Most other staking mechanisms are objective and time bound(eth only requires you to be right when your number is drawn and the next validator is up in the next block) ours is subjective. Only after the the market has incorporated the effect of a voted on change should voters be released from their “skin in the game”. If there are other “subjective” pos systems that allow instant withdraw they would make a great case study. I haven’t gone down those deep holes so please feel free to point to some examples and I’ll take a look.
I discovered that to vote in Cardano, I did need the tokens to have been locked up for at least a couple of months. But I could take them out at any time (and not vote), or remove them just after voting.
I do not think this feature is necessary, if the purpose is to trade & transfer ownership of Neurons with large staked ICP (for institutional transaction), It can be done in OTC market with public notary agreement.
If you just want to monetize the “time risk” to trade associated neuron, but do not want to transfer ownership of the neurons (still keep the VP), this can be done in futures market exchange (an idea for developer the build), or…can use the ‘betting’ platform.
Do you know if this can be done for individuals who want to transfer it off NNS and onto Hardware? Or if the process could be streamlined to do so?
Yes, I aware of that, but it will just put more unnecessary burden to dfinity developers for developing features that are not urgently required, and it can still be done traditional way.
No you’re basically putting all the locked token in another form of circulation.
This would basically kill the project as a whole.
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Hey @jwiegley,
I think in theory I really like this idea. I love the idea that one would be able to monetize their time risk in some alt-exchange for neurons. However, there is one primary concern (And several secondary concerns) I’d like to voice
Potential Setbacks - 1
- Using the current data from Internet Computer price today, ICP to USD live, marketcap and chart | CoinMarketCap , it appears the 24-hour average volume of our token is ~approximately 39M $. (To be honest, I’m not sure of the duration of look back they utilize)
- Combining the Staked: Not Dissolving & Staked: Dissolving data from the Internet Computer Network Status , we have grand total of ~270 Million ICP that could potentially be exchanged if such a proposal is to pass
- For the sake of making this easy to understand – let’s assume 47% of those token holders are interested in exchanging neurons under such a proposal.
- Staked Dissolving / Staked Not Dissolving = x
- 86,526,459 / 183,076,549 = ~47%
- 86 million tokens at the currently residing market price of ~5.30 represents ~460 million dollars.
- The Current market cap of Internet Computer at the time of writing, according to Internet Computer price today, ICP to USD live, marketcap and chart | CoinMarketCap, is approximately 1.4 billion dollars
- Staked Dissolving in $ / Total Market Capitalization = X
- 460,000,000 / 1,400,000,000 = 33% of the entire value of ICP is now exchangeable
- Let us assume some of the whales in this pool have unknown reasons for wanting to hurt the tokens underlying price. Perhaps, their vested interest is now greater in another project. (On my honor – this is not a direct attack on you, nor your intentions. I’m merely trying to imagine the worst case.)
- Here is where I worry – those whales looking to hurt the token now can effectively control the liquidity of the underlying. Why is that?
- Their implied liquidity overhang from selling will be greater than that of the entire daily tradeable volume. I’m not sure why this worries me, but it is something that perks my whiskers… It makes me feel as though whales could effectively put gigantic orders under the residing bid price causing a reflexive effect in market makers who are likely “making” most of the order book on underlying exchanges.
- Let’s make this easy. Let’s say some random participant, “Teri Dactyl”, has an 8-year neuron with 100 tokens for sale 9%. Let’s say another random market participant, “Ander Son”, is asking for 11% for their neuron.
- Now let’s imagine “Evil Whale” comes and posts up a 1Million token/8 yr. neuron order @ 7%. Evil whales only intentions are to hurt the market for whatever reason (We can extrapolate - This would represent ~$5,300,000 at the time of this writing, or nearly 13% of the total tradeable volume of native ICP traded on exchanges)
- “Ander Son” Freaks out and immediately asks for 9%, thus filling “Teri Dactyl’s” Order.
- Would this not cyclically manifest in similar circumstances for the rest of the market participants? Like a negative feedback loop of sorts.
- I guess this could theoretically work in the opposite way. This is still something I would be cautious of. Large whales could effectively price however they please, effectively making the market. The pricing would be skewed towards market participants who hold the most tokens and put their neurons for sale.
I don’t even know if this makes sense, or if this is how the derivatives market operates. I’m making several metric **** tons of assumptions here. Who knows what the market residing price would be. Perhaps the market prices based off Time Bound Risk, Reward rate outlay, Volatility risk, Inflation Risk, Growth runway, etc. Something kind of like “Greeks” in the option world? Any financial math wizzes out there?
