Compounding Maturity - NNS implementation update

If this feature is marked as opt-in, then to my understanding we would defeat the purpose of the motion proposal which has the very aim to ensure that it cannot be predicted how much ICP is produced from maturity.

Thank you for your answer @bjoernek,

Firstly :

I was only using the terms of the proposal itself as show the photo and overall the introduction of the proposal to the forum when we have been asked to give a feedback to Dfinity :

Secondly :

I disagree about such a description of the purpose of the motion proposal : it has the very aim to ensure that it cannot be predicted how much ICP is produced from maturity, yes, BUT ONLY TO avoid the tax burden for PRECISE people suffering of THEIR tax jurisdiction. I am in favor of relieving them of course, but we are not all in this case, and the disappearing of the tax suffering for this people is about to become an appearing of suffering for other ones. It is perfectly consistent to let predictability for those not suffering from it. We don’t need to go from an extremum to another one : by going to predictability for everyone TO unpredictability to everyone.

By setting this features an opt-in feature : the ones that this proposal was aiming to relieve are relieved, and the ones that have never been concerned by tax problematics keep going on without having to suffer anything.

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I already raised the issue when the proposal was being discussed and this is what @jwiegley said:

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Agreed I don’t see how being opt in makes this proposal left effective other than showing those who opt in do it for tax evasion purpose only.

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It will not relief anyone from their tax obligation. This is the problem. For some reason, Dfinity did not wanted to seek a professional tax firm advice and it looks like their blockchain scientist became a tax expert on the fly. I think they will put many investors with serious tax problem, as I mentionned many time in the main thread.
If they leave the option for accurate calculation as of now, at least it would be optional for people who want take the chance thinking IRS will not tax them because the rewards are modulated. If they don’t, all investors where tax apply, will be forced to move in the grey zone (black TMO) of taxes.
The irony is that Dfinity acknoledge that the California tax accountant said thoses rewards were taxable.
Just cannot understand the whole situation why they do this.
Some people are critisizing Dfinity should focus on the layer 1 only of the blockchain. Programming for tax purposes, for some countries only, is mindblowing.

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Why has Dfinity decided to prioritize this proposal over others much more important for the NNS to work properly such as 55651 and 38985?

In my opinion it shouldn’t have been a priority as it doesn’t provide significant benefits to the average stakers, if anything it makes the already complex system harder to understand and use.

We consider other features that are planned to have a lower priority and hence suggest tackling them after the SNS rollout. This includes for example the work on compounding maturity, the community fund and spam prevention.

It also seems to contradict what was previously stated, Dfinity didn’t have time to work on a true spam fix due to the SNS taking up all the resources, but somehow the least useful feature got prioritized and is about to be shipped. Do internal plans change that often in a matter of weeks? If so Dfinity should do a better job at communicating them.

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If it’s opt-in and you can’t opt-out, then for those who opted-in they wouldn’t be able to predict the ICP from the maturity, correct?

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It is not entirely clear why the developers should waste precious time on such an update. How does it improve the IC network? This will only complicate the understanding of staking for beginners, for whom these neurons with dissolve delay and maturity were already difficult to understand.

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It sounds like the new system is not going to be opt-in and the +/- 5% modulation will be enforced for all minting of ICP rewards. It that’s the case, I would suggest that for the sake of the UX, Merge Maturity should still be supported. That is, there should be a Merge Maturity button (i.e., convert liquid maturity to staked ICP) that does something like this:

The merge maturity operation begins a 7-day clock that completes with a modulation of the amount to be merged. At the end of the 7 days, this final amount of newly minted ICP will be automatically added to the staked ICP of the neuron.

This would be a better UX than having to go through multiple steps to merge maturity (disburse maturity, then remember to increase stake 7 days later).

Afaik there is a new type of maturity introduced with this proposal, called staked maturity, which will be used when merging maturity in a neuron.

Yes, I understand the new stake_maturity functionality described in the proposal. I’m suggesting that the existing merge_maturity functionality could also be included, but in a modified form to fit in with the rules of the new system. This would be useful for neuron holders who stake their voting rewards and want to pay taxes for those rewards in the year the rewards are received, rather than waiting to pay taxes on those staked rewards until the neuron is dissolved.

