I wasn’t aware of that; glad you’re still with us in the community 
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Hi @bjoernek,
Thank you for your detailed analysis. You bring up a great point that I hadn’t included in my initial back-of-the-envelope calculations… much of the new voting power from existing neurons with less than 6 months will not vote and thus will not affect the APY. 9.3M of the existing, less than 6 months neurons are neurons 40xx, which DFINITY has already stated will not be voting. In addition, we could assume that the neurons that are locked and less than 6 months will not vote, since my belief is that their owners have never accessed them.
In summary, I think you are correct that the APY would probably drop only a minor amount from this change, perhaps around 25 basis points.
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I think this argument is hanging by a thread…we rely predominately on Dfinity for the development and your argument is that our selecting a neuron (once or twice a year) to follow satisfies not depending on a third party.
Also, every other PoS has this setup and they haven’t been declared a security due to decentralisation.
Let me ask the question…so what if it is a security? It means fillings to the SEC…by who? Why is staking on Binance with no effort not triggering it as a security? True decentralisation will alleviate all this and is the only reason why Bitcoin and Ethereum are not considered a security.
I think this whole Security thing is the boogeyman…
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These are good points. They are reason enough not to do it, IMHO. I’d benefit from this change, but creating additional risk during uncertain times seems like a misstep.
All about the risk management,
Because the part that matters is the function of the token on the network, Binance “staking” is the exchange offering money for sustained liquidity. It’s a loan, not an investment contract.
Something can be a security for a long time before the SEC gets around to evaluating it, they are pretty busy, the important part is that we don’t expose ourselves to that risk once ICP grows to a size that would put it on the SEC’s radar. Speaking of which, the SEC just opened an investigation on BNB 2 days ago.
You don’t have to take my word for it since it apparently is meaningless to you, listen to an Attorney talk about the difference between ETH and ETH 2.0 and how that change severely impacts its potential status as a security: https://youtu.be/xCXbftjfEjI?t=276 . Or you can take a look at the CRC and get an idea of what characteristics hinder a token on the Howey Test: https://www.cryptoratingcouncil.com/framework. If you do, you are free to DM me if you want to discuss further, if not, I think we should be done here, this is no longer productive for this thread.
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I like the idea of short term staking as it is relevant to give people a reason to keep the coins in the NNS and also participate in voting. We can not expect everyone to have the same time & risk preference.
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As for rewards, the dissolve delay bonus could start a bit higher in order for the APY for up to 6 mths to be in the 3%-8% range - if we really want people to stake the minimum should be 3% otherwise it will simply not attract stacker.
Wow…on vacation and I have not had a chance to read anything but the first post, but I don’t see how this doesn’t open up the NNS to all kinds of time based attacks. At first blush I’d classify my support as vehemently opposed. I’ll try to digest later, but this seem fundamentally break “skin in the game staking”….this may be doomed with a neuron market anyway, but this just seems be an open invitation to subvert the NNS without having to face the consequences.
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Low APY is because we didn’t want to create much impact to the existing stakers. The more we increase the bigger the impact. So we proposed keeping it small.
This is not about mapping out return on investment but rather can this mechanism be leveraged to increase governance participation.
According to @Dylan
From my perspective, The biggest advantage of the proposal is for neuron holders who plan to dissolve their neurons. That is, most everyone except for who have locked for 8-year. Currently, you have this 6-month window at the end of your staking period where you get 0 rewards. For someone who wants to stake for just a year or so, they’re getting no rewards for half of their staking period, so why would they sign up for that?
This proposal allows everyone to get rewards through that 6-month period. Sure, the rewards taper off rather rapidly, down to zero at the end, but there is a psychological factor at play here that you are still getting rewards for those 6 months. With the way it currently works, it feels like you are penalized for dissolving. If this proposal were implemented, it doesn’t seem like a penalty any more.
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I believe the initial design of tokenomics and lockup for governance are still valid.
Nikhil’s point about the barrier to entry to governance caused by the 6 month minimum dissolve delay is valid. I would suggest “official” videos covering the process, as diegop alluded to… “staking your ICP on the NNS” “compounding your ICP” “withdrawing your ICP from a neuron” are all topics which DFINITY’s Youtube channel could cover (but so far hasn’t) with short step by step videos to encourage engagement. If that’s not enough, making a paper trading version of the NNS frontend which allows you to drag a timelapse slider showing amongst other things how voting affects rewards would cover all the test tx concerns - the real concern when I do a test tx is it shows up the other end - if I didn’t have confidence that the NNS will unlock and disburse in 8 years and the token price is at least my average buy-in by then, no amount of 7-day stakes would convince me to commit. It’s the long term price action that is covalent to staking, IMO
The issue of of the 6 month window… it is clear that 6 months of any staking term is devoid of rewards and any calculating investor would amortise the benefits over term. The proposal decreases the incentive of multi-year staking.
In reaction to ld-dfn1’s explanation, I’d iterate on the above. If your strategy doesn’t support a 6-month timeframe for engaging in ICP governance then don’t expose yourself to the downside risk of locking (all) your tokens. I appreciate Lomesh’s point on dipping their toe, but I don’t believe that’s the actual sticking point when compared to an exchanges’ 7 or 30 day offering. If the community’s concern is exchange manipulation of the token price possible through liquidity on the back of those APYs… then it’s not about governance after all, and you should come at the problem directly.
@skilesare are you referring to the kind of attack where a malicious actor acquires and staked a lot of ICP (maybe a flash loan) and then votes on proposals that benefit them?
I want to make sure your intent is heard and clear for folks.
Interesting. Can you please clarify? Why would you make your most loyal stake-holders have no benefits in this proposal? fwiw i am a 8 year locked neuron stake-holder.
I agree with you. It seems that this proposal is nothing to do with governance, it has to do with counteracting the exchange manipulation of token price. So we should attack that problem directly.
Maybe I am misreading your comments or the one you quoted or maybe even @nikhil.ranjan and @Lomesh-dfn1 ‘s replies, but my assessment is more dumb simple:
This proposal is exactly what it says about: it is about getting more people to participate in governance by giving them chance to experiment.
There is no hidden motive about exchanges or anything clever. It’s as simple product thinking as:
“people tell me they won’t go try X before committing 100X, what if they have a way? Let’s ask community to see what they think.”
I don’t mean to put you in the spot, but I used your quote to address directly something I saw hints of: folks trying to decipher the “real intent” vs the plain, boring stated one. Could the goal/intent be unimportant, bad, poorly executed? Sure! But I want to make sure we don’t ignore the simple version of the stated goal.
Is that fair? If I misread or misconstrued your words, please don’t hesitate to correct me.
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Yes…perhaps there is mitigation here…but again, need to read the thread.
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Those were my words, and that’s just my personal opinion (I’m not involved in the creation of this proposal) as to what the biggest advantage of the proposal would be, that there might be people who don’t want to stake ICP under the current system because of the 6-month period of no rewards, so the proposed changes could encourage more medium-term staking.
While neuron holders who have no plans to ever dissolve their neurons don’t benefit directly from the proposed changes, increased ICP short-term and medium-term staking and the corresponding reduction in the liquid ICP supply could have a positive impact on ICP price, which would benefit all neuron holders.