Possible Optimizations of NNS Tokenomics (Updated!)

Ok, so in your case as an 8Y, even though your dissolve delay would drop to 5, and you would get the same returns as a 5Y now (because your neuron age stays the same, etc). You would still feel it was a negative?


Option 1 makes sense to reduce inflation. I’d also argue it’s a good idea to just keep it simple and make the change on all existing and new neurons. Yes it’ll go down for some neurons, but c’est la vie. It doesn’t seem so drastic.

Option 2 I’m less sure convinced by. As it exists today, one can make the argument maturity is not income. It’s not a slam dunk, but there is a reasonable argument. Introducing the withdrawal of locked ICP as a tax-neutral transaction, I fear will be viewed by the tax authorities as taking the piss. It seems to be going one step too far. Right now we have a good setup. Why push them over the edge?


Would you feel the same way if the dissolve delay bonus was modified to benefit long stakers, such that after adjustment an 8Y–>5Y, your 5Y something more similar to 8Y?

(I’m not necessarily suggesting this, just asking)


Most of us that went for 8yrs has no plans of ever dissolving, so bringing it down to 5yrs makes no difference to us. We already made plans with the 16% per annum. We only worry about anything that is reduced the rewards and affect our annual income


How many times do we reduce voting rewards, which is the primary incentivization of staking ICP & voting to secure the network, to offset the inflation caused by other factors of the network?

We’ve already been down this road once before.

  1. Genesis and marketing towards 8 year gang
  2. Some ppl believe in the project and go into 8 years stacking

Followed by the NNS screwing the tokenomics of the 8 year gang by the following proposal :

  1. Reducing comparative rewards by removing proportionality of the rewards / time
  2. Fighting against the possiblity to trade neuron ( sorry it was obvious that it would be possible and will still be in the future btw ) This is again affecting 8 year gang the most
  3. More proposal / intentions to change tokenomics during the years…
  4. Finally this ???

How could new investors trust long term investment in this protocol If people change the rules all the time ? What are even the gains ? Why would inflation even be an issue ? You sacrifice the trust in stability for some questionable gains ?


@dominicwilliams people have made LONG term plans based on current situation… you are going hurt alot of us… me included… if this happens it hurts me IN REAL TIME…


Yes dom, when I decided to lock I made a investment plan like always, again I’m an investor, I understood that the curve would tend to go down, but in 4 years I would find the equilibrium point with the age bonus at an adjusted 16%, I never thought about dissolving since I understand the long-term potential, and I never thought about selling all the capital.

We can find a way to stop selling pressure from the big whales like VC’s in that’s the concern, but not affect us the ones in the middle, this I guarantee will create panic, personal experience, I used to run a crypto project too not that big, things went wrong once we decided to modified rewards. Created a panic sell pressure and lost confidence, once you lose confidence in your users and investors you are done…


Hi All

None of these proposals seem outrageous to me, do I do see @dfisher’s point on the second one. My main question is: How much does the network have to grow to become stable or even deflationary at a certain reward level? The initial thought was that the network would surely generate at least 5% (eventually), if that’s not the case and we’re reducing it to something like 4% how much faster is it going to get the network to deflation/stability? What is the target? Deflation? 2% inflation like regular economies?

I feel like without knowing those numbers/having a plan this might have to happen over and over.


It sounds like the goal of this proposed change would be to reduce inflation. If that’s the goal, I think we should really consider implementing the periodic confirmation on following. We still have < 60% participation on the governance topic since removing it from “all topics” more than two years ago. That suggests to me that implementing periodic confirmation would cut the inflation by 40% without affecting any active users.


This is brilliant, and a motion proposal was already passed a while ago asking for it!


It sounds like the goal of this proposed change would be to reduce inflation. If that’s the goal, I think we should really consider implementing the periodic confirmation on following. We still have < 60% participation on the governance topic since removing it from “all topics” more than two years ago. That suggests to me that implementing periodic confirmation would cut the inflation by 40% without affecting any active users.

