Proposal: Permit transfer of neuron ownership

There is a feature of the NNS that I would like to open up for discussion, to gauge whether it merits a more detailed motion proposal.

In brief, at the moment the NNS actually goes to considerable lengths to avoid transfer of neuron ownership. The private key used to create a neuron is the only key that can control that neuron, creating issues of trust if one wishes to transfer the neuron to another owner.

The proposal I’m suggesting is:

  • remove this restriction from the NNS and stop using it as a guiding principle for neuron ownership
  • allow the controlling key of a neuron to be modified. In the simplest case, this would be a simple change from one key to another; in the more complex case we could support 1 or more keys, and optional multisig permissions, where at least N of those keys is required for specified operations
  • if the key is changed, it would be best if the message to enact that change required a signature from both the old key and the new key, both to guard against typos and to ensure that the new key is valid

These changes should require only a bit of extra support in the NNS (more if multisig is adopted), and I anticipate it affecting the stakeholder community in at least these ways:

  1. Neurons may be transferred to another key holder
  2. Neurons may be controlled by a different device/key from the one used to create it
  3. Neurons could be bought and sold on a secondary market
  4. Neurons could be liquidated before the end of their dissolve delay
  5. A person would be able to temporarily purchase voting power, which may mean that certain restrictions perhaps should be applied to a transferred neuron (for example, it cannot vote on proposals existing at time of transfer)

The main idea here is to monetize the “time risk” associated with a neuron, allowing market dynamics to assess that risk relative to the IC’s health and future prospects. This could either help or hinder supply flows; more thought would be needed regarding the effect on tokenomics.

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Where do you stand on this topic? I can’t tell if you’re just trying to start the conversation or if you believe that neuron transfer should be allowed. I value your opinion and therefore would like to know what you think.

I was hoping this would happen - love the idea. If someone wanting to unstake their 8-year dissolve delay neuron early and “cash out” so to speak. This would allow a finance company to purchase the neuron at an agreed upon discount and the neuron would get reassigned to them. Who’s gonna set this up? :slight_smile:

If the motion passes the right thing to do would be to set up a DAO to purchase neurons if people want an early exit, no sense in giving a finance/bank company more power. The DAO can arbitrage the purchase of ICP filled neurons for a discount, cents on the dollar. Ownership of the neurons go’s to the DAO, the community should own the DAO and we all profit from someone’s early exit from their neuron.

Hope this makes sense. Maybe even have an option like we do for the community fund to opt into the DAO to purchase Neurons from identities that want out…

Thanks for asking: I very strongly support transfer of neuron ownership. If disincentives are needed, that can come in the form of discounts against dissolve delay, for example; then the market should reflect whether trading neurons is positively or negatively correlated with price, rather than the choice that was made at genesis to disallow all transfers.

Do you have concerns that organizations with deep pockets will buy neurons at steep discounts and accumulate disproportionately high voting power? Do you have concerns that this will drive the price of ICP down since token buyers who would otherwise be buying off exchanges will shift to buying neurons? It seems there could be a lot of genesis neurons who would be willing to sell at a significant discount. I would imagine you have given this a lot of thought and I’m curious how these kinds of arguments have affected your opinion on neuron transfer.

If neuron transfer were allowed, then do you have specific disincentives in mind that you think would be fair?

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Now, would this mean that, say I staked a neuron on the NNS directly. However, I now would want to switch or transfer custody of it to say the nns app on my ledger nano s and store it there. I could? I personally have been crossing my finger for this exact case. However, I have been waiting for experts to weigh in on the vulnerabilities of making a neuron transferable.

What would be (if any) new liabilities or issues that could arise with creating a transfer Neuron ownership such as this on a security level? I am 100% for this if it is safe. I think it would be an excellent way for average users to stake on the NNS and then be able to move said neuron once they’ve become more experienced and have a proper self-custody hardware wallet

EDIT: if selling staked neurons does at some point become a taboo issue or thrown down by consensus would you still consider drafting a proposal that would allow users to only transfer for described reasons I mention

I think that an organization with deep pockets whose objective is voting power wouldn’t need this mechanism, they would just buy ICP and stake it. The argument could be made that the ability to divest that neuron later makes it easier for such an organization to make that choice, since they wouldn’t be locking themselves in, but I doubt this would determine their business model.

But here I will point to the “other blockchain” argument: Many other networks that support staking allow for easy entry and exit. I vote on Cardano, and can remove my stake at any moment without penalty. This has not ruined their viability as a voting platform nor been a noticeable factor in driving their price down (at least, no one points to it being such).

The disincentive I most prefer is that dissolve delay should correlate to discount, and that this should be set by the market. In other words, imagine a neuron trading site where buyers Would post bids of what they’re willing to pay for X ICP at N dissolve delay, and sellers could decide which of those bids to accept. Since this correlates somewhat to “value at dissolution”, I can imagine an options pricing model being applicable here, where price and volume volatility would contribute directly to those discounts.

As to who would build it: https://axon.ooo/ is already a great idea just waiting for more neuron control.

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“Only transferring for specific reasons” is a very hard door to open, since the mechanism to determine those reasons must allow for full, decentralized automation.

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point taken. Hmm. Well, I guess I’d support it, and hope that transferring for the reason I described comes along with it as an added bonus. I staked to avoid “weak hands”, yet do often wish I could move off NNS directly. Just throwing it out there.

Yes, there are a lot of reasons to want to transfer keys, aside from early sale or purchase:

  • Move onto or off of the NNS dApp
  • Replace a compromised private key
  • Split a neuron and distribute the parts to future heirs
  • Move from a NitroHSM to a Ledger Nano (this affects many node providers)
  • Key diversity if you decide you’d rather not keep everything in one big neuron
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Yes, yes,

and more yes. Please create this proposal like yesterday. This is what I want, and have been waiting for. I do not care about the selling it would just be a bonus for those who do want to leave.

See previous discussions: Proposal: Remove the is_self_authenticating restriction on Neuron Ownership

I personally think this breaks the NNS if it doesn’t impose a massive penalty. And if a market based penalty does emerge it becomes a variable that can get pretty out of whack and cause serious problems. The only thing that makes the NNS work is the demand that you “suffer” the consequences of your vote.

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Thanks for sharing this helpful thread.

I disagree, buying lots of ICP influences the price directly and locked ICPs will likely cost less than liquid ones due to the risk associated with them.

Making neurons more liquid also means the deflationary effect provided by the NNS is reduced, cause if someone wants to buy VP he now has 2 options: buy tokens from the market or buy neurons at a discount.

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Just a general question @Zane are you (we) talking about a possible equity issue? I just want to clarify in a language I better understand.

Can you say more about why this would be so, and why other projects have not needed this penalty?

Other projects don’t have multipliers based on lockup periods afaik. The current system gives more VP on the premise value has been locked for a longer timeframe and the increased exposure to the ecosystem incentives better decision making, this becomes irrelevant if it becomes possible to sell the locked stake to someone else, cause at that point neuron’s market becomes a greater fool type of economy.

If neuron transfer is here to stay and it seems it is no regardless of what the NNS officially decides, then it might be better to scrap the 8 year lockups altogether, come up with a fixed APY for a lower timeframe and call it a day.

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I’m sorry but I don’t quite understand your question.

I see what you mean, yes, that could indeed be a counter-argument.

so, maybe it was not just to you but more general. My apologies. I am saying that if investors do sell out at a penalty or loss even and VPs buy them up would this not create further inequity in markets? Or would this not perhaps create an event where newer users may be taken advantage of when the market fluctuates as we see now?

Edit this could be what we are/ have mentioned tad slow sorry