. Will provide more details in the yellow paper.

Thanks!

2 Likes
#27

Thank you! That helps.

Also apologies if this has been asked but I did not see it here. If I’m understanding correctly, a sub p-rep with 1% of delegation would make the same rewards as a main p-rep with 2% of delegation, since 50% of rewards from the main would go to the contribution fund? I know it’s a very specific example but we are considering some of the specific scenario cases right now.

1 Like
#28

Check out the Whale Analysis Model and scroll down to row 32 where it says “Percentage of the Vote Received”. Cell B37 is how much a P-Rep with 1% delegation would earn, and cell B41 is how much a P-Rep with 2% delegation would earn. It doesn’t matter Main vs Sub. You can hit me up on telegram if you have more questions about the model, happy to walk you through it.

2 Likes
#29

Thank you, Scott. Appreciate the detailed answers. We did have one more question that came up within our group, if you don’t mind.

Do you know if the bond will earn rewards during the lock up period?

1 Like
#30

100% APPROVED It’s great to see everyone working together for a better ICON.

3 Likes
#31

Great ideas in general. Only concerns are;

(i) Will the 6% be enough to prevent vote concentration at the top? How about we start from 6% bond requirement at 1% delegation and use an exponential curve to determine the bond requirement as delegation increases. This will make it harder for a few teams to control all the votes.

(ii)How long will implementation last? If it takes too long, it will defeat the whole purpose of having a bond in the first place as teams ranked very high can just raise their I-rep score now to gain more rewards to pay for the bond further leading to centralization of votes at the top. P-rep teams should go through the CPF if they can’t afford the bond. That is the whole purpose of DPoC right? We all want to see contribution to the network, not entitlement.

3 Likes
#32

Thank you Scott.
Will do.

1 Like
#33

Decision: Reject

Comment: What you are suggesting will disincentivize ANY party to run a Main P-Rep node and as a result will lower the security and reliability of the chain. If Main P-Reps start dropping votes, because they will not want or be able to put up a high bond, it’ll make it much easier for someone to overtake the network and possibly drain the 1M ICX from CPF.

Bond requirement – 6% is too high and teams that actually have been utilizing their rewards instead of hoarding them will have a hard time to comply with this – even within the mentioned 6 month period – which might lead to them cutting down their operation to bare minimum and/or maxing out irep to collect more ICX while it’s possible. 6 Main P-Reps already increased their irep in the past day.

Contribution Proposal Fund – moving all block production rewards there is a bad idea. This removes motivation to run a reliable node (in order to receive full block production rewards) and jeopardizes network stability.

You suggest moving half of all P-Rep rewards to CPF claiming this is in ethos of DPoC – but keep rewards of voters the same, while it’s voters who are in fact passive. That is why we’re discussing changing IISS in the first place.

Governance Slashing – you’re adding work to P-Reps (CPF management), while removing majority of their rewards, requiring them to come up with a bond and adding fear of getting the bond significantly slashed on top of that. Awful combination.

8 Likes
#34

There is an economic simulation to show how the ICON Network will evolve in time, in 5-10 years, with the new proposals?

#35

Just to clarify, “bond” is just a word describing the concept of proving to the network that you have a stake in ICX. If a p-rep has 100k votes, it would need to stake 6,000 ICX. The p-rep could vote with this ICX however they want. There was no specific lockup period in mind, it would function the same way as any other Staked + voted ICX.

3 Likes
#36

Understood! Thanks again, Scott. Appreciate the quick turnaround.

I’ll bring back to the team and will reply again shortly with an approve or reject comment.

1 Like
#37

Ubik Capital Decision: Reject

We think the proposed changes are in the right direction, but suggest some changes for our team to approve. We believe the bond, CFP (and contributions from P-Reps), and Governance policies all will positively effect ICON, but request the below changes to approve:

1. Reduce the amount of rewards given by main P-Reps to the CFP: current is based on square root. We think a more conservative approach of raising the % kept by the P-Rep to the 3/4 is more appropriate in order to still provide significant motivation / competition to increase votes.
2. Have block production rewards go to P-Reps and not CFP: Block production is one of the most important aspects of the network, and we want to ensure Main P-Reps are motivated and compensated to maintain high productivity rates, infrastructure, security, and monitoring. Additionally, CFP has no relation to block production, so we don’t think it is fitting for these rewards to be given to CFP.
3. All P-Reps contribute to the CFP: P-Reps who make more should contribute more, but all P-Reps should contribute to the CFP, as part of the DPoC ethos.
4. Ensure the bond can be posted by different wallets, and not specific to any kind of wallet: flexible between ledger, myiconwallet, ICONex, etc.
5. Have a grace period for the bond requirement: skin in the game is important but requiring the full bond right away can turn off teams that may not have the bond right away. We would like to see an option to grow this bond over a few months.

4 Likes
#38

Thanks for your clarification. I do not represent any PREP-team as of now but i am an iconist that cares about our ecosystem because it is something special. Glad to see this open discussion amongst all of the PREPS. I hope and am convinced you guys will reach consensus on this topic.

3 Likes
#39

Reject.

-Arguably the largest driver of a cryptocurrency’s relevance is its price and growth. The current model has shown that it is working and supporting ICON’s growth. Since decentralization has begun ICON has climbed from around 60th position up into the 30s. It has become more relevant, looks safer/stable, and is poised for growth. The recent climbing in the rankings shows that the incentives are currently in the right place.

-Smaller changes could make more sense, be simpler to implement, and would not cause potential stability and planning issues. For instance the problem of ICON Foundation getting too many votes- cap the max vote for each p-rep at 10% of total staked ICX (or less) in order to better distribute the votes. This would only affect ICON foundation at this point and would help all other p-reps.

