A Call to Action: Using the NNS for Growth

A Call to Action: Using the NNS for Growth

Co-sponsors: @dfisher & @wpb

Problem Statement:

Today, ICP suffers from two separate problems that we believe could be improved with a single silver bullet. Those two problems are as follows:

  1. The incentive to upgrade ICP by meaningfully participating in governance is low
  2. The demand from dApp developers and end users to use ICP is well below what the Internet Computer is capable of

Let’s tackle each problem separately.

Governance on the IC today follows the liquid democracy model. Stakers are encouraged to either vote directly on proposals or follow “named neurons” who can vote on proposals on their behalf. The theory is that such a system can be self-regulated and self-improving since experts will develop followings and named neurons will upgrade the protocol over time.

The problem with the system as currently designed is that no-one is properly incentivized to participate in governance. ICP has very few “named neurons” and all its members are doing it as a hobby, part-time so to speak. The most promising - CycleDAO - which had some of ICP’s most luminous technical minds has since fallen into oblivion because its members simply were too busy to vote on important matters.

We have only one named neuron - Synapse.vote [formerly ICPMN] - with members who spend a significant time out of their day debating in the forums. As a result, Synapse.vote has a disproportionate amount of the voting power. But it too suffers from the same problems as CycleDAO. There’s only so much time that Synapse.vote members can really take out of their day to focus on governance issues.

As a result, ICP’s governance is overly centralized and filled with apathetic voters who want their token to moon but can’t be bothered to do the work to improve the system.

The problem of governance in ICP can be said to fall into the category of the Tragedy of the Commons. When folks are not individually incentivized enough to improve the system as a whole, often the system languishes. It’s the reason why we need the government to build roads and we can’t rely on private individuals to build them.

The second problem besetting ICP today is that there is low demand from dApp developers and end users to use ICP. One could spend all day wondering why that is. The spectacular flop during launch? The poor performance of the Dfinity marketing team? The manipulation of bad actors to thwart Dfinity’s tech? Probably the answer is all of the above, but ultimately it does not matter. What matters is that we are here now and have a big problem to solve to get the world to pay attention to us.

Why does this matter?

If ICP does not fix the demand side of the equation, it will fade into oblivion. And if ICP cannot fix the incentive to participate in governance, the protocol will not autonomously upgrade itself. After all, the DFINITY Foundation expects its voting power and influence over the network to decrease over time.

It is definitely not a foregone conclusion that demand generation will just pick up on its own, or that voters will spend half their day making meaningful contributions in the forums, and it is simply a sad fact that the best technology does not always win.

The Internet Computer community should not be complacent. The protocol has suffered from a year of disastrous PR and collapsing token price. Many in the media don’t even know about all the incredible things happening on ICP.

Today ICP enjoys a technical superiority that may not last. Well funded competitors such as Solana, Avalanche, Aptos or Mysten may use their war chest to upgrade its technology and take over ICP’s technical lead.

Peter Thiel is famous for saying the following:

“Superior sales and distribution by itself can create a monopoly, even with no product differentiation.”

Proposed Solution: An NNS Treasury + NNS Foundation

ICP holders today have a superior product with inferior distribution. If we fix distribution, we have a chance at winning.

By inferior distribution, I mean ICP has been unable to appeal to a broader audience. ICP needs to focus on growth to expand its appeal and improve incentives among the following constituents:

  • Application Participation [NOT ENOUGH DAPPS]
    • Developers
    • End Users of applications
  • Protocol Participation [NOT ENOUGH GOVERNANCE]
    • Stakers
    • Named Neurons

We believe we can achieve this goal of growth through the creation of an NNS treasury + an accompanying NNS controlled foundation.

NNS Treasury

The NNS controls everything to do with ICP including its monetary policy. If it wants to, the NNS can mint ICP through inflation out of thin air.

By creating a treasury controlled by the NNS, the NNS could endow itself with resources to spur growth. Some examples could include:

  • Demand Generation
    • Marketing
    • Branding
    • Developer or End user acquisition
  • Governance Participation
    • Paying members of named neurons to vote
    • Paying developers to implement community driven proposals

Should we consider driving decentralization as part of the scope of the treasury? Perhaps. This should be subject to discussion from the working group as it’s a tricky question.

How Would Such a Treasury Get Funded?

There are three options to fund such a treasury:

  1. Increase inflation of all neurons
  2. Reduce staking rewards from all neurons while keeping inflation constant
  3. Reduce the staking rewards from only non-voting neurons (or another group of neurons)

The benefit of the third option, as proposed from @Kyle_Langham, is that this funding mechanism does not penalize voters who are engaged in governance. As such, it aligns incentives to get neurons to properly participate.

