Almost every SNS has a contribution of the Neurons’ fund and depending on the amount they raised, the Neurons’ fund share can be quite significant. While the general idea is great as it provides SNS launches more capital, the question is what happens after the SNS launch?
At Gold DAO, we have probably around 25% of the SNS voting power in the SNS neurons’ fund and the highest voting participation on any proposal we ever reached was close to 72%. This also means that if we do critical proposals, such as treasury proposals, we almost always have to wait 5 days because we rarely reach 67% voting participation. While the proposals usually pass after 5 days as most voters vote yes and we have 20% participation, it would still be interesting to have the share of the Neurons’ fund actively vote on proposals.
On the doc page about the neurons’ fund it says the following
The NNS NF treasury holds SNS neurons & tokens in its treasury, to be dissolved and sold at its discretion.
So this means that technically, the action about the neurons’ fund SNS neurons could be controlled via NNS proposals? Would it be possible to have those neuron’s vote?
The NNS can sell the tokens from an SNS at a later point in time. After the NNS sells tokens from an SNS, the received ICP will be burned.
Instead of selling the SNS tokens and burning the ICP, could it be possible to burn the SNS tokens directly? As the share of neurons’ fund SNS tokens can be quite significant, this would mean that it can dump the price of SNS tokens massively. Burning the SNS tokens themselves can be quite attractive for SNSs.
The controller of the neurons is the NNS governance canister. Right now, the NNS governance canister does not contain any functionality for controlling those neurons after they are created.
The controllers of the neurons that participate in the NF can control the SNS neurons via voting hotkeys, which are added to the SNS neurons when they are created during the swap. Those controllers will also receive any proceeds from maturity gained through participation in the voting process. Thus, if you want the SNS neurons corresponding to the NF to vote, you’d need to talk to those entities that control the neurons in the NF.
The exact design of this dissolution phase has not been fixed. That said, I don’t think the design can generally burn those SNS tokens because that would mean that either:
The holders of the neurons in the NF would not receive any value in return for their participation in the swap which lead to a reduction of their neurons’ maturity, making any participation in the NF a guaranteed loss; or
their neurons would have to be rewarded with some amount of maturity (the amount TBD), which however would mean inflation in the ICP tokenomics for the benefit of individual SNS projects, which is not in the interest of ICP token holders.
So while the concrete design is still in the works, I don’t see a way to simply burn these SNS tokens. Of course it’s conceivable that the design could allow for the SNS to “buy back” the SNS tokens from the NF participants using ICP from the SNS treasury, and that ICP could then be used for generating maturity for the NF participants.
Ah wow, thank you. For some reason I missed that I actually have neurons through the neurons’ fund like this … That makes a lot more sense now. So essentially the fact that the NF SNS neurons are not voting is because people are not actively managing those neurons. Or there are other general neurons who are not voting.
About the burning, I agree, burning those tokens directly means the investors would loose the funds. I was under the assumption that the NNS “owns” those tokens for some reason and then burning could have made sense.
So, if I understand correctly, the current general idea for dissolving neurons’ fund SNS neurons is to
Dissolve the neuron
Buy back ICP with the SNS tokens coming from the dissolved neuron
Burn those ICP
Increase the maturity of the original investing NNS neuron by the equivalent amount of burned ICP
And given your explanation above, the exact mechanism for dissolving neurons’ fund SNS neurons is not yet in place, correct? Is there any outlook for when this will be available?
Does this mean that there will not be a mechanism to give Neuron’s Fund participants control of their neurons, tokens, or maturity any time soon? Does it also mean that there is no code that enables a proposal to be submitted to unlock Neuron’s Fund neurons that have no dissolve delay or enable those neurons to start dissolving or to increase the dissolve delay? I think the last SNS that I participated in via the Neuron’s Fund was Catalyze specifically because of the lack of control I have over these neurons. I didn’t realize originally that hotkey control of voting would be the only control available to Neuron’s Fund participants and I still didn’t realize that lack of control would be indefinite. If there are no plans to change this any time soon, then should the NNS dApp provide warnings about these severe restrictions when people agree to join the Neuron’s Fund? Otherwise, how can these restrictions be obvious to participants?
What you describe is the high-level idea, that is correct. There are of course lots of open design possibilities especially around step 2. There is no timeline for the design at this point.
The text should likely be updated since (up to three) hotkeys actually get copied as well from the NNS neurons in the NF to the newly created SNS neurons since the latest upgrade.
This warning is perfect. I don’t recall seeing it, but that’s likely because I haven’t joined the neurons fund in a very long time. Thanks for the clarification.
… That makes a lot more sense now. So essentially the fact that the NF SNS neurons are not voting is because people are not actively managing those neurons. Or there are other general neurons who are not voting.