Dfinity Communication Regarding Tokenomics Changes

Proposal Author

Wenzel Bartlett (Forum: @wpb; Twitter: @BartlettWenzel)

Introduction

Several people in the IC community have commented in the forum and on social media that Dfinity should communicate changes that affect tokenomics so more people are aware of the changes. This proposal is an attempt to formalize that suggestion. It is possible that Dfinity does not want to or cannot send this type of information for legal reasons, but perhaps they can do it if the community requests this action by way of governance proposal and a decentralized decision by the governing body.

Proposal

Dfinity should send a communication to their email distribution list(s) that they believe are most likely to reach current ICP stakers. This communication should include information about tokenomics changes that have occurred since genesis including changes that have been approved for implementation by way of governance proposal. It should include relevant information about proposal 34485, proposal 55651, and proposal 48623. The communication should also include a description of how ICP stakers can currently maximize voting rewards. Below is an example of a letter that would comply with this communication proposal. This letter is not required, but it is provided in case Dfinity wants the communication to be drafted solely by the community.

—- Begin Letter —-
Dear ICP Governance Participant,

We want you to maximize governance rewards. ICP is a governance token. Staking entitles you to vote, but voting entitles you to voting rewards. Voting rewards cannot be earned unless you vote and ICP tokenomics is intended to incentivize participation in governance. It is a mutable governance system and changes have occurred since genesis that are intended to incentivize participation. This letter was written by members of the Internet Computer community in order to communicate and educate as many NNS governance participants as possible about these changes. It was posted on the forum, deliberated by the community, and presented as an NNS proposal. The proposal specifically requests that Dfinity Foundation send this letter via email to the email distribution list(s) that they believe have the highest probability of reaching current stakers in the NNS.

A major goal of Internet Computer governance is decentralization. Significant progress has been made over the past year, but there is a lot of room for further improvement. One change that has catalyzed progress is proposal 34485, which was deliberated and approved with overwhelming support by the governing body in late November 2021. This proposal had two objectives: 1) remove the Governance topic from the All Topics “catch all” and 2) weight proposals so Governance topics have much higher significance to voting rewards. The proposal was implemented in mid February and governance participation went up dramatically from approx 5% in December to approx 45% by late March. Since implementation, neurons that are voting on Governance proposals are earning significantly higher voting rewards and neurons that are not voting are earning significantly lower voting rewards. This change was designed to incentivize people to select Followees for the Governance topic, including new choices to follow public known neurons like the ICP Maximalist Network, Cycledao, and ICDevs. Everyone who stakes in the NNS can start earning voting rewards for participation in Governance topics. It only takes a few minutes to select one or more Followee for your neuron in the NNS dApp at https://nns.ic0.app. A great source of information for how to configure your neuron is the internet computer wiki at https://wiki.internetcomputer.org.

A more recently approved change is proposal 55651. It specifically recommends confirmation of Followee selections every 6 months and automatic reset of Followee selections if they are not confirmed. Removal of Followees will cause the neuron to stop voting automatically, and therefore, stop earning voting rewards. The purpose of this change is to ensure that neuron owners are making active decisions on who they want for their Followees and also ensures that the Followee cannot have permanent voting power from the follower if the neuron owner is inactive. The goal of this proposal is to increase governance participation by incentivizing inactive neuron owners to actively select a Followee for the Governance topic.

Finally, proposal 48623 is intended to change how maturity is handled by the NNS governance canister in order to avoid problems with incurring a tax burden and to enable compounding maturity with the least manual effort. This was the most controversial of the proposals that have changed tokenomics and you are encouraged to read the proposal in detail for more information.

Everyone who is staking ICP should know that the governance system is mutable. It can and will change over time in order to incentivize participation. Even with these changes, the amount of work it takes to actively participate is minimal. You just need to remain aware of changes and to spend time deciding what neuron to follow to help you maximize your voting rewards. At this time, the easiest way to maximize voting rewards is to configure your neuron with a Followee for the Governance topic and for the All Topics Except Governance “catch all” category. Soon you will also need to confirm your Followees periodically, but this should be a very simple task 2 times per year in the NNS dApp.

—- End Letter —-


The information below this line will not be submitted in the proposal.

Schedule

This proposal has been deliberated for 7 days and the comments have gone quiet. The proposal drafted above has been revised according to community feedback. It will be posted for further deliberation for 3 days and then it will be submitted to the NNS.

Crowdfunding

This proposal has been generously funded by 4 individuals so far. This crowdfunding effort was intended to raise the proposal reject fee of 10 ICP (goal exceeded) by at least 20 people (goal not achieved yet) who would be willing to offer microdonations as a way to “sign the petition”. Donations of any amount to the account listed below are welcome. All donations will be used to top up my proposal neuron listed below, which has an 8 year dissolve delay (not dissolving). Deposited donations cannot be refunded.

Donation AccountID: 10517e297382fd13abf9a1d05ab35b67a6875e26462d881d87418206094e4b84
NeuronID: 12008772471346176261

Attention Tags

@Kyle_Langham @cryptoschindler @LightningLad91 @Zane @justmythoughts @skilesare @ayjayem

9 Likes

Thank you for everything you do :pray:t4:

You’re a true community champion!

4 Likes

I have concerns that the community is still unaware of proposal 48623.

I’ve heard people make statements about how they’ll “live off [their] neuron”, which isn’t realistic with 48623. The information has yet to trickle down, and it’ll shock many once they realize.

I’d be grateful if you could also include 48623 in this proposal. It’ll bring sufficient change relative to NNS at Genesis that it also warrants an official claim.

Thank you again!

