[Proposal] Reducing minimum staking time for expanding governance participation

[bjoernek]

Hi @wpb
Many thanks for your detailed analysis again! This spreadsheet is very useful for bringing the discussion forward. I would like to highlight one subtle but important point, which appeared higher up in this thread in a discussion between @Kyle_Langham and me:

• For the impact on voting power and APY we need also to consider whether the neurons with dissolve delay < 6 months will actually vote or not.
• I made the assumptions that approx only 50% of these neurons will vote, which leads to a minimal impact of 0.25% on overall APY.
• If I include this assumption (i.e. half the voting power of the 0-6 month bucket) in your spreadsheet it seems to suggest that the impact on APY of the 8 year gang between the current set-up and original proposal is less than 0.10.4%.

[wpb]

I would need more information to understand how you arrived at those numbers. However, the model in it’s current form may not lend itself to performing this analysis. It’s built with the same assumption as the dashboard APY reporting, which is an assumption that all neurons will always vote. I think this is a reasonable assumption for this type of analysis since the design intent of the NNS is that all neurons always vote and voting rewards are allocated proportional to that participation.

There isn’t enough information in the API to easily build a model that accounts for voting participation rates on Governance topics. It requires information like how many governance and routine business (e.g. subnet update) proposals are submitted each day and what percentage of each dissolve delay bucket are voting on Governance proposals. I do plan to work on this more complicated model to see if it is possible using information from other API sources, but I don’t think it is necessary for the purpose of this discussion.

For every neuron that does not vote on Governance proposals, their voting rewards go to neurons that do vote on Governance proposals. Hence, if we were modeling the 8 year gang based on actual APY today, the range would be something like 12-30% APY as opposed to 20-23% APY as shown in the Current model. The same goes at the low end of the dissolve delay range. For every neuron less than 6 months that does not vote on Governance proposals, there will be neurons in that same region who get an increase in voting rewards relative to the average because they do vote on Governance proposals. Of course, it’s not that simple because you really need to model the entire data set to understand how lack of voting on Governance in one bucket affects APY in all the other buckets.

So to make a long story short, I don’t think lack of voting on Governance proposals results in a change in the average APY. My hypothesis is that it just spreads out the range of APY for each bucket.

[bjoernek]

To bring my overall point across, I see the value in your proposal:
Instead of introducing a kink in the dissolve delay function you suggest to keep the linear shape and slightly rebalance it in order to not negatively impact the long stakers. This has the additional advantage of simplifying the implementation.
@lomesh and @nikhil.ranjan: What is your view?

In terms of estimating the impact on the long-stakers, I am making the point that we can refine the estimate on how much additional (active) voting power we will add, because the majority of rewards is paid out to active voters (and thus the additional inactive voting power which does not vote on governance topics will not matter so much).

As derived in the calculation above, I estimate that we will add 7mn additional voting power assuming 50% actively voting neurons (which is still a conservative estimate as these neurons probably vote less actively than the global average of around 50%). If I enter this estimate in your sheet in the tab NRProp (cell I65) I derive a much lower impact of less than 40bps on the APY of the long stakers. Can you follow this line of argument (and did I interpret your spreadsheet correctly) ?

[wpb]

It is definitely true that when there are fewer votes cast the voting reward goes up for everyone who votes. The daily reward pie gets split between fewer votes. It actually doesn’t matter if you take away those votes from the new <6moDD bucket, the 8YG bucket, the dissolving bucket, or the non dissolving bucket. The result is the same.

According to the IC-API, there are currently 28mn ICP in nuerons that are dissolving that are less than 6 month dissolve delay (cell H15). They would all vote on all Exchange Rate and all vote on other routine business proposals (e.g. Subnet Updates) since they are following Dfinity by default as configured at genesis. The APY for all of those non Governance proposals would be equal to the results displayed in the models because the models assume all neurons always vote, which is true even for this new <6moDD bucket. It is only for Governance proposals that 53% of total voting power in the NNS is not voting. If you were to subtract this 53% of total voting power from any combination of cells I65, I54, and I25, then you would end up with APY that match all neurons that vote for those Governance proposals. If you then apply proposals weights to the APY for all Governance proposals and the APY for all non Governance proposals for any given day (based on the number of proposals of each type that are submitted), then you end up with the daily rewards that are reported to us each day in the form of maturity.