This, but there should be a note that there are levers on the other side of the equation, like increasing prices/reducing subsidies. The IC is a wonderful platform and shouldn’t need to be 1000’s of x’s cheaper than other chains.

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@dominicwilliams what if this applies to new neurons created after proposal approval, make a big marketing campaign by community where potential investors will see this as their last time to make them up with a 8year neuron, this instead of creating panic and selling pressure creates buying pressure in the weeks or months before proposal is made, as it will obviously pass as most of 8year neurons, and every other year neurons will vote to approve it.

AThis can apply to genesis neurons, and new neurons, also you said there are vcs not staked so I don’t see how reducing rewards for middle class will affect them.


Think this is a better option to to see if we can stifle some inflation
Lets try this 1st :clinking_glasses:


Overall, @dominicwilliams both of these ideas are extremely clever, it’s awesome to see you thinking about things at this level!

I feel like a DAO should generally keep its promises. As long as existing 8 year neurons remain with the same dissolve delay and reward rate but new neurons could only stake up to 5 years, then all prior promises from the NNS to its users would be kept. In that case, I think there would be a generally strong amount of community support around both of these proposals.

The sensitive thing here is making sure confidence stays strong that governance rewards (and tokenomics in general) will remain fairly stable and not leave people feeling rugged.

Someone should be able to stake ICP, set it to follow a known neuron they trust, and then come back in 5 years with no surprises waiting for them. If that’s not the case, a lot of people won’t be as eager to stake because they’ll feel that rules might be changed at any time from under them.

Also, while inflation is important I also see a lot of value in having as much ICP as possible remaining locked into the NNS.


I hear your concerns about tax authorities, but how authorities treat this kind of things comes down to tax law, and possible contest of points of law where things need clarifying (e.g. case law). The design of the current system doesn’t enable tax avoidance, or reduce tax revenues that authorities receive (in fact, quite the opposite), but it can provide a much more workable framework that allows people to time when they generate taxable income.

Participants in NNS governance choose when they will engage in the production of new ICP/income. Unless they have a pressing need for funds, they will choose to do so when there is a buoyant market for the ICP they are creating. This results in the production of more income, and significantly more revenue for tax authorities over the long-term.

So tax authorities have no reason not to like the way the NNS is designed. However, in the end, tax law trumps all. The question is, when a neuron gains maturity, will the laws of your jurisdiction classify the neuron’s maturity increasing as representing clearly realized income over which you have full dominion – I would argue mostly not, since it’s not transferrable, has no quantifiable market value, the amount of ICP it will produce is indeterminate, and even the meaning of maturity can be changed by NNS updates/it’s not a cryptocurrency. But where there’s debate, in the end local courts have to resolve it, which is why it’s important always to get your own tax advice.

Going back to Option 2. There is nothing naughty about this either. If you release your own pre-existing locked ICP and pay capital gains when you sell it or swap it (which may happen sooner than later now) then you’re paying the same kind of tax as when you dissolved your neuron. So from the tax authority’s perspective, this is tax neutral.


This is 100% what should be done first before the stuff dom has proposed.


think their are presented more then one solution to reduce inflation on this forum i to be fair everyone in the network should be slashed in rewards equally stakers but also node providers for me it really give a bad impression when literally a proposal was adopted to reduce the inflation here Proposal: 55651 - ICP Dashboard but it was never honored
Node Provider Inflation Spiral - #13 by Cryptobaasnl


But i staked for 8 years and the plan was to never dissolve. Its the 8 year gang. And now my plan just goes away, i dont like that. I staked for 8 years and made up a strict plan for all of it, i want to keep my 8 year neurons and 8 year neuron rewards. Sorry to have a different opinion.

I think 8 year neurons should stay in existence, and from that point on there shall only be 5 year neurons max, and those who staked for 8 years until that point can keep it.

Or those who have a 8 year neuron that is not dissolving until that point, should be able to keep it.
Something like that. As a thank you to the hardcore believers.