Cap Node Rewards to Prevent “Death Spiral”

Simple proposal. I know that node providers are provided an amount of ICP equal to a set dollar amount as payment for their services.

However, as ICP continues its downward price slide, potentially to sub-$1 prices, these rewards in terms of ICP will grow to eclipse nns rewards and will inflate ICP supply very quickly.

I am not suggesting that we pay node providers less at current prices. But I am suggesting that as price declines, we create a cap in terms of ICP on how much ICP can be paid out.

We could institute a hard cap, perhaps no more than 10 million ICP paid to node providers per month? Or we could stipulate that node rewards never exceed nns governance rewards. Or we could say, we’ll never pay an amount greater than X% of total circulating supply. There are plenty of ways to restrict payout.

The problem is, if price and market cap continues its precipitous decline, there is a scenario where node rewards to be paid exceeds market cap. Obviously we can’t pay an amount of rewards greater than market cap. We therefore must institute a cap of some sort to prevent this increasingly plausible scenario.

Thank you.

What do we think?

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I very much agree with your proposal. I think it is necessary for the DFINITY team to discuss this issue. This is definitely a serious BUG that will leave our investors who have been locked up for 8 years with nothing!

I think capping is possible and I support you! I also hope there is a better way to allay people’s concerns. The current price drop is very sharp, which is directly related to this problem.

There is currently already a limit in place - the topic has been discussed indepth within the following thread.

It should be noted that even with the current cap, it doesn’t stop anything.

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I am glad there is a cap in place! Thank you for this info, I didn’t know. I think there should also be a global cap, and not just per node.

It won’t stop anything, no, but it’s still important. We can’t afford 500 million icp being minted each month because our price is $.10 and we have 5000 nodes (I made all these numbers up but we get the point).