So to make a long story short again, yes you can subtract away votes from any bucket and increase the rewards for everyone else that does vote. However, I don’t think that represents an apples to apples comparison of what would happen to the baseline case (aka worst case scenario) from our current participation rates if we were to add this new <6moDD bucket to the reward distribution.

All that said, it would be just as valid to think about how many new votes will be added that don’t exist today if NRProp (or AltProp) were successful at attracting new governance participants to the NNS. We can pick any definition of success and add 10mn, 20mn, 40mn, 80mn votes to to the model and see how much the APY prediction goes down for all buckets. If any of these scenarios are accurate, then NRProp in the current form will end up putting more and more voting power in the hands of people who own neurons that don’t have the long term best interest of the IC in mind, which runs counter to the objective of the tokenomics incentives. Hence, this change needs to also increase the max dissolve delay to counter this effect.

This just brings me back to the point that, in my opinion, we shouldn’t lower the dissolve delay that pays voting rewards without also increasing the max dissolve delay bonus enough to 1) ensure that the voting power increase for the longer stakers at least matches the increased voting power of the shortest stakers after recognizing some definition of success and 2) give the longer term stakers a tokenomics incentive to vote yes for this proposal. I also happen to think this proposal has a higher probability of success if the new <6moDD bucket has reasonable rewards, which is why I’m hesitant about the steep dissolve delay bonus slope for the new bucket. However, if we do move forward with a steep slope for the new bucket, then I would recommend a max dissolve delay bonus of 3x (which is 1.125x at 6 months instead of 1.0625x) to help offset the new rewards (this is also consistent with the preference that @dfisher expressed above). I would support this proposal under those conditions, but I would still be hesitant about the probability of success of attracting new NNS participants due to the very low APY for a 1 month dissolve delay.

[kvic]

I see panic as the reason for adjusting the minimum dissolve delay because of the whole crypto market being volatile and down at this time, I believe the reason is so some can sell up and move on and it is their reason to support lowering.

As far as participating is concerned the only proposals that I see on the NNS to vote on are the hard working teams like, The DFINITY Foundation, ICP Maximalist, Internet Computer Association, cycledao.xyz and ICDevs.org and others which you can follow to get the rewards.

Other than that I did not see any stakers participating in a proposal for anything other than changing followers to lose rewards for following, so now they have to update their following every 6 months or lose their rewards or support dog boys spamming on the NNS.

I was told that followers should not be rewarded because they don’t vote and the voters put in the time but at the same time they don’t have any proposals and therefore pointless.

I have put forward a proposal to build onto the NNS as a staker to participate and increase our rewards to build on the NNS and its future needs and not 1 reply. The teams have their hands full and the stakers don’t participate.

Stakers want more rewards but don’t do any work to build onto the NNS other than to weaken, in my opinion.

[bjoernek]

@nikhil.ranjan

Thanks @bjoernek Yes we kept the linear shape for the dissolve delay function instead of introducing a kink in order to not negatively impact the long stakers.

@nikhil.ranjan: Just to clarify, I meant that the proposal AltProp by @wpb would not introduce a kink because the whole function remains linear from start to end. The proposal from the start of this thread has a kink at the 6-month point where the slope changes.

[bjoernek]

@wpb

It is definitely true that when there are fewer votes cast the voting reward goes up for everyone who votes. The daily reward pie gets split between fewer votes. It actually doesn’t matter if you take away those votes from the new <6moDD bucket, the 8YG bucket, the dissolving bucket, or the non dissolving bucket. The result is the same.

This is correct if we assume that active vs non-active voting is the same across all dissolve delay buckets. However I would expect that long-stakers are much more active voters than short-stakers. Let me pull some data to verify this.