-The new model looks complicated and complication inhibits growth/use/adoption. Complication leads to more possibilities for malfunctions or unanticipated consequences. Stability is king in cryptocurrency.

-Another possibility that was floated a while back was to make the top 22 p-rep rewards all equal. This is a decent solution. It would decrease self promotion and competition for votes and possibly increase collaboration. However currently many p-reps are(were) collaborating on projects like the Consensus 2020 sponsorship. So this may also not be broken. We’re personally in pretty regular contact with 5+ of the other main p-reps and open to collaboration. Again, it seems to be working fine as-is.

-You mention infighting among p-reps. I have only seen some small instances of this and that was when ICON was newly decentralized and people seemed to be feeling things out. Since the first initial small conflicts I haven’t seen much of this. (It’s honestly mainly one certain p-rep being aggressive and trying to push their ideals).

-You also mentions lack of “skin in the game” for p-reps. I think this is way off the mark. Many p-reps we have spoken to have said they stake their funds and vote for themselves. I bet 100% of the p-rep owners have ICX that they stake and vote for themselves with. The current system incentivizes it and that’s not a bad thing. You want p-reps with a strong belief in ICON. The incentives are currently good for this and this may be a main driver of growth/awareness as currently- p-reps are incentivized to buy more ICX in order to get ranked higher and for the larger rewards.

-The new proposal cuts p-rep rewards more than 50%. At the current price, and even at double the current price that’s just not enough for most p-reps to really make anything happen. The bigger ones could still have the funds to pay people and fund things, but #12-22 wouldn’t be getting enough to make meaningful contributions at this point.

-The forced contribution to the Contribution Proposal Fund and decreased p-rep rewards would lower the incentive for p-reps to do anything other than that CPF. It would take away/disincentivize a wider variety of p-rep actions and just put it all into these forced grants (or probably just end up burning a lot of funds due to lack of grant applications). In reality, we’re a private group focused on institutional investors with deep pockets that actually move the needle. We do not campaign for additional votes for our p-rep, and no outside party is allowed to “buy votes” with us though we have received portions fo their votes after convincing investors of ICON’s value.

Things have been going really well, ICON is super stable, development is humming along. I just don’t think we need to be getting in and messing with mechanics that aren’t broken. Some small tweaking is fine, but I don’t think a full on revamping of incentives would be good for ICON. People want something stable and constant. We don’t want rules switched up on us every 6 months. Plans have been made and now even just the idea that the whole incentive system may change in 6 months is adding stress and possibly changing how we (and others) allocate funds.

And now maybe for the most important point – the winning platforms in this space are NOT going to have complicated governance structures with proof of contribution systems that will inevitably end up in MORE infighting and pain. The answer here is simplicity, not complexity. As I’ve mentioned to you before, Icon should be aiming to become THE blockchain network for Korean enterprises. That in and of itself is enough to create a multibillion dollar network. POS is infinitely better for accomplishing this goal as it’s clean and simple. You stake, you earn. You don’t need to “force it” with weird and confusing governance structures. The priority with POS is not hollow contributions (“Look, we made a Youtube video!”) but instead a solid and reliable network. Full stop. That’s all that matters in the long run. Technology, and a stable decentralized network. Icon should focus on signing up clients, we’ll focus on running a stable network. This thing will be part of the Korean infrastructure in 10 years if we focus on these goals.

Please don’t mess with something that isn’t broken. This will only serve to harm the network. Don’t listen to the P-reps with no skin in the game and no investing/business experience to their names. If anything, we should be making this more simple, not less.

8 Likes
#41

Great proposal, I agree on everything and hope this will be pushed through asap.

But it’s funny to notice who shows up all of a sudden SymmetrySLC! We didn’t hear anything from them for 6 months but once you start chopping at their money tree they get summoned…and of course vote for a REJECT what a surprise :speak_no_evil::rofl:

This proposal is exactly what ICON needs, bring much needed transparency on where money is going and less into questionable p-reps pockets like VELIC (I’m surprised they voted approve but good on them) and SymmetrySLC (there are probably more but those are the most noteworthy ones).

6 Likes
#42

Thanks for illustrating one of my exact points, ICONast. There are two sides here. There’s the side that uses monkey emojis and immediately starts throwing out insults, making no actual case for how anything in this proposal benefits ICON other than lowering rewards for p-reps… And then there’s the side of professionals who value stability when they’re investing and want to make sure that ICON has solid fundamentals and appeals to large investors. One of these sides should easily win out if people are actually concerned about ICON’s real growth, but the other side is very vocal.

Like we wrote above in our criticism of this proposal, small tweaks to the system are reasonable and could help better balance the network. However, large sweeping changes to the core incentive system that keeps the ICON network stable when it has already proved that it is working seems unnecessary at best and highly dangerous to investor confidence and the network’s growth at worst.

To address some of your concerns about us specifically: As anyone who has contacted us in the community knows, we are very responsive, open, and willing to collaborate. Just because we don’t self-advertise and try to pump our vote numbers doesn’t mean that we’re not involved in trying to make ICON better. We recently lowered our i-rep to the lowest in the top 30+ p-reps (chopped some branches off of our “money tree” as you put it) because the community desired this change. Helping ICON grow and progress helps us much more than the relatively small amount we actually receive from the p-rep rewards.

5 Likes
#43

Many good points brought up here. We also rejected the proposal for reasons we outlined in our post above, however, the consideration of stability is important. I’d argue that whatever changes are indeed implemented should be done so slowly in order to provide a stable grounds for evaluation and avoid disruption of a system that is working well by most measures. If we were to implement some of these changes, then small changes done one at a time would be beneficial. In this manner, we can evaluate as independent variables. Perhaps adding a bond, then evaluating. Next, adding a CFP, then evaluating- and so on.

3 Likes