At this point I’m no longer recommending rejection, if for no other reason than gates are generally bad and that if something is a long term safety issue then it should be addressed head-on rather than asking people to block access. In that vein, I do still recommend one of the following actions be taken for network safety(I’ve listed them in my current preferences, but I think the debate and research is far from over). @WaterNeuron is right to question if this is a realistic issue or not and we will certainly see as the platform launches:
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Change the contract such that the return on nICP accelerates to 0 after total ICP locked in the contract reaches 1% of ICP. This builds a market driven cap on likely ICP out into a single platform. You could even launch WTN2 when you get close to this. Why? Having different DAOs with diverging priorities and different voting blocks helps maintain decentralization. We are in a strange place right now where something like WaterNeuron can help decentralization by gaining voting power while also reducing centralization by concentrating VP in the hands of WTN holders. Once more than -1% of VP is held by WTN holders I’d suggest that the script starts to flip and that further concentration of VP in WTN holders becomes “bad” for the network, but that a second, third, nth, etc similar structures may continue to good to diversify away from the current DFINITY concentration. Unfortunately, once we have whole DAOs controlling 1% blocks it may be very hard to roll back. These chunky voting blocks can give a parliamentary feel where fringe small groups get an elevated say in governance(see ch. 13, Choices Amazon.com). The ability for DAOs to hold VP may be indirectly leading to a multi-party governance that we can’t unwind, thus capping it at a small amount now gives optionally down the road.
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Hard cap. Same as 1, possibly easier to code.
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NNS motion to cap any one DAO at 1% VP and future forced installation of an upgraded WTN contract with a cap in it. We already have a passed proposal to reevaluate the entire canisters holding neurons issue when we reach 10% VP. The waterneuron contract is controlled by the NNS and thus the NNS can vote to upgrade it to any contract it sees fit. I’d prefer self regulation and best practices standardization as mentioned in 1 or 2 as this third option may be very hard, if not impossible to pull off due to ideological reasons even if the network is at serious risk.
What is the risk if no action is taken? The viral and value loop in WTN is very well designed. The minimum return on a 6 month neuron staked via waterneuron, even when something like 2% of ICP is in the system is only a few fractions of a percent less than the standard six month rate in the NNS. Liquidity is likely with far more than those few small points. A rational person with full information would likely have to be very confused to stake in the NNS once water neuron exists. This, coupled with the fact that 8 year neurons get only a straight line bonus, could lead to a runaway loop where WaterNeuron(and/or copycat platforms) becomes the defacto staking platform for the IC and no more ICP is individually staked on the NNS. The WTN is less aggressive about the take up of the platform than I am and it is possible that I’ve missed a particular variable that makes nICP less attractive at high ICP locked value, but according to the provided xls the rate it very close to par with a 6M neuron.
(These restrictions may need/should exist for the @GeekFactory riskless staking platform as well, but I have been in vacation this week and have not even had a chance to read the announcement, much less the code.)
I haven’t had a chance to look at the contract code in any depth at this point and my rust is a bit rusty, but I’d expect an insertion point for 1 where the amount of maturity distributed to WTN from the 6M neuron could increase from 10 to 100 after a certain point.
For 2, the contract could just stop processing deposits after a certain point and refund ICP instead.
This analysis has unfortunately intersected with some time on vacation I’ve had very limited time to do any deep review or audit, but my concern for a runaway scenario seemed to warrant staring some discussion. Thanks to the WTN team for the interaction.