All that said, it would be just as valid to think about how many new votes will be added that don’t exist today if NRProp (or AltProp) were successful at attracting new governance participants to the NNS. We can pick any definition of success and add 10mn, 20mn, 40mn, 80mn votes to to the model and see how much the APY prediction goes down for all buckets. If any of these scenarios are accurate, then NRProp in the current form will end up putting more and more voting power in the hands of people who own neurons that don’t have the long term best interest of the IC in mind, which runs counter to the objective of the tokenomics incentives. Hence, this change needs to also increase the max dissolve delay to counter this effect.

This is a fair point and an according estimate should be included in the analysis.

[Denis]

If the APY for 6 month stakers goes down from 10.9% to 7.2%, as proposed in the linear shape version, I suspect many 6 month stakers will dissolve neurons and shift their stake to Binance, with the result that, far from inducing more people to stake, the proposal will result in an exodus of stakers.

[Tony89]

because curbing inflation is good for the price of $ICP in the long run. Voting rewards are way too high compared to necessary. you want high APY. but that means $ICP will continuously decrease in price. supply is increasing daily. Don’t use high APY to entice retailers. we need low inflation mechanism and with the development of IC make $ICP increase in value. Don’t because APY is high it will look like a ponzi scheme that will kill the project when inflation is too high. Supply pressure will result in always selling.
in other blockchain platforms, they only let APY 5-7% reward inflation. and $ICP is having 20% ​​inflation. Just like the more money is printed, the inflation increases and money is gradually losing value over time.

[diegop]

@Tony89

in other blockchain platforms, they only let APY 5-7% reward inflation. and $ICP is having 20% ​​inflation.

Just to make sure we are on the same page: the NNS APY is currently around 20% but the ICP inflation is NOT 20%. It is currently at 8.5% and dropping to 5%.

(See Circulation - ICP Dashboard)

This proposal would not affect at all the amount of ICP minted, only the distribution of what is minted.

I hope that makes sense.

[mparikh]

Further when 48623 is implemented, FOR A WHILE, ICP inflation due to rewards will go down even further.

[ajismyid]

From the @wpb 's AltProp argument implies that the proposal is not willing to give more voting power to participants that not ‘maximalist’ enough because not willing to stake for longer period (> 5 years), instead punishing the medium DD participants (< 5 years) by subsidizing their reward to short (<6 month DD) & longer term participants (>5 years)
My argument is if ICP wants to be a general purpose ecosystem that onboarding many kind of participants from different background, it should give more fair voting power also to non-maximalist participants. This is to ensure, that the ICP goals are not just strategically for long term objectives, but also give more considerations & attention to achieve short-medium objectives.
From the NRProp vs AltProp, I see NRProp will be a better route. AltProp is a bit radical, and will stir disturbance for governance participants with DD < 5 years.
If the AltProp prop argument is to encourage shot-medium DD participants to increase their DD to 8 years, I don’t think this will be the case.

[skilesare]

How do we feel, if this is really about dipping a toe in, lowering the xdr vote threshold to 7 days…maybe upping it to .1 instead of .01. This gives them the opportunity to try it out but the rate is super low and doesn’t shift much VP away from current stakers.

[ImagineChadParadigm]

Hello ICP community. Long time forum lurker.

Though I appreciate the communities’ intentions of garnering additional stakers to join the NNS, I’m afraid such a proposal is merely a band-aid solution for a more fundamentally driven one. Let me explain.

Let us fancy this matter from an outsider view. Pretend you are a newcomer to the ICP space. You are intrigued by the disruptive technology being built on the ICP platform. You are a bit frightened by the price history of the token, but for some reason, an insatiable urge to learn the technology drives you to consume the red pill. You have a general understanding of other blockchains; however, you are convinced $ICP is quite literally the future. You quickly hit the market buy option on your favorite exchange and are now faced with the dilemma – How can I earn rewards and participate in the DAO?

Let’s dive in. First one must create an “internet identity anchor” before having to log-in to the “Network Nervous System.” After said completion, you are left clicking the tabulated links on the top and eventually stumble on the word “cannister.” Eventually, after clicking around and searching various web2 sites (Tisk tisk…), you deduce this is the appropriate option to stake your ICP. Upon staking you need to determine your dissolve delay, and are further bombarded with things like “Increase Neuron Stake”, “Split Neuron”, etc. Do you see the problem?

