Path to Sustainable Economics: P-Rep Commission Rates

This is the medium article that ICON foundation has posted regarding the lowering of I-rep and changing it into P-rep Commission Rate to be a network proposal

One of the biggest concerns with all the network changes that have been happening recently (IISS 3.0 B1 reward removal, I_rep reduced to 14,000) is that the P-reps will not be able to make meaningful contributions to the network with lower rewards and we are always pointed toward the grant options.

This article references two different networks that also have a similar system of collecting votes and validating blocks via validators, and it compares the commission fees which are much higher on the ICON network at the moment. But there is one big difference and that is that validators on those networks aren’t “required” to do any growth for the network. And that makes total sense, even ICON was designed in a similar way with EEPs and DBPs being responsible for the development/marketing funding, but at the point of decentralization everything fell on the laps of P-reps, which should run a node, govern and grow the network.
This was a bad idea, in my opinion, we had to give a lot of rewards to the P-reps without any guarantee that any growth will be made and in the past few months there was a lot of unnecessary hateful discussion regarding the contribution of individual P-reps because of that. We shouldn’t implement things that work in a perfect world, but rather do it in a way that they function in the world today. If the world changes we can change the governance system or development processes at that point.

We are always looking at things on other blockchains if they work and try to implement an improved version of it to the ICON network, but we can also look at some examples from real life. Democratic government is kind of close to how a decentralized governance system should work, and people (ICONists) vote politicians (P-reps) which represent them and make government decisions (Governance proposals). And when the people who govern the countries see that let’s say a road is needed to connect two parts of the country, they don’t go and construct it themselves but they employ construction workers (developers) which are paid from the treasury (CPF) if the work is completed.

I would like to see that P-reps are validators and governance subjects so their contribution to the network is securing and governing it and stray them away from development/marketing, this way they would really be Public Representatives. CPF and maybe more similar approaches should be implemented to stimulate growth on the network.
When ICONists are voting they would need to look at P-reps decisions only on governance level, basically which CPF projects they support and which on-chain governance decisions they approved (no more oh this P-rep did 10 projects 8 of which were twitter posts).

To reduce vote stagnancy re-election would also make sense, if a P-rep has done well in a term there is no problem with someone voting for the same P-rep if they feel that their P-rep has done a great job, but the problem is when a voter votes for someone and leaves those votes there. What happens if the voter couldn’t change his votes due to real-life situations (losing private keys, death). Those votes could be locked to malicious P-rep forever. Besides that I think that active ICONists who can revote once per term are more valuable and bring more contribution than the “lazy voters” who vote and leave the votes to produce rewards, so they should be rewarded more. If you are not active enough in the community to be able to see all the news about re-election that is probably going to be promoted by all P-reps, a lot of ICONists and maybe some other crypto news sites in various social channels than you shouldn’t get the rewards as you are not contributing but instead you are just enjoying rewards from the network for voting once. It is not healthy for the ecosystem if voters get to vote once and can get rewards as long as the network exists, the least we can expect is that they re-vote at a certain interval (not too frequent, but also not too infrequent).

Imagine if we had no elections in countries and people could freely change their votes whenever they feel like it. There would be a group of active voters (people who are interested in politics) and they actively change their votes which is not a bad thing, but some people would vote for one party and leave their votes there for what 10, 20 maybe 30+ years without ever thinking about it and what that political party does. Elections are there for a reason.

I know that the network is kind of moving towards this and in general I agree on reducing rewards from P-reps but I wish to see them be responsible only for securing and governing the network.

Let me know what your thoughts are on the P-rep Commission rates and what the responsibilities of P-reps should be. Do you dis/agree with me? Are there parts of the system that I haven’t considered? How does this affect you as a P-rep? etc.



Thank you for posting this and thank you for being so active on the governance side of things. We’ve had many great conversations in the past, and you hit the nail on the head with this post. I agree with just about everything you have said, so I’m just going to comment on the one point where we might differ; contribution. I agree that contribution should not be a core requirement, but I don’t believe that means voters need to change how they make decisions. Yes, when CPF is live, on-chain CPF management should be the metrics shown, not these “10 projects where 8 of them are tweets”. Before CPF I think those that apply for grants and are awarded grants is a good metric perhaps. Nobody should get attacked for just running a node and participating in governance, but we can still encourage voters to support those that go above and beyond.

DPoC is and always has been the same thing as DPoS, but with a completely different ethos. Voters in other DPoS Networks typically focus mostly on the commission rate offered by different teams, while also looking at convenience and things of that nature (for example, being able to bake Tezos on Coinbase).

In the ICON Community, we have created something different, something better, and I refuse to believe this happened solely because of excessively high commission rates. Our community is passionate, and there is nothing wrong with them seeking out the teams that are going above and beyond the core responsibilities (governance, block validation). Since commission rates are equal across all nodes, our community is focused on asking what you bring to the table. I don’t see why this needs to change simply because we are working toward a more reasonable commission rate and more sustainable economics.

Our social volume has broken all-time highs, I refuse to believe that is because of excessively high commission rates. Multiple teams are collaborating on Balanced, I refuse to believe this is because of excessively high commission rates. Why do we do this? Because we want the value of ICX to go up. Why do we want the value of ICX to go up? Because we are validators on the network, our cashflow is in ICX, and since it’s a form of proof of stake network, we also hold lots of ICX ourselves. Regardless of high commission rates or not, I still expect to see people going above and beyond to maximize the value of their cash flow and investment.

Balanced is not going to shut down because of lower P-Rep commission rates, and I don’t expect to see our social volume and community activity disappear either. If people were only here for the high commission rates, then it wouldn’t be sustainable anyway. Plenty can still get done without excessively high commission rates, and I think it’s still fair for voters to seek teams that have gone above and beyond the core responsibilities.


If the commission rates would be lower there would be less development/marketing on the network from some active P-reps as there is less incentive, but we would still see the growth of the network. And the ICONists can still seek out the teams who contribute to the network the most or the ones that they agree with the most regarding their governance decisions (and node stability/security) that is up to them to decide. We aren’t here to tell anyone why they should vote for someone, but instead, look at how things play out in the system and adjust parameters in such a way that it benefits everyone involved in the ecosystem. It is good to have a positive outlook on things, but the system is based on how the active ICONists will act (and I really appreciate everyone who is an active voter), and we shouldn’t worry about how active ICONists will act but how the passive ones will. The same goes for P-reps the active ones aren’t a problem in most people’s views but the passive ones are.

We have seen what happens when the network blindly rewards P-reps in hopes that all teams will put the rewards they get to good use and contribute with that. That is why I feel that it is really necessary to let P-reps get rewarded solely for securing and governing the network, everything extra they wish to do is because of their free choice. Incentives for growth should come from another place (CPF or personal investment incentives).

Don’t get me wrong I am not against lowering inflation and I am not saying that there will be no contribution with low commission rates. And if the price increases and more people might gravitate toward ICON because of that, it would be awesome for everyone in the ecosystem. Maybe even more development could be done to ICON in the long term as more developers gravitate to the ICON network.