So this mechanism allows for a few to exit and traps the others.
I am interested how this is handled in the future. BTW for those that provide liquidity with cicp who will get the vp for that?
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With a proper liquidity system (easy to implement) it will take weeks to exit and that wonât go unnoticed.
Thatâs an interesting question. We could easily make the DAO that governs the DEX to get the VP, but I am not sure if itâs a good idea, because someone will make canister smart contracts that sell the VP only. Separating VP from the token and selling it is detrimental for the health of the IC. Especially when you run a bidding war on that VP - it becomes a liquid ransomware solution. Does it ring a bell?
At NTN we are governing the voting system, not voting with NTN. The voting system can be near black-holed to ensure it will keep working as intended and cICP will vote the way itâs supposed to.
So you donât have a solution for those wanting to provide liquidity and retain their vp?
I know this was an issue for the geek team with their stake geek. It forced users to remove their liquidity daily for a snapshot to earn apy.
It could be possible. I can only tell you once we start implementing the system. But I think at most 10% of the cICP will be in DEXes. Currently nICP has 2,8% of the total supply in DEXes.
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I didnât think we were trying to compare projects?
Does having 10% on a dex not concern you? That is the only way people will be able to exit their âliquid staking positionâ since there is no way to claim your apy or unlock your tokens for stable returns.
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What can we do? Iâd like to help but not sure where to start.
Regarding NNS VP, would you consider making the proportional representation relate to NTN holders, rather than cICP? As I understand it, NTN holders are the ones governing the protocol, and need to be staked. It also gives more utility to NTN, which is another way to help with improving demand for the token (increasing opportunities for decentralisation). I personally think itâs very important that individuals with no locked stake should not be able to influence NNS proposals using anyoneâs VP (even if it could be argued that itâs their VP).
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Fully agree with Alex here, cICP holders being able to vote expose the IC to governance attacks. One could know a proposal is coming ahead of time, for instance weekly IC-OS updates, stake ICP into cICP, vote on the proposal and later on sell their cICP.
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Thanks, to speed things up, we could use a NP who is willing to become a service provider and to figure out how to setup the first node.
Itâs a bad idea Alex. It results in separating the stake from the voting and in buying and selling of pure voting power. This solution is combining the 3 elements that are now separate in WTN (np staking, nns staking, voting). Like I said, they are still locked, just a different mechanism of exiting/unlocking - through a stream where other stakers are buying your tokens out with their maturity when you want to leave - or new stakers are taking your place.
When they are separate, this happens:
nns staking - these are the ones who pay the most, stake and get yield
voting - people with no skin in the game vote
nodes - people with no skin in the game run nodes, secure the network and get a lot of the rewards
Kind of the opposite of what every Proof Of Something chain is trying to do to.
Going to copy/paste some chatGPT responses on why we need PoW or PoS so you donât have to take my word for it.
- Secure the network against malicious actors.
- Ensure agreement (consensus) on the state of the blockchain.
- To make it costly to attack the network, so it is more profitable to play by the rules.
- Make dishonest behavior economically irrational.
- Without consensus mechanism, the system breaks down into disagreement and chaos.
Back to the question. Is it economically rational to vote badly and then exit cICP through its DEX liquidity - No, itâs not. cICP is sound in that regard.
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This is very interesting. This is the complicated part that is hard for me to wrap my head around as the defi vectors managing this seem like a âblack box.â
This seems like it could be great. Just more tricky to understand precisely how it works (for me).
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When you have all neuron maturity disbursed daily (ICP) and swapped for (cICP) in the DEX, then burned. What happens is - the mint rate increases, because it is
mint_rate = mint_input / total_ledger_supply
All of the cICP holders benefited from the burn - their % of the whole increased.
You can see how âNeuron #2â has output maturity in ICP and it gets sent to âExchange #76â then the output is cICP that gets burned. To make sense you just have to think about the mint_rate as well. These vectors are standard, nothing different and blackboxish inside.
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I donât follow. My expectation is that giving those with a liquid token VP weakens PoS, rather than strengthening it. The more liquidity cICP gains, the less secure the network becomes as it reduces exit friction.
Could you explain more about why you think NTN holders shouldnât be the target of proportional representation?
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Examining how things may work out:
The cICP model
Letâs say cICP holders have 10% of the NNS voting power. A bad actor holds 30% of cICP. When they vote with cICP badly and try to exit right after, the first few cICP they sell will be at a reasonable rate, the more and more they swap for a liquid ICP, the worse the rate will be. You can`t really instantly leave from cICP to ICP in large quantities without that becoming economically irrational. If the APR is 17% this means you can leave the stream at a good rate only ~17% a year if nobody else does (if it only depends on the buy-back stream). If the NNS made a really bad decision thanks to that 30% cICP holder, ICP value is going down, so everyone will want to leave and nobody will want to get in to take their place. Which means the bad actor isnât leaving, so the same assumptions as the ones in NNS 8y locked neurons are in place - bad decisions = bad for the voter.
If a bigger bad actor does that, they will loose a lot. If a smaller - letâs say 3% of cICP staker votes badly (that will be 0.3% of NNS VP) and then attempts to sell, they will only be able to wipe some of the liquidity out, still loose some, but probably leave in half year without too much loss - but again, if theyâve ruined the NNS, everyone will be leaving cICP.