I think I’ve heard derivatives exposure is a much greater proportion of implied liquidity than the underlying tradeable for some financial instruments. However, I’d imagine a massive proportion of this is bound up into basket-able securities and not direct underlying names. (Think perhaps a market capitalization weighted index vs. a Specific underlying name)
Could we protect ourselves from those who are looking to spoof orders to their advantage? Such a proposal would have to ensure only “Real” neurons could put neurons for sale. How often could they post? How would they be verified? What mechanism would need to be built to exchange neurons under such a proposal? Who would be the “Guarantor” of the transaction? There is no governing body that would be able to protect token holders from heinous or potentially illegal acts in these type of alt markets. (Guess this narrative could be applied to ANY tradeable crypto market… I Digress)
I must be transparent – for whatever reason, it feels like such a suggestion during a market puke is nefarious in nature John. It just seems a bit odd to bring this up now. You can surely reference several other posts you have made historically. But this looks like the first post you have made on the forum dedicated to this suggestion (I could be 100% lying here – I’ll go back and read through all your posts. If someone says otherwise, please don’t hesitate to correct me) However, I’d imagine you are a large stakeholder ICP regardless of your affiliations with other projects. You’ve poured your blood, sweat and tears into this project surely – and I take your word you want to see this project succeed.
Hope this makes sense. I could be completely off the deep end in my thought. Extremely grateful for what you have done for ICP and our community, John. You have always been a shining light in what feels like a heavily one-sided bureaucracy. Really just want to voice my opinion in the rawest form.
Imagine
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I also think or feel we should be mindful of whales or elitists taking advantage of poor market conditions or any global recession that could essentially further marginalize already marginalized and disenfranchised groups of individuals (such as those from low-income or poverty). Essentially, they could narrow the gap further by creating a further sense of fear in the space (through various media campaigns let’s say) just for the purpose of buying out these perhaps more financially strapped individuals at a significant hit and then jacking the price up shortly after accumulating as a way to monopolize
I appreciate the directness, @ImagineChadParadigm. I actually presented this idea on an internal Notion page at DFINITY several months before launch, so it has been on my mind for quite some time. The other day in the thread New protocol rewards thoughts - #3 by jwiegley someone brought up an idea for improving participation by changing rewards, and there I presented this idea of neuron trading as a way to (possibly) increase participation without touching rewards at all. Then I thought, why not, I’ll present the proposal in a fuller form and solicit feedback to see what people’s ideas are.
I am very much committed to the long-term success of our network, and have no desire to sell my 8 year neurons at a discount. What I would hope to see from this proposal is that an ability to trade money for time would shift the population of neuron holders from seed investors who may not have a great deal of interest in governance, to those willing to buy tranches of those neurons at a discount in order to increase their own voting power.
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NitroHSM keys are pure evil !!!
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Imagine the concerns around neuron markets apply to this thread as well.
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After 31 responses, although some were very much in favor of this proposal, it does not seem to have garnered enough support generally to merit putting forward as a proposal. DFINITY has expressed a desire for there to be no neuron markets, and so enormous support would be needed to ensure passage against their possible counter-vote.
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AFAIK, ICP neurons can’t be controlled by canisters, and they can only be used as hotkeys to call basic methods such as top-up or changing the config of followed neurons. This should be changed, and the mere fear of the ‘neurons market’ seems unfounded to me, because anyone can sell their neurons anyway in the form of transferring the seed phrase of their II by the seller to the buyer.
It will be good to consider this proposal more one time and don’t block implementing useful functions (ex. passive income as ICP neurons owned by SNS Treasury). Thanks for your attention.
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I haven’t read through this thread yet, but just wanted to throw out my current feeling on the topic: it probably doesn’t matter too much if neurons can be transferred. I feel this way because of the extreme difficulty or implausibility of enforcing the restriction, and the fact that other staking networks don’t rely on this kind of mechanism (Ethereum being the largest and most successful) and they seem to be functioning just fine.
Those are my most basic feelings on the topic from thinking about it at a surface level over the past couple years, a deeper dive might change my opinion, but I don’t care too much to go deeper. Fighting this seems like a lot of effort to achieve a mythical security property that in reality could be impossible to achieve or not really necessary.
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This should be changed, and the mere fear of the ‘neurons market’ seems unfounded to me, because anyone can sell their neurons anyway in the form of transferring the seed phrase of their II by the seller to the buyer.
There is clearly intent for them to be locked. The fact that there is a way around it is not a good excuse to let it continue to happen. There are other mechanisms that are or will become possible. Once we have a good mechanism to restrict transfers it increases network security to enact it.
(Ethereum being the largest and most successful) and they seem to be functioning just fine.
I think this comparing apples to oranges. ETH staking and any consequences of decisions made by stakers are closed out at the end of each epoch. The NNS is voting on things that won’t be ‘closed out’ for years.
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Are you talking about governance proposals or a trial IC protocol votes?
In the case of governance proposals those don’t have any real affect just from a vote passing, this security risk is low.
In the case of protocol votes, those are much more akin to validator votes. I see them as very similar in the potential negative consequences of voting. You could take down Ethereum with a large percentage of staking power just like you could with ICP (voting on the protocol, not governance proposals).
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Mechaquan already gave more security risk concern on named neuron in the following link : https://taggr.link/#/post/25426
And Manu already gave its personal opinion that a neuron market would not make it unsecure ( for those that dont know it, it always existed offline and exist now online with the funderful idgeek app ) : Introducing IDgeek - Identity Anchor Marketplace - #4 by Manu
Thank you for finding this 1 y.o topic with more people in favor of it.