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Measures originating from the community are not treated the same as those originating from within Dfinity. Since governance proposals are not self-executing, we still depend on Dfinity, and it is no surprise that they prioritise their own priorities. In this case, the instructions came from the very top, too.

I will include this suggestion as an input in the discussion on the next phase of the implementation of the motion proposal.

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This is great, ideally we don’t need to wait for 7 days but immediately convert the maturity into staked ICP with the modulation applying of course.

Could you also speak with the team of the possibility to convert the STAKED maturity directly into STAKED ICP eventually ? Currently, the staked maturity is sentenced to keep being staked maturity until the neuron dissolution without any possibility of conversion of this kind of maturity.

By offering the possibility to convert STAKED maturity into STAKED ICP, of course applying again the price modulation, people can come back from STAKED maturity to ICP without having to dissolve their neuron : by doing this we offer the possibility to those wanting to EVENTUALLY get ICP only to benefit of the auto compounding feature (because, yes, some people don’t want to get STAKED maturity).

In summary, we need more conversions to staked ICP, even applying the price modulation because some people want to keep staked ICP ONLY and then don’t want to use the staked maturity, but maybe they could find benefit in using it if they could use it to auto compound before converting the stake maturity into staked ICP.

I think that, as long as you keep your price modulation feature, and then the unpredictability of conversion, these other possibilities are legit.

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I will also include this suggestion as input for the discussion on the next round.
As mentioned above, personally I am a bit sceptical because this seems to go against the spirt of the motion proposal, but I am happy to collect further opinions on it.

Thanks for the input and yes I will include the ideas on conversion to staked ICP in the discussion with the team.

As a side comment: The purpose of the 7 day period is to have the uncertainty thus immediate conversion would probably not work.

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I understand ! Thank you very much.

Will we have to possibility to mint a portion or 100% from a 8 years staked maturity to a 8 years ICP neurons?
Or if a staked maturity account is completely frozen for the choosen time just the same as an actual neurons?
Will we have to possibilty to manage both an ICP staked neurons and staked maturity neurons?

thanks for clarifying

No

Yes

There is no such things as staked neurons. Neurons are currently constituted by :
– staked ICP (it is not the neuron which is staked, but ICP : you stake ICP to create a neuron)
– maturity (so said « liquid »)

Once the proposal implemented, a neuron will be constituted by :
– staked ICP
– liquid maturity
– staked maturity (if you previously staked liquid maturity)
You will be able to disburse your liquid maturity as ICP or stake it as maturity, in the second case, it will become a staked maturity that you won’t be able to manage anymore once staked until your neuron’s dissolve delay reach zero, just as you can’t do anything with your staked ICP before the dissolution of your neuron.

So see the staked maturity as staked ICP without having totally the same nature (you will even be able to have a neuron with 0 staked ICP and 100% of staked maturity).

So, one neuron : staked ICP + maturity (to disburse or to stake). If you stake the liquid maturity totally, your neuron become : staked ICP + staked maturity. And you won’t be able to get back your staked maturity before your staked ICP (or the contrary) : they are staked in the same boat, called « neuron » !

Only one difference : you can “exchange” your liquid maturity for staked ICP (it is explained in the proposal), by doing this, you kind of withdraw your staked ICP and replace them with staked maturity ; to say it differently, it is like indirectly convert staked ICP into staked maturity, BUT you can’t indirectly convert staked maturity into staked ICP : here is the difference between staked ICP and staked maturity : one can become the other, but the other can’t become the first one (this is how you can eventually have neurons constituted only by staked maturity without implying any staked ICP anymore).

This is why I was asking to @bjoernek the possibility to exchange the staked maturity for staked ICP, rather than only allow exchange the staked ICP for staked maturity : some of us prefer having neurons without any staked ICP, for countability and tax reasons, but not only this.

I hope it will help you.

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Wow, million thanks for your generous explanation.

Mays I ask you quickly the process for someone who will want to use a portion of his rewards every month? Example a person receive approximately 100 ICP equivalent in maturity and want to keep approx 20 icp for living and reinvest the rest in the 8 years lock up maturity? Will there be a way to cash only a portion on regular interval?