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reducing voting rewards turns down inflation and harms investors (which is risky)
if the price keep going down, no matter what amount the investors get is meaningless -
reducing node providers rewards does it too, but has existential risk (which is very scary)
it dese not affect node providers rewards, because their rewards based on real currency. I think u don’t have deep understanding of ICP tokenism . -
increases burning turns up deflation, but harms devs (which is quite scary)
this should be paid by Dfinity funding. Any chains do this work. like ETH and DOT, and so on.
only do this can help price pump up which is good to Dfnity funding. They can rely the huge inflation token every year to paid for developers. that’s totally wrong. -
linking burning to minting feels smart but could just cause problems with both areas
Any change should make the whole community memebr good. if keep working like this, situation will become worse and worse.
There’s a level of basedness with this dedication that I can’t help but to respect to some degree.
It seems that Dom and Dfinity don’t care about this, they only care about the technology, but they don’t seem to understand that if this doesn’t change, at some point there will be no liquidity for ICP, which in turn will lead to it won’t cost enough to keep running the giant machine Dfinity and it will collapse no matter how good the technology
@willguest, good summary of some of the key options. @smaug, good topic for discussion.
Before the SNS ecosystem rolls out with some high-utility token launches, along with the BTC, ckBTC and other integrations built into new dApps – all burning a lot more cycles and ICP – it is difficult to estimate what a baseline burn rate even looks like in the IC. So how can we really judge how long it could be until a deflationary scenario becomes possible? Therefore, I think we should hold off on any major tokenomics proposals until this baseline burn rate and SNS ecosystem growth comes more clearly into view. Naturally, this can only happen after this bear market and crypto winter are over.
That said, one thing I see no value in maintaining for almost everyone is the lockup on seed/early investor tokens. (FYI - I am not one of these individuals, so I’m not speaking from a desire to sell these locked tokens.) This slow monthly unlocking process is obviously bad for these early investors, since they clearly want to cash out but are prevented from doing so only because of a lockup that they had no choice to avoid. This is a critical point, since all other investors after genesis made a deliberate choice to stake their tokens for a specific dissolve delay that they also deliberately chose.
The key difference here is choice, since choice should ultimately matter. I understand the temporary benefit of locking seed/early investors right after the genesis frenzy, but we are now over 1.5 years past this launch and well into a crypto winter.
However, what is even worse is how this restriction on seed/early investors actually deters any new (or existing) ICP investors who want to make their very first investment in ICP. This is where I am speaking about myself. I have been doing my due diligence on the IC for about two months, and this slow grind down of the ICP price from this monthly release is a significant deterrent to making my initial investment. It is quite obvious that there is a slow motion price discovery process in play because of this monthly batch of unlocked ICP, so why should I invest until I know that this effect is no longer so dominant over the market price?
This predictable effect is also what is causing so much FUD and hyperventilating around a “death spiral”, which is not what is happening right now. We could quickly and easily get rid of this doomsday FUD by unlocking the neurons of these seed/early investors. Then everyone (not just new investors) could get a great chance to buy ICP at a real equilibrium price, likely at a significant discount to today’s price.
So my simple suggestion for now is to remove the lockup on seed/early investor tokens (other than those owned by DFINITY or the ICA, if possible) and let them make their choice for the very first time whether they want to stay invested or to cash out. This will accelerate ICP price discovery so that we can finally arrive at a true price equilibrium. I see no benefit to anyone in denying them the choice that all other investors have had. Can anyone provide a significant reason why this proposal would not be a good idea?
for waht you said, I can’t agree, it already showed the situation keep going worse under nowadays situation.
Any bad thing can not be recovered to be good without any action.
We all know the tokenism is a big problem, if let it continue like this without any action. that’s a disaster. This predictable effect is also what is causing so much FUD and hyperventilating around a “death spiral”, which is what is happening right now !
what u said are only based on your guess without any data. but we all use real analysis data to show there is a big problem which listed in those post before.
The problem of tokenism is exist, why don’t everyone recognize it and don’t want to change it?
Dfinity fund is using inflation token to support developers, not like ETH and other project which is really consume their funding. his token become more and more, which is not beneficial to token price.
solving the inflation problem of ICP tokenism is urgently.
You’d need more than that, cause a % of the burn rate goes towards burning the node provider rewards.
Hi @smaug
many thanks you for sharing your thoughts! Here is my initial feedback:
The motivation for current neuron design is:
- In order to participate in governance, users have to stake ICP for a minimum of 6 months. Via the dissolve delay bonus, users are encouraged to stake for longer times, which translates into higher voting power and voting rewards.
- This structure provides an incentive for users to vote in the long-term interest of the IC.
If we now abolish the minimum lock-up, as you suggested, we would loose this incentive, which I would find concerning. For example participants could vote in arbitrary ways and immediately sell their tokens, without bearing the consequences of their decisions. Also what would we gain from your perspective?
The underlying idea of this point seems sound to me. In the long run, we could consider linking voting rewards in some ways to the amount of burned cycles in a given time period (presumably minus the node provider rewards). Given that the IC is currently in a ramp-up phase with rapid growth, I would think that such a mechanism could be phased in slowly over time.
There is already a separate discussion thread on node provider rewards here. The latest proposal, in a nutshell, is to proceed in phases. Ad-interim, for generation-two hardware nodes, it is suggested to determine node provider rewards similar to the generation-one node rewards, but with a lower risk premium given that the IC platform is now established. In addition, we require a thorough review and discussion on a broader update.
because i am a researcher on tokenism, i just want to know if the tokenism is suitable for every project.
For ICP, I really found the tokenism has a big problem. Any project hope that their ecosystem’r prosperity can take deflation. Pls remember this is crypto world not country. Any project and community’s task is to increase the price of that token under the real expaned usage of that chain.