If we as a community intend to drive user adoption of the NNS for staking, we need to put ourselves into the shoes of our common crypto-peers. Needlessly verbose terminology is such a huge turn off for newcomers. What appears to be the intent of creating a cult-like mantra around the use of novel words and nifty idioms is exactly what turns people off from wanting to participate. Perhaps as important - participants must think to drive their decision-making process. Think of every other user-friendly stake platform. You login, find the stake button, and then bam – rewards expressed as a percentage depending on your stake term.

We need an NNS that is so user intuitive, it’s a simple as logging into your favorite social media platform. Simply login, “Stake”, and set your term. When you are ready, you can “Unstake” or “rake your steak rewards.” (Folly, but an option. 8 Year gang baby!)

If you think this is ICP fud and crypto babble, I truly apologize. I’m totally engrossed with the technology Dfinity has built with ICP, and truly believe this has a chance to transform the internet as we know. However, we as a community must stop trying to create robust mathematical proofs to drive user adoption. Perhaps a greater emphasis on ease-of-use would solve that very problem instead.

[kvic]

I remember it well and when you finally setup and in you become a bystander.

[integral_wizard]

At the same time, what you are referring to can be understood in little time. There are official articles that explain it that takes like 10 minutes. You SHOULD NOT stake your money if you don’t understand the basics. I don’t think it is too much to ask. We dont want a community of price-fixed/ yield hunting BAM BAM type of people who are living on a surface and can be convinced in minutes. These are the people who come in and out and dont really care about the project and will easily flee and FUD when we hit different roadblocks. They bring unnecessary volatility which we dont need as we are and will be attacked anyway due to being a gamechanger. I urge the community to support newcomers but not get rid of critical education. At the core of governance are neurons. We should not think of yield, but of decentralized incentivized governance.

While we welcome everyone i dont think we need to dumb everything down. Education matters. ICP is not a get rich scheme that is slightly better than the previous blockchain. It is paradigm shift. If you want to participate and earn generational wealth it is not too much to ask to get in touch with the terminology, imo.

[ImagineChadParadigm]

Hey Integral,
First, thanks for your post. Greatly appreciate how this community is willing to engage in thoughtful discourse – regardless of agreement/disagreement. I have used some “Choice” words below – please exercise caution. I assure you this is not a personal attack, and hope my passion and love for this project is evidenced.

Perhaps I wasn’t clear enough, but your very point evidences exactly the issue I’m trying to highlight. Let me hash some of your key points (Sorry in advance - not yet keen on how people can pull out specific text for a reply)

1. “Official articles that explain it takes like 10 minutes.”
   a. Problem 1 exhibited. It is my opinion it should not take 10 minutes to learn how to stake a “neuron”. There shouldn’t be a need to educate users on how one should stake – maybe no more than a minute. I’m not dragging an arbitrary number out of my bazoo for nothing – merely trying to illustrate the user needs to understand how to act in a fastidious manner. The interface should enable this quick understanding, not an educational video.
   b. Furthermore, perhaps you are a proficient crypto advocate who has been in the space for several years. Maybe you aren’t, and just have a high aptitude to digest critical concepts. I am not. There are many others who are not. We as a community should be striving to create a platform easy for anybody to use – without the need to go and find a full-feature solution on a web2 interface, no?.. Intensely think about that for a minute in respect to the very investment you have made. ( I would be doing an injustice to the community If I didn’t give honorable mentions to @cryptoisgood , @icpjesse , @BitcoinRenegade, @icpsquad, and the many others who have made videos on how to stake on the NNS. Know there are people out there like myself for which you greatly reduce the learning curve. Thank you, sincerely)

