Governance Centralization Risk from Liquid Staking Design

You are better than this @infu. You don’t usually talk such nonsense.

Why was this post hidden @Severin?

I am really asking, don’t know what “start_reducing_voting_power_after_seconds” and “clear_following_after_seconds” does exactly. Or what else can be changed which will matter in this case

@WebTreeSoftwareSolut Food for thought. https://x.com/anvil_ic/status/1916089304494825926
Swapping the skin with another skin where both skins are pro IC.

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Sounds great looking forward to hear how it actually works.

start_reducing_voting_power_after_seconds is the amount of seconds after which inactive neurons start being affected by linear reduction of their effective voting power. clear_following_after_seconds is the amount of time it takes a neuron, that has started experiencing VP reduction, to completely lose its effective VP and have its followees reset.

I think that’s an interesting observation, I gave a look at the relevant code and run tweaked integration tests to confirm it, right now the values can be set to any u64 number other than 0, in which case the old value is used. There isn’t anything that prevents a malicious proposal from setting start_reducing_voting_power_after_seconds and clear_following_after_seconds to very low amounts, e.g 1 sec, in which case the NNS would immediately lose all the inherited security from followers. So this could be used as a governance attack vector, at this time the VP dynamics for the Network Economics topic seem similar to the ones for ICOS version election with DFINITY casting a supermajority, exception made for the last NE proposal for some reason, but it should still be kept in mind that if this were to change in the future, it could be used to damage the network.

For starters it might make sense to add more validation for those fields to make sure they are never set below sensible values, just like it’s already done for neuron_minimum_dissolve_delay_to_vote_seconds. Removing these checks would require a new replica version and if someone has majority on that topic they already effectively control the network.
Then it might make sense to extend the VP snapshot feature, which the NNS team is currently implementing, to not only detect suspicious VP spikes, that could be caused by attackers using a vulnerability to inflate their VP, but also sudden reductions in total deciding voting power.

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Probably best to check if maximum_node_provider_rewards_e8s has a limit as well, in case someone decides to go for it and excuse themselves with “Code is law”

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I like your thinking @infu, as usual. This sort of begs the question of why staking on the IC (NNS and/or SNS) doesn’t already amount to offering liquidity (instead of the stake just sitting there). :thinking:

I think the reason is that it introduces trust assumptions about who/what is managing the liqudity pool, how it affects competitiveness/incentives for other DEXs to emerge, as well as the complications of impermanent loss (the stake you started with isn’t necessarily the stake you’d end up with).

On the other hand, the trouble with this sort of thing not being implemented at the base protocol level is that liquidity provider solutions / liquid staking solutions need to compete with the rewards that the pre-existing (base protocol) staking option is able offer (in the form of governance rewards). Unless of course they utilise staking at the base protocol level in order to pass on those rewards (working with the existing aspects of the base protocol rather than competing with it - as WaterNeuron does).

Anyway, I like your thinking. The IC could do with more high quality liquid staking options (particularly ones that do a good job of incentivising liquidity providers). I think the problem is harder than it seems though.

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Actually contrary to other concerned members in this thread, I don’t think that the Voting Power is the primary motivater of this project (from an investment standpoint).

From an investment standpoint the value propostion is when the the amount of ICP deposited by nICP holders exceeds the size of the DAOs 8 year neuron by a factor of 18. At this point the net flow of ICP will be from the nICP holders to the DAO, an extremely lucrative opportunity for the DAO members. The voting power is simply a massive added bonus to give them the power to secure the strong financial position they are building.

Given statements from people such as @wpb, who said he is willing to support a proposal to reduce the max cumulative VP for canister controlled neurons to 5%, I would say both parties have interests in maintaining an ammount of VP that is healthy for the network. As both parties must consider future players down the road, who could dwarf their marketshare very quickly.

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Well they’re working with Coinbase, and therefore you can expect 10-20m ICP coming into the contract (which is being formally verified).

It’s part of a multi-faceted attack on governance.

Wenzel says he’d support 5%, but would he? Really? :slight_smile: Maybe his meagre tiny CodeGov vote would vote for, but Synapse because its “decentralised” maybe would push for no.

You guys are being played, it’s obvious.

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well, you could call his bluff and submit the nns proposal. Then we’d know.

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Not when I’m about to flood that 10% with staked ICP of my own.

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Politics aside,

I just hope we can focus on projects that add value to the network.

And not compete over who can build the best / or most decentralized money printer.

Everyone can already have their own money printer (by sacrificing their liquidity and staking in the nns).

We need to figure out ways to sustainably burn more ICP, and right now we’re building services that will just print more. And in the process, slowly move those funds from the hands of the less patient to the more patient. (That’s the ethics part). Markets already do this naturally, we need not create complex mechanics to leverage peoples’ impatience any more than what naturally occurs.

Too many projects are turning to the business model of having massive neurons and finding clever ways to redistribute rewards. This doesn’t actually add value to the network (in my opinion).

Hopefully caffeine will help solve this problem.

yes you are absolutely right, @borovan should take better care

Thats what Im doing, you just got it in the wrong order.

Control and tear down the bad ones that have no right to be featured in the NNS.

Build and improve the good ones.

It’s not my fault you’re on the wrong side of the tracks here.

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You are very wrong adam.

The majority of the people who are supporting you have done shady things already.
Anvil botted sns1
Jordy promotes rug pulls
YSYM got paid to spam the nns so people like you can get free icp.

You are who you surround yourself with.

You even attempted a cycle drain attack on a dao because you don’t like other investors. You crippled another dao because someone else didn’t invest.

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https://dashboard.internetcomputer.org/sns/jmod6-4iaaa-aaaaq-aadkq-cai/proposal/3062

Nice work! Here’s your WTN bribe.

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