All, make sure you’ve read the update I added to the main post – the proposal changed within an hour or two of it being made. Give me some time and I will create two new topics for the proposals, one which will be an updated version of Proposal 1 incorporating the discussions of yesterday. Thanks for participating in this discussion.
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Thanks @dominicwilliams let’s do this baby! Also can we maybe increase cycles burn rate? Like maybe 2x?
Also @dominicwilliams the reduction if you go from 8 to 5 should align with where you’re at now. So if I’m at 7 years it should go to 4 years. If it’s 7 years 300 days, 4 years 300 days. The at way we all don’t have a massive dump on 5 years exactly.
Speaking on behalf of the Personal DAO team: I have no issues with the updated version of Proposal #1 in which existing 8 year neurons are unaffected while limiting neurons hereafter to a maximum dissolve delay of 5 years.
I also have no issues with Proposal #2
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Hello @Manu and @dominicwilliams and big Hi to all who committed for 8yeargang!
After reading the original proposal and many comments I came to the conclusion that the easiest way for us to find the best solution to any proposal is to firstly express what is out clear interest and expectations so that Dfinity team could come with the best solution. In the same time we need to be clear that all of us understand correctly how rewards function works, as i still have questions. I never participated in the forum before, but this is a very sensible topic so I created the profile and I hope you will read. Many of you know me from X, by the same name.
[1] Who am I and what I expect from ICP protocol?
I am an ICP investor since November 2021, started to buy ICP at 50$ and DCA-ed until the bottom. I am now an ICP whale with an average price of 5.5$ and I committed half of my ICP to an 8 year neuron.
My neuron is in NON DISSOLVE STATE and I don’t plan to hit that button in the next decade, instead I plan to add more ICP to the neuron and leave from maturity starting from 2026. Since 2026 i will disburse all my maturity and sell later. So regarding to the age of the neuron, for me it doesn’t matter if it is 8y, 5y of 20y, but what matters is the annual yield and the annual (inflation minus deflation), as this affects the price.
I expect to receive the highest annual return in maturity from my 8 year non dissolving neuron and also expect the protocol will have a low annual inflation by 2030 due to deflationary mechanisms.
[2] How rewards function works?
a)What I understand from the “Voting Rewards Function” which is currently at 6.96%, so I suppose the total annual maturity created can not be higher than this percentage. At this moment we have only 50% of total ICP staked in neurons, so I assume the inflation from non-staked ICP and non voting ICP goes to the ICP that are locked in neurons and do vote and this is how the 8 year neuron which has the most voting power can get up to 16% now. If we assume HYPOTHETICALLY that until 2029 there are 100% of ICP staked for 8 years and the voting rewards function is 5%, then every neuron gets 5% based on the equal voting power and assuming all participated to voting. PLEASE CORRECT ME IF MY ABOVE ASSUMPTIONS ARE WRONG
I don’t understand in this case why so many 8 year neuron investors expect their neuron to give an annual yield of 16% after several years? I have made some calculations and if the rate of staked ICP rises to 75-85% by 2029 and assuming all of these ICP participate into voting, then the estimated rewards of an 8 year neuron won’t be higher then 8-9%. This is absolutely logical. Think if 40% of total circulating ICP are staked for 8 years and have 16% APY, this means just they produce 6.4% of national inflation which is higher than the maximum of 5% expected for 2029, so it is not possible.
b) If my above assumptions are not correct, then we could take exactly the opposite case into consideration and this would lead us to the HYPOTHETICAL case where 100% ICP is staked for 8 years, the “Voting Rewards Function” is 5%, so in 2029 an 8 year non disolving neuron will receive 5% * 2* 1.25 = 12.25% annual return in maturity and the national inflation will also be 12.5% if all maturity is minted into ICP.
If case a) is correct then i don’t see why we have to bother as 5% inflation will be counteracted by 2-3% deflation, but if case b is correct then we have a problem and we have to find a solution to @dominicwilliams 's proposition. @Manu please answer and let me know if A or B from [2] is the correct model. Thank you!
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Proposal 1 makes good economic sense, even more with the latest update. It is not dissimilar to other funding schemes were the investee proposes bringing forward redemption, reflecting that economic circumstances have changed. Those ICP holders remaining long term committed can always redeploy their (ICP) capital by increasing participation in SNS/DAO projects, which we dearly need. This will increase IC utilization and ultimately cycles burned, further helping to achieve the supply-demand equilibrium that we are targeting.