3 Likes

Good point. It should be included in the discussion… Would you please draft a paragraph that you think is complimentary to this letter?

FWIW I don’t think proposal 48623 will have a very big impact on rewards and returns in practice, but it is a change that should be communicated…

1 Like

Thank you!

How I think of it is that it’s not possible to “live off your neuron” with the new change. It’s best if people are aware so they don’t make uneducated decisions that could end bad—like poorly planned retirement then run out of neuron money :smiling_face_with_tear:

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To my understanding, I can be very wrong, proposal 48623 will have a very big impact on rewards and return. It should add 30 millions ICP (probably 60 millions voting power) to the rewards because all maturity will then vote. The 30 millions come from the maturity not minted yet.

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I don’t think the modulation portion of the proposal is going to be very dramatic in practice.

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This is probably true, but there have never been any promises of APY returns for voting rewards. There have only been announcements of current APY and explanation that the daily voting reward pie is divided among currently voting neurons proportional to voting power and proposal weights. They have always been dependent on total participation in voting and they still are even with this proposal. To me, this point is like announcing that a big neuron was created or increased their dissolve delay on Dec 31. This kind of increased staking should be expected already and doesn’t really need to be announced.

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Thank you to whoever made a generous donation to more than cover the proposal reject fee.

Now we just need to reach 20 micro donations to fulfill the objective of “signing the petition”. Please help spread the word.

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Thank you so much for leading this. Communicating tokenomics changes widely should help ensure that stakers engage productively in IC governance. Dfinity is probably best positioned to reach those who aren’t on other channels (Twitter, Discord, this Forum, etc.), so very much support this proposal.

2 Likes

I think it would be nice if notifications for this feature came through the IC directly and not email.

Hopefully tokenomics changes are infrequent, so DFINITY can submit a special “notification” proposal to the community and then all the telegram bots and what not will pick that up.

I’m sure someone could build an SMS/email bot for the IC as well.

Maybe a better solution would be for a developer in the community to build a notifications bot that lets you know when a governance proposal has passed (as well as the one that lets you know when a proposal was created)?

I agree that some sort of announcement feature for tokenomics changes in the NNS dApp on the Neuron tab is a good idea. I intentionally don’t want to load all the potential communication methods into one proposal. I think you should make a proposal to take action on your idea…or some variation.

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Haha I’m tired of making new proposals and talking governance for right now tbh. Just gonna comment loud and grumpily as always :smirk:

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This is funny and I can totally relate. I really want other people like yourself to get involved and lead these discussions. I’m really impressed with the role you have played since you recently came on the scene as @justmythoughts (even though you may be a known dev in the community by another identity). I hope you don’t get too burned out. We need action oriented thinkers like you more than we need critics IMHO.

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This post was flagged by the community and is temporarily hidden.

Maybe that you need attention from somebody in your life. :upside_down_face:

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Please note this proposal has been revised according to community feedback. See revisions in the first post of this topic. It will be deliberated for another 3 days and then submitted to the NNS for voting.

I would still like to achieve 20 microdonations if possible as a way for the community to “sign the petition” during deliberation. These microdonations could be as small as 0.0002 ICP ($0.003)…it only requires the effort of making the transfer. Even though the crowdfunding effort has raised way more than the 10 ICP proposal reject fee, it has only received 4 microdonations so far. Your help would be greatly appreciated.

This sounds like a lawsuit waiting to happen. If you want DFINITY to communicate changes, that’s fine, but they shouldn’t encourage the community to “want” them to do anything related to making financial decisions (of which staking is one) of any form. Imagine this letter goes out, people stake, and then the price of ICP halves (even if by coincidence).



I still don’t understand why DFINITY is responsible for communicating tokenomics changes that they themselves did not make. It would be one thing if they were giving everyone the opportunity to “one-time” unlock their 8-year neurons or leave the community fund, but I don’t see any of this tokenomics notification being their responsibility.

I can imagine that there was some original email correspondence for seed and other early investors, but I don’t think this really applies to governance proposals.

Imo this opens up an opportunity for an IC organization or subscriber service to follow what’s going on and keep your subscribers updated. Sort of like what @Kyle_Langham is doing with on-chain ICP and NNS analysis, but from a different angle.

Maybe you can start with an ICPMN messaging channel through OpenChat where it’s all just outgoing messages/letters from ICPMN. That gives even more value to those who follow your neuron.

I appreciate the thought and effort that went into writing this proposal, but I don’t think our first reaction to a problem should be to keep volunteering DFINITY to solve it with NNS proposals.

2 Likes

Please note the letter is only an example that could be used if Dfinity prefers for the communication to be penned by the community instead of by Dfinity. I don’t mind edits as needed to make it acceptable and I don’t mind it being completely replaced if needed.

Also the letter is focused on educating NNS participants on the mutability of the governance system and how to maximize voting rewards after these changes. It is not about ICP price.

I agree with you that the community has a big responsibility in spreading the word regarding tokenomics changes. This proposal is my response to the numerous comments I have heard from community members that Dfinity should have a role in this communication. As a community we have spent a large amount of time and effort talking about how to change the system to address the spam problem, but surprisingly little about the need to communicate changes and how to most effectively communicate those changes. Our problem is voting participation imbalance between proposal topics, which I think has a lot to do with lack of knowledge. It’s a fair question to ask if Dfinity has a role in that communication and I hope that putting this proposal to a vote will give us an answer to that question.

3 Likes

That is problematic, and I believe you are right. This proposal will promote centralization -or, at least, delay decentralization- (i.e. more rewards to current wales = delay to deliver true web3 promises.)