How Big Could an NNS Treasury Be?

The potential to raise funds that could be put to a productive use is enormous given how valuable the NNS is ($1.57 billion worth of ICP staked at current value). The proposal to redirect ICP from non-voting neurons could in theory place 1M ICP a month into a NNS treasury without increasing the overall pre-set inflation rate of ICP (10% going down to 5% over 10 years). 1M ICP a month is $6M a month. That’s a lot of money! Just imagine how many great initiatives could be funded with such a large honey pot accumulating…

Potential Problems with NNS Treasury

While the potential for growth with such a war chest is huge, so too is the potential for abuse. Cryptocurrency is rife with fraud. One cannot go a single day without reading about a hacker or an imposter stealing funds.

It is a foregone conclusion that bad actors will try to claim NNS treasury funds for themselves. Maybe an OFAC state-sponsored group assumes a false identity to get funding.

It is naive to assume that a war chest of funds can be allocated to anonymous groups. We live in a world of regulators who insist on KYC and AML procedures to make sure bad actors don’t get funding.

It is also hard to think of how accountability and transparency of funds could be enforced in a system whereby an NNS treasury existed in isolation. Let’s say a good faith actor was able to claim funds but spend them inefficiently. Who would be there looking over their shoulder to determine if they had spent the funds as they said they would?

And then finally, one would be remiss to not mention the risk of inflation getting out of control. If the NNS voted to increase inflation in order to fund the NNS treasury, that could have a disastrous impact on the price of ICP.

Ultimately, the prudent thing to do would be to start the treasury small and iterate from there. But starting small is still not sufficient. We need proper oversight to prevent fraud.

NNS Foundation

It is our view that an NNS treasury cannot work without a foundation that works alongside it to oversee its operations – with full time employees who are properly trained and incentivized to do the work.

Such a foundation would be dedicated to growth and to overseeing the proper functioning of the NNS, including the treasury.

The foundation would make sure that a bad actor doesn’t get funding. That grant recipients are who they said they are. And they would be subject and accountable to the NNS itself.

Potential Problems with NNS Foundation

Of course, adding in an NNS Foundation has the potential to massively centralize the power of the NNS into a single body.

Additionally, it is unclear to us at this time whether it is truly possible to create an institution that is answerable to the NNS as it lives off-chain. The code is not law in the real world and people can choose to break the laws of the institutions we set. We can say that the leader of this foundation must be elected by the NNS every four years, but what does that actually mean if they flout those rules and get away with it?

Any design must keep this in mind and have checks and balances. Perhaps it is better to not call it “The NNS Foundation” but rather the first of many foundations that the NNS can help fund and support. That way the foundation does not need to pretend to be official but rather just a private organization that is contributing to the goal of the Internet Computer much like Dfinity. Given the DFINITY Foundation does plan to decentralize various components of the organization over time, this could (and eventually will) be one such decentralized component.

Whatever the design, what is clear is that the establishment of a foundation would require a lot of work. That’s the whole point. Whoever is up for the task of making this a reality needs to make it a full time role. What that person looks like could again be a good topic for the working group.


To re-state, the problem facing the ICP ecosystem is twofold:

  1. The incentive to upgrade ICP by meaningfully participating in governance is low
  2. The demand from dApp developers and end users to use ICP is well below what the Internet Computer is capable of

We believe NNS can turn both of these around by resourcing itself with a treasury that makes inflation productive. All that said, a new foundation will need to be set up dedicated to growth to ensure that the treasury is not abused.

All these are just ideas to further the growth of a NNS treasury. Ultimately a working group will need to be established to hash these ideas out and land on a consensus. With great resources come great responsibility and the only chance this has of succeeding is if there is general buy-in from the community.


Why would making inflation productive be more beneficial than reducing inflation? And for the neurons that are so uninvolved that they don’t harvest their maturity, is it a problem that needs to be solved?

I feel like the IC cannot engineer its way to greater use, and it has done too much of this already. Marketing and education are what is needed, and I have a hard time seeing how handing money to the NNS will help this.


The NNS treasury & foundation could fund this precise use case.


Do you mean the NNS would somehow contract with an external organization to perform marketing for the IC? That requires a lot of interactivity and coordination; would the NNS nominate an agent on its behalf to do that work? How would the quality of the work be measured, and what if the agent’s work is sub-par? This seems like a very inefficient way to fund what must be highly engaged work. I think it is better if the Foundation spearheads such an effort, than a decentralized agency managed by public proposals…

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Dfinity does not need to be the only foundation that does this type of work. The NNS could create a new foundation funded from its treasury to do marketing.

