Hey community, the topic of economic unlocking has garnered significant attention, and I appreciate your discussions. Based on the discussions and feedback, along with considering aspects that I hadn’t previously taken into account, I have rethought the implementation approach.
Summary of the discussion
Allowing an emergency neuron unlock, subject to a high burn penalty as proposed by a community motion, is considered a valuable enhancement to the Internet Computer.
We propose a simplified approach that offers improved security and comprehension. Our suggestion is to enhance the ‘minimum burn penalty’ design element by introducing a dissolve delay-dependent unlock penalty function that can be configured by the NNS. Neurons would have the ability to initiate an emergency unlock, incurring a specified penalty dictated by this function. The specific form of the penalty function can be defined separately, but it should carry a significant punitive effect (e.g., an 8-year neuron might be subject to a burn penalty of 80%).
The ‘Emergency Unlock Maximum’ design component would still be required to prevent an overwhelming influx of ICP into the market.
However, our proposed approach could potentially result in a race condition. At the start of an unlock period, numerous neuron holders may rush to unlock their holdings, which could overwhelm the system until the instant unlock global maximum limit is reached.
A potential solution to this issue, potentially for phase 2, could be a Dutch auction mechanism. This auction would start the unlock penalty at a high value at the beginning of the unlock period, which is then gradually reduced until it reaches its lowest possible level at the end of the unlock period. This lower level would be defined by the previously mentioned dissolve delay-dependent unlock penalty function. This approach maintains a level of competition, as outlined in the original multi-state auction, while simplifying the process.
Moreover, to increase scarcity, we could limit the use of this feature to a specific time period, e.g., 6 months. After that period, the NNS could vote, based on the experience gained, whether to discontinue or modify the feature (e.g., by reducing the ‘Emergency Unlock Maximum’).
