@bjoernek’s conclusion on this proposal was the following:
Proposal 1: Reduced Dissolve Delays
The analysis in this post shows that the primary method to balance supply and demand within the ICP ecosystem remains the growth of the cycle burn rate. Adjustments to inflation are likely to have a lesser impact.
Reacting to community concerns, Proposal 1 was adjusted with the inclusion of an opt-in mechanism. Assuming that 25% of neurons opt in, the proposed changes would result in a modest 3.8% reduction in voting rewards. Given this limited impact, pursuing this proposal further may not be worthwhile. It might be sensible to revisit the voting reward function at a later point in time.
However, a specific element of the proposal—reducing the minimum dissolve delay to three months—could be considered separately. This adjustment aims to attract new stakers by lowering the barrier to entry and merits discussion in a dedicated forum thread.
Another effect of that change is making it easier to go in and out of staking, which could benefit liquid staking protocols like @WaterNeuron.
Following a quick analysis, the APY for locking ICP for 3 months would be 7.66%.
Suggested Implementation
It seems that this change is pretty straightforward and would only require one change to the constant here.
All the frontends and other places where this constant is used would need to update this constant as well.
I warmly invite the community to share their feedback. If the feedback is positive I would submit a motion proposal for this change.
I also think this would be a reasonable change, imo the 6 month minimum delay for voting and rewards is a very high threshold, so I hope and expect that with 3 months more people would actually stake ICP.
I would rather we revisit a prior proposal made by DFINITY that would have enabled rewards for lower dissolve delay. I think the rewards for neurons with 6 month dissolve delays are already disproportionate relative to neurons with 8 year dissolve delays. Reducing the minimum to 3 months exacerbates this disproportionate ratio. At least with the prior proposal the slope of dissolve delay bonus changes below 6 months.
That proposal did not pass, but a large reason for such a lopsided vote was that DFINITY ended up voting to reject their own proposal because they interpreted the vocal community to be largely against it. Take out the DFINITY vote and it was a relatively close result.
Thanks for pointing that out. The changes proposed by @nikhil.ranjan, which is no longer part of the forum, are more elaborated than what I am suggesting here.
The change suggested here is less drastic hence easier to evaluate. 6 months is considered as long enough to be safe, which was the case when ICP was launched. Now that the network matured, 3 months is probably long enough.
I would be interested in seeing further discussions on lowering it to 1 month, but let’s keep this thread about 3.
My apologies Leo. I was in a rush to hit the road this morning and didn’t explain my comment very well. I was trying to emphasize the change in dissolve delay bonus slope that was proposed previously. That seemed like a reasonable compromise to justify lowering the minimum dissolve delay. I wasn’t focused on whether the min dissolve delay is 3 months or 1 month.
I know it adds a complication, but 6 month rewards (currently 7.9%) already seem lopsided high relative to 8 year rewards (currently 14.9%). Keeping a single linear slope down to 3 months would mean the rewards are something like 6.8 - 7 % for a 3 month neuron. That seems too high.
If it’s because of the lopsided difference, then lower the 8th year to a 6-year. We cannot stop improving the network token economics just because some people might find it a bit unfair.
Those are two different subjects. From what I understand, you think that longer dissolve delays are not rewarded enough, which is fair but probably out of the scope of this change.
Regardless of this point lowering the dissolve delay to 3 months has a key advantage: making staking on the IC more competitive. Unstaking on Solana takes 3 days, on Ethereum it’s 1 to 4 days, on the IC it’s currently 6 months which is probably a deal breaker for a lot of people. Lowering it to 3 months + liquid staking solutions could make it more attractive. Also note that on Solana the staking APY is around 7%.
I’m definitely in favour of reducing the min dissolve delay required to earn voting rewards.
Especially because you earn no voting rewards once you are below the minimum, so if you set the dissolve delay of a neuron to 6 months, you have to keep it locked there for a while to earn any rewards, then once you unlock you earn nothing for 6 months. So realistically you need to have your tokens locked for a total of at least a year otherwise it is pointless, this is way too long and I’m sure it is putting off lots of people.
What if we just half the dissolve delay of all neurons and also scale the dissolve delay bonus so that neurons locked for 4 years get 100% bonus. That way all neurons will still have the same voting power that they have now.
6 month neurons become 3 month neurons but still make ~7.9%.
8 year neurons become 4 year neurons but still make ~14.9%.
That way everything remains fair. Only downside is RIP to #8YearGang.
We should also open another forum thread about reducing the max dissolve delay. It makes sense to first focus on this side of the problem as the other side will probably create more debate.
I agree, awards are way to high for the short end of the “yield curve” for these staking rewards. I’m in favor of a 3 month staking option, but I think the incentives need to be reduced.
I think this needs to be a bit more nuanced. There are some votes for which the dissolve delay could be 1 day, but others where it actually needs to be much higher. The whole point of staking is that the voters should be forced to endure the market adjustment due to their vote. If that takes a long time to implement then they should be staked for a long time. In a perfect world we’d have a way to tell if the vote had ‘settled’. So if you vote in favor of a code change that takes three years, you should probably not be able to dissolve for three years + a bit. Of course, it isn’t a perfect world.
Things like adding a node are likely settled quickly…either the node joins or doesn’t…it runs the right code or it doesn’t. Motion proposals and large code changes likely need a longer lock.
I’d be fine if the delay was lowered to 3 months for the categories that are settled quickly, but would be against any lowering for most of the categories.
Of course, explaining this to a user might be more complicated and that always seems to be a sticking point for retail take up. But it seems that ship sailed long ago…clearly, even the smallest hurdle is too high for most, so we are stuck asking ourselves if we want the right system or cater to people who are never coming until the system has so much value that they have to pay attention and will take the time to understand.
I believe that a comprehensive discussion should have preceded the development of a more detailed and nuanced proposal. Consequently, I am voting against the current proposal, as it appears not to have been thoroughly considered.