The nICP/WTN model
WTN launched with 50% (early contributors and devs) getting WTN without putting any ICP (the stake). The rest placed ICP to get their WTN. In the second launch a whale bought a lot of WTN with ICP, it turned out they work with the early contributors and devs and vote together. The total stake theyâve put is only the stake that whale got during the second sale (Should be around 30% of the ICP WTN has gotten from swaps), but now have 100% of the votes cast on the NNS and ~70% of WTN voting power. Additionally all ICP going for nICP gives them the voting power - resulting in WTN buying almost pure voting power without much ICP stake. The more nICP grows and the more WTN sales are made, the worse that ratio goes. From one side during launches, people putting ICP and getting WTN - gift their voting power to the group in control. From another everyone putting ICP in nICP gives them voting power. Combined with Synapse and Codegov - looks almost as if someone is trying very hard to be able to vote without putting stake and be able to make decisions that could harm ICP and ICP stakers without them suffering the consequences. Here you have bad decisions = no problem for the voter.
Additionally the unlocking mechanism doesnât play in favor for WTN. Someone can borrow a lot of ICP from lending protocols, put that in nICP and make everyone believe WTN is a great deal, then launch another sale, get ICP inside the WTN neuron, then unlock most of the nICP and return it to lending protocols. If you move minimum dissolve delay to 3mo instead of 6mo, that becomes even easier.
In cICP model, an SNS can vote with its cICP in treasury. A DEX can vote with the cICP in its pools. A user can vote by holding cICP in wallets. The voting power is distributed and decentralized and never separated from the stake.
In WTN model - all voting power goes to the few entities controlling WTN.
This sounds more like âliquid voting powerâ instead of liquid staking.
Cicp model is asking you to give up the rights to your icp in exchange for vp.
Cicp only allows you to sell on a dex to get your icp back and can never unstake your portion of the neuron. Users lose their icp when staking with you.
Nicp is asking you to give up your vp in exchange for icp apy.
Nicp allows you to choose to sell on a dex or unstake for your share of the neuron. you never lose your money.
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I think youâre only accounting for attacks that require immediate exit. There are attacks that can set up delayed triggers. Forgetting about attacks, itâs about ensuring that VP is cast by those who have the long-term interests of the network aligned with theirs. This is an intentional part of NNS governance design.
For argumentâs sake, if you applied the proportional representation idea to NTN holders, rather than cICP, what problems do you see this causing? I think this is the way it would need to work to align with foundational principles of NNS governance.
I love your general idea. Iâm just sweating over details. But sometimes details are very important.
I donât think you are seeing it yet, but long-term interests are still voting in cICP.
If we gave the VP to NTN holders, the voting system would become same as WTN. Creating a bidding war for voting power. The ones who want to protect their stake in the NNS have to buy 51% of WTN to make sure the ones without stake arenât going to harm the NNS. This makes it pretty much a ransomware with its current design.
Not if you implement proportional representation. I personally think this is whatâs needed.
Iâm very concerned about the idea of people with no stake (as in the kind that is actually locked for a deterministic period of time) having a say in the long-term direction of the network (or the short-term).
The idea of finite liquidity acting as a sort of locking mechanism is interesting, but ultimately it begs the question of why real ICP staking was implemented in the first place. I think the answer is that itâs not a robust enough mechanism, and provides only very weak guarantees (or no guarantees). This is really my only problem with whatâs being suggested. Everything else sounds top notch.
Not trying to derail, but i donât think this is fair. I think their intention is simply to minimize risk and maximize returns and vp, that doesnât mean they have malicious intent for the network. Though i agree the result is not ideal.
Lets let just let the better ideas win organically.
+1, hopefully @infu has come up with something to convince me otherwise.
This is what Borovan want, more VP. He was attacking WTN, but now funded even worse liquid staking. Building such crappy projects will for sure keep people away from ICP. Staking is broken, if i had 500mil usd to buy tokens and another 500mil to pump price, i would not do it. So huge amount is in maturity, any pump that is made cant be sustain. Right now when 1 whale pumps, another dumps.
If cICP is not set up similar way as WTN, than it has to be buried.
Until @infu solves the issue with cicp vp when in liquidity pools this is a vp grab.
I donât think you can assume that the dex with cicp will take the extra time away from their project to vote with the cicp on their dex. By default the cicp that doesnât have a followee set up gets sent to those that do. In a long way this acts as a vp grab until this issue is resolved.
(I donât think that is the intention of infu. Just a part of the problem that wasnât thought about.)
In the WTN model, you will need a proportional representation system to be added and also for that system and everything around it to require critical proposals to be changed, so the 51% canât change it instantly and vote however they want. Then 33% will be able to defend the voting system.
But even then, it will still give their early contributors 30-40% more voting power and rewards. While nICP holders are only giving stake and losing their voting power.
Ok, letâs do the math.
WTN shows 2,148k ICP in 8y neuron and in 6mo neuron.
The controlling group spent ~200k ICP
This means their risk is ten times lower than NNS stakers with the voting power they have. Also, with 200k ICP, now they have the voting power of 10 times more. That ratio is not going to change too much. It means 5% of the ICP can take 50% of the voting power (if it grows and NNS allows it).
If you think thatâs fair⌠you just need to add node providers in the equation, and I can assure you, it becomes 10 times less fair. Add both, 10*10, and the whole solution becomes 100 times less than whatâs fair.