2. We don’t want a community of price-fixed/ yield hunting BAM BAM type of people who are living on a surface and can be convinced in minutes. They bring unnecessary volatility which we don’t need as we are and will be attacked anyway due to being a gamechanger.
a. Curious then what your thoughts are on this very proposal – I.E, participants can stake under the 6-month threshold. Would that very proposal not manifest exactly what you are intending to avoid? FWIW – I have several neurons with different yield terms. Am I a poor proponent of the ICP ecosystem because I spread my investment across 6 month/1 Year/8 Year neurons? Of course not, and how ludicrous to think otherwise. This is merely my way of trying to diversify risk, avoid exogenous shocks x years down the line, etc. This is how investors think.
b. When I came to the ICP space, I was relatively new to the “Crypto Space.” I’ve been an active participant in the equities market for quite some time and had been trying to digest the implications of crypto. In particular, I was trying to seek out a project that presented a unique use case in the future – something that empowered true utility, was light years ahead of the other technology in the space, presented an opportunity to extract market value from the likes of competitors, and had deflationary dynamics that could be construed as positive cash-flow-esque properties. I performed my research and made what I believe is a sound Risk/Reward opportunity. The ease-of-use for staking has nothing to do with understanding the underlying fundamental prospects this technology beholds. How are you connecting those dots?
c. Not sure I totally get your point about how a simple change in wording would increase “unnecessary volatility”? If their ICP is staked, can you tell me how the underlying price dynamics would exhibit increased volatility? (I feel as though this is the vantage point you are alluding to – please correct me if I’m wrong)

3. If you want to participate and earn generational wealth it is not too much to ask to get in touch with the terminology, imo.
a. To me, this is a poor cop-out excuse. We need to facilitate understanding of this technology for everyone – this is the future in which we both desire, no? How do you increase user engagement if a large proponent of users don’t even understand the terminology? They look at the price action history, briefly glance over the fundamental prospects, and stumble upon the words “Cannister, Nueron, Subnet, Network Nervous system, Threshold Relay, CKT, Service Nervous System, Noninteractive distributed key generation, an SDR that pegs a fiat basket converted into a derivative instrument used for computational throughput”… you truly feel that way? To me, this is entirely jargon. I’ve done my research and still feel as though I have a surface-understanding of what this technology beholds.
I’m not expecting people to understand the fine intricacies of how a direct integration with BTC is feasible (Nor do I) – I’m seeking easy fixes to help users digest info as efficiently as possible.

[integral_wizard]

Hey. Thanks for engaging. I feel there are some interesting points to dwell upon and some miscommunication as well.

I would say first that what we don’t necessarily need right now (and support) in these delicate first years is “dumb” community and fast results/ greed. That is, people who don’t understand what they are buying and not willing to do any research. If they are open to learning, different story, but many want fast results. This shallow approach is epidemic. This creates greed, leverage, easily manipulated emotions. Some other project comes in saying they do what ICP does but with better UI and they are gone spreading FUD. For example :).

The reason I care about this is because we are still so early and it is perfectly normal that few get new technology. Innovation doesnt happen in the mainstream. Now, ofc a better UX is better for everyone and all resources will get better with time. The wording, illustrations etc will get better. But I do believe that “simplicity without understanding” is not worth it. And for an investor, you need research first. If we talk about a 10 minute walkthrough of well-written terminology, is that really too much to ask?

It’s like building a company. Contrary what some might think, you DON’T want to grow too fast. Why? Because culture is smth to be built carefully, organically. Crypto is all about network, which is about the community.

…
I recently posted a link to a Bitcoin documentary and someone asked me to make a small summary. Well, no. They are missing the point. Many still want fast results. Education is a journey, there are no shortcuts. Summary wont help understand Bitcoin which is entirely outside the box/ system invention. You need many many many hours to see the depths of it. I believe the same goes to IC. It is a gamechanger tech. It is Internet Reimagined. Understand the god damn terminology, if you want to be an investor.
…

ICP doesnt have staking, it has governance. While it does earn yield it is much more important to understand that this is a DAO governing the whole network. It is amazing. To be part of this, you need to understand the basics. For the yield, you need to have skin in the game, which means taking responsibility. You are literally voting (or following). Your vote matters. If one doesnt understand the basics (and I just mean best effort and curiousity), then maybe one shouldnt be part of the OG ICP. Maybe come back in a few years then?