Like BTC, we know it’s constant number , it will never generated agian if it reach 2100 millions .
Like ETH, we know it is very useful in those Defi and at the same time, it’s deflation. so we trust it will pump up agian and evem more higher in bull market.
I know some of u may say one or two project like Doge has also inflation, But it has Elon’s support. and even though like that, Nobody prefer to hold it.
now, we all know, according the the price at 4$ icp, Cycle burn only can consume 100,000 icp per year.
but the real inflation is 40,000,000 ICP if all people release their maturity neurons .
there is a huge difference between burned amount and inflation amount.
under such a situation, ICP is already into a death spirals. but Dfinity team don’t recognize it is death spirals , they still think it is normal in the bear market.
To increase cycles burn rate, keep inflation and consumpiton are almost same is the only way to solve it.
Dfinity fundation has enough icp to support developers like ETH foundation. otherwise price will never pump up. i am not scare anyone.
Yes, you touch on a very important point here! It would be great if we could come up with an approach for rewards which distinguishes between manual voting and voting via following. In particular, it would be great if we could foster decentralization by proving higher rewards to known neurons who completed actual work before voting (e.g. checking replica upgrades).
I am 8 years NNS stakers, No one hope ICP will go to death in long time. We just hope Dfinity team can receive community’s feedback and do some change.
No one says the tech is not good even excellet, but without a appropriate tokenism, alway skeep inflation is a disaster, because lots of developers and users will leave, they are afraid of this inflation token and price keep falling down. as I know. some of good projects team has already left, even though they develop a good dapps, no users come and their project token borned in a terrible ecosystem.
pls always remeber" rarity is more expensive" !
“If we now abolish the minimum lock-up, as you suggested, we would loose this incentive, which I would find concerning. For example participants could vote in arbitrary ways and immediately sell their tokens, without bearing the consequences of their decisions. Also what would we gain from your perspective?”
For this question, i think lock 30 days or one or two month is enough. the price is already has a big change during that time, just like ETH 2.0 staking only ask for one year. if people believe they will still stake their token.
"consider linking voting rewards in some ways to the amount of burned cycles in a given time period (presumably minus the node provider rewards). "
this is a good way, it’s urgent now. people already feel afraid of inflation. And at least your team should give out a announcement to the market.
Please articulate the advantage of changing the minimum time for participation in governance from 6 months to 1 months. In my personal opinion, we can of course debate the most appropriate value (and there might be no clear-cut answer), but I believe we should only change parameters if there is a very clear benefit.
I agree that this is an important discussion which we should pursue. However before concluding on anything we would need to do much work. From my perspective, changes to tokenomics require a very careful analysis and syndication with the community.
What i mean is not to reduce minimum time for participation in governance from 6 month to 1 month.
I mean, we don’t need to set such long staking time like more than 3 years.
ETH2.0 staking is already shows us its success. people don’t know what will happen in such a long time.
like the situation now, Tokenism, NNS-1 released, expand more users, and dapps ,some excellent developers left, those problems are all make people lose faith.
To be honest, Ur team don’t know we all investors really have a beautiful dream that ICP will be successful in long time.
Dfinity should have knowledge in cryto market especially what factor affects user most and what factor will affect users to prefer hold its token.
Fisrt is the ecosystem’s development, that’s ture.
Second is tokenism, at least it can’t be in inflation without huge users at the beginning.
I recommend. DFINTIY Team can suggest to give some inflation when the whole ecosystem is too fanaticism which means token is not enough, instead of give such huge inflation when its ecosystem is just at begainning.
Voting via following has higher utility than voting manually and we should promote following those with the proper knowledge to vote on particular issues over voting manually. This is the simple economic principle of labor applied to governance and it is the thing that has driven efficiency. A proper liquid democracy will have very little manual voting.
The concept of months as a lock-up period is an abstraction over what the proper implementation of this would be if were not confusing and hard to understand. The proper implementation, given that everyone were smart and clear thinking and adequately technical, would be for your votes to determine your lock time. If you vote on something you should be stuck with a lock of 1.5x where x is the time it takes to implement the feature. For exchange rate proposals this is very short. For the ability to change your vote after your follow neuron has voted this is a very long time.
I’m not suggesting we do this because I think it would be too complicated and we have enough complication as it is, but…if we were going to do this, then if you vote on an item and claim the reward for voting, your neuron should be locked until the NNS votes to recognize that the implementation of the vote has been effected and deployed…then you’d take the time from the vote to the acceptance of the implementation and add 50% to neurons lock time. This would require all voters to stick around for the consequences of their votes and makes people much more thoughtful about their votes as it may lock them up for a long time if it is a big, hard-to-implement feature.
Because this is complicated we choose to abstract to simple months…but it does expose us to cracks in the skin in the game mechanism, especially when accepted features are kicked down the road past 6months from acceptance.
Patience pays off, when 2024 arrives, you will have a neuron that is very old and with a high ICP price… be patient.
Yes I agree that following is a powerful mechanism. My point is that it would be worthwhile to explore how we can create incentives for known neurons to vote manually and perform work for that (e.g. check replica upgrades). Would you agree with that statement ?
I completely agree with @skilesare, we shouldn’t think about grading voters according to their manuality. It is not a good scale for determining the value of the action of voting.
The best leaders in the world know how to delegate decision, and where to delegate them. If we just make it about who is clicking the buttons, we diminish the whole affair.
Argument by assertion fallacy dismissed. We are still waiting on your model demonstrating your doomsday death spiral. Per your current logic, ETH was in a doomsday death spiral in 2016, yet we now know this was not true. Try harder.