Proposal 2 needs more careful consideration, esp. the fiscal interpretation. Most tax jurisdictions define capital gains as limited to an equal unit of underlying increasing in price. In the proposal’s example, as soon as the units of ICP increase, it is likely to be defined as financial income, not capital gain.
As mentioned earlier, I think we need to solve this problem once and for all. So rather than tweaking staking parameters, we need to tie the total governance rewards to the amount of ICP that is actually burned on a regular basis.
That said, if this approach doesn’t generate enough reward at the moment, then at least consider a limit that is some multiple of the actual revenue of the network. This multiple can be reduced over the next 4-years as natural revenue grow.
See my prior comment:
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Thank you @dominicwilliams, when discussing tokenomics update (shouldn’t be applied often) I wanted to suggest one more modification (hope not too late - couldn’t participate yesterday) which would (slightly?) increase generation of maturity but might motivate people not to spawn a neuron (mint ICP - causing actual inflation) - include part of Available Maturity in calculation of Voting Power
Current VP calculation:
voting_power = (staked_icp + staked_maturity) × age_bonus × dissolve_delay_bonus
Suggested VP calculation update:
voting_power = (staked_icp + staked_maturity + available_maturity/X) × age_bonus × dissolve_delay_bonus
-
value of
Xto be discussed and agreed, e.g. 2 means counting in 50% of available maturity, 5 then 20% … -
this would:
- (further) motivate people to keep maturity even as available rather than using it to mint new ICP (causing inflation)
- (partially) provide a short term staking functionality which NNS currently doesn’t provide
- in general this would motivate people to rather keep maturity than ‘moving’ it as ICP to some exchange
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I have been in the lock for 8 years and I am happy with it. I do not criticize the proposed proposal. It is obvious that nns needs to be constantly updated in order to develop.
I could not understand the 2nd suggestion no matter what I did. Could you please share your ideas so that I can understand what the dom means in the 2nd suggestion.
What’s amazing is that we have the ability to adapt to our surroundings and this is what makes ICP special. No need to fork.
Hi, I think this post should add a link to the neuron sandbox so people can visualize the impact the change will have on their rewards.
I went through that and realized my rewards would be reduced from an average of .25 icp a day down to .21 icp a day.
This brings me to the question if this proposed reduction will actually have the impact intended.
As well as if Dfinity is starting to believe inflation is an issue would the team be open to leading the charge by burning a portion of their maturity rewards?
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If Dfinity proposed 1 and burned a portion of there a rewards to kick start this and make our total supply decrease the angels would cry from the heavens
Would at least show they are taking the lead in the selfless act to reduce the inflation. Would increase community solidarity on this topic.
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Absolutely I agree on this
I’m quite new to the ICP project but I have started building up my 8 year neuron so I could retire earlier and enjoy this life. I also think ICP has a great technology and this project will win long term. As an investor I’m looking for certainty even though I understand this industry is quite new. This being said, as long as reward system can be altered anytime, any changes being made now can be amended at a later stage, providing an unsecured environment for investors. Binance provides an apy of 8% for 120 days, seems more feasible than continuing with nns. Quite dissapointing
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In option A, what you described is correct. The total reward pool for a given day is calculated as the total supply multiplied by the voting reward function, then divided by 365.25. This pool is then allocated to neurons proportionally to their voting power. Therefore, if only 50% of ICP is staked, neurons receive twice as many rewards as indicated by the voting reward function.
For a brief summary of the voting reward mechanism see here.
Additionally, if you are interested in simulating rewards for various neuron configurations, you can explore the NNS Neuron Sandbox here.
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The neuron sandbox was an amazing tool to visualize the impact this proposal has on my rewards. It really should be linked in the original post for people to use.
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While we’re at it let us unlock our neurons with a 10% burn penalty
I think it would be cool if you could unlock your neuron for a 10% burning penalty. Do you agree?
- Yes
- No
0
voters
Good question! Granular data on the flow of maturity on neuron level is not available as maturity is a private attribute of a neuron.
However, we can get some insights from the dashboard (on the aggregated level): On this page, you can see that the majority of voting rewards is not yet spawned; the ratio between undisbursed vs disbursed rewards is approx 2:1 (82M vs 38M). Furthermore, exposed NNS metrics show the amount of staked maturity (which is approx 8M in the moment).