Now, at many levels I agree with you. Im just offering another side of the story. I dont ask anyone to understand the mechanics of the revolutionary tech (although as you pointed, there are many of us who are covering this truly revolutionary tech), but the basics of NNS and the overview of network, yes. I dont think it is too much to ask from new community members.

Just to be clear, I agree that we can make onboarding better. I think ICP will be increasingly well suited to onboard non-crypto people because of Internet Identity, being fully on-chain (unheard of) and having direct Bitcoin integration. So as we go forward, this transition should be smooth. But onboarding people to make an account vs governance is different. An additional price/ effort (time/ education) has to be paid to take part in this experiment. At the end, this effort is worth it.

Thank you for engaging and caring. Lets be part of history in the making .

[ImagineChadParadigm]

Hey Integral,

Happy to engage, thanks for your prompt response (Sorry caught in the corporate jargon lol ) This is a terribly babbled response – just wanted to get my thoughts out there before a July 4th Party – Happy early Independence Day to my fellow American friends !!!

I know you are speaking holistically but let me preface with my personal take. I’m not seeking fast results, nor am I seeing a get quick rich quick scheme. I’ve performed my due diligence in this ICP rabbit hole, and continue to research. (quite literally on the daily) Yet still, I think there is an apparent disconnect with how the external crypto community views our project. They simply don’t understand. It is my belief difficult to understand terminology simply exacerbates this problem.

You bring up an EXCELLENT point, “And for an investor, you need research first. If we talk about a 10-minute walkthrough of well-written terminology, is that really too much to ask?” – 100% agree with what you are insinuating here.

Let me be transparent – this was not a 10-minute undertaking. This was a multi-week undertaking. (Just for the NNS…I’m quite slow in my deduction) Videos, journals, and articles were all utilized when trying to unravel “What in the absolute heck is the NNS?”

Research should absolutely be a prerequisite one employs when considering any investment vehicle. One SHOULD perform robust due diligence when trying to substantiate their investment thesis. This should not be construed as any type of financial advice nor insight, for which I am absolutely not qualified. I’m just a simpleton who loves ICP. This is simply how I asses’ personal investments.

I’m certainly no dumbo, and conversely, no genius. I think I’m probably right in the middle of the bell curve. I believe our community severely underestimates the impediments our terminology imposes on potential NNS Stakers/Governance drivers. It just deters them to other services. Those people are still buying, believe me (hearsay). Just not joining our community on the NNS.

I further believe our community has a fundamental misunderstanding of engagement. Selective wording of Nuerons/Stake and Cannisters/Smart Contracts does not degrade the projects undertakings. It just aligns crypto knowledge across the entire crypto ecosystem. This alignment will drive engagement. Put simply - I think there is a middle ground where we enable users to put their thesis to work. (This was my problem)

After purchasing my first ICP, I was still afraid to stake my liquid holdings in the NNS for quite some time. I’m not sure why – but I believe it has something to do with the “Scary” & “New” terminology. Why stake on the NNS when you can simply participate on perhaps an easier to understand centralized exchange? (Maybe not the appropriate analogy in recent times, but you get the point)

Which brings up an important caveat you expertly intertwined - ICP doesn’t have staking, it has governance. The governance drives the liquid democracy of our protocol. The yield is merely a secondary result of your contribution to the governance. I love your thoughts here.

Engagement with the community on why this governance factor is structurally fundamental to ICP is paramount. Something I will certainly think about more.

Cheers - and agree with you, history in the making

[integral_wizard]

I sense we’re on the same page. We are all learning, evolving and making the whole system better (including understanding it). Digesting, elaborating, marketing is smth where the community has a big role to play. I am glad we have you on board, learning and seeing the same as the ones before you. It’s gonna be an interesting ride the next few years.

And to remain on topic, clarity is smth we can all strive for. Docs, UI, communication, etc. Key information for new folks (like Internet Identity, neurons, staking/ governance) should be easy to understand. Likewise, we shouldnt expect new people to come in and lock money for 6 or more months, hence lowering the barrier and benefit, while keeping things secure.