All best xx
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Named neurons vote on governance motion proposals. Governance motion proposals do not change code. Only DFINITY is capable of implementing changes approved by a governance motion proposal and it happens in a follow up proposal that is not a governance motion proposal. All neurons were set by default to follow DFINITY on the All Topics catch all category. Hence, when DFINITY votes on the types of proposals that do change code they trigger a total of 99.4% voting power in the NNS (of which DfINITY owns 23% directly). There are many layers of protection to the network. There is zero risk to the network caused by named neurons. Control of the votes resides 100% in the hands of the people who own the private keys to the neurons. Hence, there have historically been features that make it hard to transfer neuron ownership at a discount. DFINITY chose to restrict neuron transfer by way of code limitations, so if that is going to change then I want to hear DFINITY describe what has changed and why it is no longer considered a risk. I also think all neurons should be treated equally in terms of ownership transfer limitations. Hence, it doesn’t seem appropriate for a different set of rules to apply to genesis neurons and post genesis neurons.
Offline neuron transfer means the individuals have to trust each other. I think a lot less people are willing to do that than they would be with an online service. An online service that helps interested parties find each other and provides an escrow service for the neuron ownership transfer is a totally different scenario than it happening between private parties who have to find each other and trust each other. The fact that offline neuron transfer is possible is no justification for an online marketplace.
@lastmjs Agreed that governance proposals do not change code and are low risk. However, neuron transfer at a discount is a transfer of voting power for all proposal topics, not just governance motion proposals.
I think it’s been a long time since we’ve heard an official position statement from DFINITY on neuron markets. It would be helpful if DFINITY would reaffirm previous positions or officially announce new positions. I know John isn’t with DFINITY any more, so perhaps @bjoernek or @diegop could indicate if we are likely to get additional, formal feedback from DFINITY on this topic.
Glad you wrote so much obvious stuff. Could you specify more the above ? When ICP were created ( supposedly equal right ? ) how do you explain that Genesis neuron, on day 1 had already their 25% Bonus reward ? Is that the inequality you want to fight ? So they get back to 0 ? Let me tell you, they are NOT equal, not for this reason and not for the price people payed to get them.
Oh wait, It could be that you are in FAVOR of trading neurons online with this equality argument, since rich people can use institutions to sell them ( offline ) while small retail neurons will never get the opportunity to do this. I love your arguments i have to admit.
Named neurons could be made with 1 ICP stacked and ( could ) have more than half follower. So basically they do not have skin in the game and can influence everything. If you would have read the previously given link, you could see that in contrary, when you buy/sell neuron on a second market, you have to pay a good price for it and so by definition you have a skin in the game and want the best interest for ICP.
Lastly, lets look at the stats, IDgeek have been here for what, 10 days and it traded less than 0.002% of the total supply of ICP. Or also less than 1% of monthly unlocked neurons from genesis. Perhaps you should fight to prevent neurons to get unlocked.
All best xx
I don’t follow your questions or purpose, but I will correct some facts and clarify my point as requested. All neurons, genesis and post genesis, had voting rewards that were in the ballpark of 40% APY (8YG) on day one. Genesis neurons were pre-aged with 18 months, so they did have a slightly high bias compared to post-genesis neurons, but that certainly doesn’t amount to 25% higher than post-genesis neurons. Nonetheless, it was all spelled out in the tokenomics literature and everyone had access to that information. All neurons have been subject to the same rules from day one and my original point is that I believe that should remain in effect. I don’t care if it’s a genesis neuron, a post genesis neuron, a small neuron, or a whale neuron, they should all be subject to the same rules. If neuron markets are going to exist, then they should be accessible to all neurons, not just neurons created with an internet identity. If neuron markets are going to be mitigated, then all neuron markets in all forms should be mitigated when they become known. My position on neuron transfer and neuron markets will be heavily informed by the position that DFINITY expresses on this topic because I believe it is fundamental to ICP tokenomics. If there is a change in philosophy on this topic, then I expect it will come after careful study by experts in the field. I want to hear what they have to say.
This is a fallacy in my opinion. Almost all named neurons are actively involve in governance and they all have skin in the game. Owners of named neurons do not publicize their personal neurons. Most of them create voting neurons that are separate from their personal neurons for privacy reasons. Regardless, who really has the right to decide how much skin in the game is enough? It makes no difference how much stake is in a named neuron. What matters is if they are trusted by followers. Even if they are trusted on routine proposals, there is nothing stopping neuron owners from voting manually on any proposal any time. There is also nothing stopping neuron owners from changing their Followee to any other neuron any time for any reason. And then there is the not so obvious fact yet again that governance motion proposals do not change code. I am an active contributor on Taggr and I am well aware of the post that you linked, but quite frankly I’m tired of contributing to the same discussion over and over again, sometimes with the same people, when nothing new is introduced. I fundamentally disagree with the idea that named neurons are a security threat to ICP.