How does one measure the quality of the work of the new Foundation? These are important and tricky questions to answer. But just because it is hard doesn’t mean it shouldn’t be considered.

The NNS has a vast pool of capital. Dfinity’s resources are limited and dwindling. Now might be the time to birth one or more foundations with very limited inflation.


At the moment, I’m having trouble seeing how the IC achieves decentralization without incentivizing people and organizations to become contributors to the IC. I think an NNS treasury can be used to fund experts who have the skills to review replica updates, bounties for people to deliver governance changes and roadmap, incentives for named neurons to actively participate in governance, R&D that is focused on decentralization, as well as growth and marketing. I think the NNS should fund multiple organizations that perform the coordination and highly engaging work that these tasks require. At this time, the community turns to DFINITY for everything related to a roadmap, but I don’t see any reason why other organizations can’t develop their own roadmaps and make valuable contributions to the IC.

That said, I do have a hard time seeing how this would work if a decentralized agency is micromanaged by public proposals. It seems there should be organizations that form as non-profit legal entities that are empowered to micromanage their own day to day operations while somehow still having accountability to governance participants.


I would argue this can be boiled down to one simple fact (potentially controversial in these forums).

Right now, the IC has many Dapps, but not one of them is a value-add magnet for its users.

This means for the average person (not crypto nerd) living through a global recession, war tensions, and inflation, a product that reduces customer costs or makes their lives more efficient, convenient, or secure (while not having overburdening UX).

Hype is not value. Promise of growth is not value. Tangible, current utility is value.

Early adopters have funneled money into NFTs, and the ICP token (8 year stake), but the bear market has destroyed many of these investments (in the short term), sucking value out of IC users/investors since genesis.

  • The IC has many NFT collections and dapps - these are 95%+ value-suck
  • We have social media applications, that facilitate discussion (value-neutral, relatively low-user counts & IC performance/storage limitations prevent from benefiting through network effects)
  • Developer Tooling/Infrastructure (boosts dev productivity and potential value-add, but this has not yet been fully realized by any app)
  • Wallets and identity applications (value-neutral until cross-chain enabled)
  • The closest value-add applications we have currently are games, content-moderation platforms, and site-builders/blogging sites. Still, these currently add minimal value.

Taking the value sum of all applications, the scale is (currently) heavily weighted in the direction of applications that suck value out of the IC.

To reiterate, the IC needs an application that either reduces cost, improves efficiency & convenience, or provides a unique IC functionality not found in web2 or executed in other crypto projects, that either tens of millions of people, or big money interests actually receive additional value from (pump and dump doesn’t count).

If a project can follow-through on this, then we’ll see a turnaround in the price of ICP.


I like this idea in a particular good suggestion. I think this group should consist of legal entities from every area (or as many as possible) that the IC operates in the best represent all of their best interests and allow these individuals a chance to argue and debate amongst themselves and then deliberate to their communities of/from their area so those users can make the best decision for them based on their geographical location.

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In my opinion, to solve the two problems you’ve mention cannot not be done with NNS Treasury & NNS Foundation, if the ICP weird tokenomics is still broken. Till today, there’s no meaningful response from the dfinity foundation to address the issue, nor to show the tokenomic research paper defining the ‘formula’ & ‘number’ behind the tokenomics design. All just based of assumption with no ‘real’ number backing it up.

This was no issue a year ago at genesis launch, because some investors still put hope & confidence that the tokenomics works, and give it more time to have some data to prove. But, it has been more than a year, and the data & number showing are not convincing.

Before proposing like NNS Treasury & NNS Foundation, we need to fix the tokenomics first.
If the tokenomic is convincing, the ICP price will stabilize and grow. If the ICP price is appreciating, it will be an easy job to onboarding many developers & increase governance participation. It is very hard to market protocol that is declining in value with no sign of fixing from the fundamental side.


The problem with the tokenomics is that it only is beneficial with more adoption. If adoption never comes the price will dwindle and the project will have a slow demise.
The biggest problem for price right now is the inflation of the circulating supply and I don’t think anybody has proposed any reasonable solutions. I think dfinity is in a pickle which is the reason why they decided to stay silent. If they can’t get enough adoption on this platform, the result will be a slow death spiral.


The NNS treasury should function similar to how the ENS DAO works.

