- Last year the NNS approved a motion proposal for financial proposal spam prevention.
- This is planned to be released in March ‘23.
- A new exchange rate mechanism is planned to go live in Q1’23. It will automate the setting of the ICP/XDR exchange rate, which is currently set by an exchange rate proposal every 10 minutes. This exchange rate is used for converting ICP to cycles.
- The new exchange rate mechanism considerably increases the financial incentives for proposal spamming as it reduces the number of NNS proposals, in particular on week-ends. See the analysis here.
- Hence, it was deemed desirable to implement a spam prevention mechanism in parallel with the new exchange rate mechanism.
- An according spam prevention proposal by the community was adopted in September '22. After the SNS launch, the NNS engineering team has now picked up the work on this item from the roadmap.
Adjusting the reward allocation scheme
- After this change, a neuron which votes on all proposals on a given day will receive the pro-rata share in terms of total NNS voting power of the total daily available rewards.
- This amount is identical to the amount received under the current mechanism, in case that all neurons voted on all proposals on a given day.
Weight for governance proposals
- The proposal allows to move the governance weight back to 20 without incentivising spam. This change is also part of the proposal.
- On each day, the total amount of available voting rewards and the actual distributed amount of voting rewards will be exposed as a governance metric.
- The actual code change for the main element of this proposal is small, as explained here.
- The outstanding implementation work focuses on testing & integration. Post SNS launch, the NNS engineering team has picked up this work again.
- The implementation is planned to be released in the next few weeks.
Voting neurons will receive rewards aligned with the reward estimator on the IC dashboard, which assumes that all neurons vote on everything.
Impact on voting neurons compared to current mechanism
- Compared to the current mechanism the impact will be very small for voting neurons.
- On a day without governance proposals, a neuron will receive almost the same amount of rewards as now. Rewards will be lower by a relative amount of 0.6% (e.g. instead of receiving 10 maturity a neuron would receive 9.94 maturity).
- On a day with one governance proposal in addition to an average of 6 further proposals (e.g. replica upgrades), neuron rewards will be lower by a relative amount of approximately 6% (e.g. instead of receiving 10 maturity a neuron would receive 9.4 maturity).
Impact on overall voting rewards post go-live
- Assuming that one governance proposal is submitted every 5 days and 50% participation in governance voting, we estimate that the overall amount of distributed voting rewards will be 80% of the total available voting rewards.
- This reduction is driven by non-voting neurons.
After the approval of the spam prevention proposal, a subsequent discussion in the community focused on the creation of an NNS treasury, which did not find a consensus. Hence, we would like to clarify that this implementation update does not include any aspects of the NNS treasury.