I’d like to start by clarifying, this post is not intended to “bash” anyone - I am simply making an observation. I am aware that the proposal being discussed introduced a solution to spam: being the inability to artificially increase the voting rewards of a given day.
However, this has seemingly come with unintended & unconsidered consequences - being the dependency upon Known Neurons & in turn centralization of voting power.
Please also note that the following topic only references Governance topics, as 99.99% of voting power was assigned to DFINITY by DFINITY prior to this change being made.
In February of 2022, the concept of public “Known Neuron’s” was introduced, offering the community the opportunity to highlight individual neurons within the NNS UI as reputable followees. This, of course, was beneficial to the ecosystem - it allowed users to pool voting power behind those they believe would accurately represent their best interest within governance.
Shortly after, in May of 2022, the concept of converting from Staking Based Rewards to Voting Based Rewards was brought to light - aiming to diminish the financial incentive associated with spam proposals, while simultaneously decreasing the inflation rate of $ICP.
However, this proposal was seemingly shut down - although I can not find the direct proposal from the NNS to verify its results.
The topic then resurfaced in September of 2022, at which point it passed via the NNS, to then be implemented.
As a result, Neurons who do note vote, do not receive rewards.
This meant Neurons that had staked over the previous year, utilizing a set & forget mindset, were left with 3 options to reclaim their APY, had they even noticed the adjustment that stripped them of their rewards;
- Establish yourself as an expert on voting topics & vote on every single proposal
- Pretend to be an expert on voting topics, vote on every proposal & hope you don’t cause serious harm
- Assign your voting power to someone else who has deemed themself an expert & votes consistently
Or in simpler terms, you either lose your APY for assets staked in the past, locked for years in the future, you spend hours a day vetting & voting in proposals, or you simply assign your voting power to a Known Neuron.
As so frequently stated within the Periodic Followee Confirmation topic, most people within the NNS practice a set&forget mindset, attempting to maximize rewards & minimize input - which seemingly resulted in most neurons that were aware of the switch in reward distribution, assigning their voting power to the few Known Neurons available at the time.
Which leads into the question:
Had the switch from Staking Based Rewards to Voting Based Rewards not occured, do you believe we’d still see such a high concentration & centralization of voting power, or is the current centralization of the network a result of the psychological affect of potentially losing rewards?