Their DAO breaks up responsibilities into Working Groups that are managed by Stewards. Working groups perform a function, such as Ecosystem Working Group which has many purposes but one of them is hosting Hackathons to help grow the ecosystem. The Ecosystem Working Group is provided financing from the treasury (and in our case the NNS treasury) to pay for these Hackathons as well as give wages to the Stewards since this requires time out of someone’s day to manage.

Stewards are elected by the NNS to be officially part of these working groups and receive compensation for their work defined by the proposal for the working group.

If you find this interesting I would look at the proposals for their working groups.


ENS Ecosystem


Public Goods

These are the Q1/Q2 working groups and in Q3/Q4 some of these groups have received a 20x increase in budget.

The current proposal we have gives an example of providing marketing for the IC, this could be within a working group that is given budget to market externally and onboard new users and improve distribution.

If we adopt a similar system and pair up elected people from the community with DFINITY employees to help steward these working groups, I believe we will have a measurable way to determine if NNS funds are being properly budgeted as well as determine the ability of these stewards of executing their working groups given function.


Ironic to hear from ICPMN peeps when they’re the ones that proposed most of the tokenomics changes and voted on spam proposals for like 6 to 7 months to siphon rewards from unaware investors.

Apparently Decentralization only looks good on paper


Hard to disagree with any of these points made. I would also add to it that there is no case studies of viable revenue models.

There have been a number of projects I have looked at investing in but none have been able to show how they will generate revenue over time. I would love to know if there have even been any examples of theoretical ones proposed. Selling continuous series’ of NFTs to pay for cycles may be viable but I am yet to see anyone even discussing this with respect to dAPPs.

Is the presence of a clear dAPP revenue model even a weighted criteria when giving out funding because if it isn’t it should be.


ICPMN has never made any proposals

No proposal that I have made that touch on tokenomics has been implemented

ICPMN voted NO on all spam proposals

ICP investors do not earn rewards for staking, they earn rewards from voting.

I have put a lot of time and energy trying to spread the word about tokenomics changes that were implemented by DFINITY. Those changes were very effective at moving us in the direction of decentralization, which in my opinion is a positive outcome.

Ironically, in spite of your willingness to complain you have never tried to educate people about those changes. Why don’t you help spread the word so we can achieve one of the ultimate decentralization goals…100% voting participation without default following?


I agree. dfinity has to admit the failure and start over properly. It’s not a shame to set it up right. Groundless tokennomics will keep icp sick.


reward the best economists and find a good solution


I want to add some clarification here. I am very in favor of starting a discussion about an NNS treasury, but I don’t resonate with the main benefits of the treasury being a solution to these two problems. These may be problems that we have as a community, and perhaps an NNS treasury will help to some extent, but I’m more interested in the holistic and possibly unknown benefits of the NNS having its own power to effect changes as it sees fit, independent of DFINITY.

I believe that an NNS treasury would provide a great step towards the decentralization of the leadership of the Internet Computer, possibly in protocol development and grant giving. An NNS treasury with the power to issue its own grants is what I am most interested in. And disclosure, I have hopes that Demergent Labs or myself could receive some of those grants someday.

Personally, I would want the NNS to focus on grants that enable projects that are a step or two below the application layer. Protocol layer concerns, open source projects without sound business models, basically what Demergent Labs is working on. Many projects that raise money have to focus on the demands of their investors. It’s much harder to just receive money to build what needs to be built. I hope the NNS will focus on these types of projects.

But besides the focus, I think we first need to agree on:

  1. That an NNS treasury should exist
  2. How the NNS treasury will be governed

For governance, I recommend we design a legal entity that is legally and in reality controlled by the NNS. For example, written into its bylaws or operating agreement, and enforced by the NNS itself, would be rules governing all funds. Salaries will not be able to be withdrawn without the consent of the NNS. The NNS can fire and hire at its will. We will have to carefully consider how to construct this entity.


Though I’m not sure more marketing is what we need, I really resonate with the idea of decentralizing the core leadership and source of funds for protocol leadership. DFINITY is really the only major contributor to the IC right now. Let’s get some more of these entities. I hope some will naturally arise as dapps become profitable, but shouldn’t the NNS be able to govern itself and issue its own funds? Right now only DFINITY has that power. The NNS is really beholden to DFINITY in material ways.


It may be essential to have a legal entity. And I believe that entity should ultimately be controlled by the NNS. All authorization of funds should ultimately be controlled by the NNS. The leadership of the legal entity should be controlled by the NNS.


Voting yes or no, in the end, rewards are distributed regardless of what you vote right? am I missing something here?

on all spam proposals”…