WaterNeuron SNS-DAO Launch

Hey @skilesare, thanks for updating everyone on our discussions.

Increasing the vesting schedule makes sense, that’s why it’s now configured for up to 3 years to make sure we’re aligned.

Now regarding the cap, this protocol has an implied cap. As the protocol grows the yield you get will tend to be slightly below what the NNS offers.
Screenshot from 2024-06-10 11-47-02

You can find the spreadsheet here and play with it by yourself: nICP - Google Sheets

Regarding future work, we already have a replica build tool verifier ready to be deployed. This is the first time such a tool has been built by community members. We also have a lot of ideas to develop and test, but first, we need to make this work.

Do not anticipate trouble, or worry about what may never happen.
Keep in the sunlight.

Thanks for your interest afat!


I’d be 100% on board with an algorithmic cap that tapered out the returns. That would be a natural way for the platform to self reg via the market.

The issue with this chart is that the bottom is 7.42 and the current rate for a 6m is 7.5.

There are a large number of universes where .08 percent + instant liquidity if a free option and no rational actor would choose traditional staking. If we find our selves in one of those, nICP could grow unbounded.

There are also a large number of universes where retail piles into Mother and 7.42 and 7.5 are irrelevant.

Cannot go to 0? Or at a tipping point could it accelerate to 0? This would cause a natural mint/burn cycle even in those universes where the free option is worth it at a 5% discount. And it takes the decisions out of human hands which could be good for keeping the meddlesome token architects out of future discussions. :grimacing:

I understand your critiques and I think public debate is healthy, but don’t understand why you would vote to reject the proposal to launch the SNS. If you don’t like the tokenomics or the structure, don’t participate in the SNS sale. Voting to reject the proposal seems like an unnecessary attack on the project.


There are a number of reasons, existential and practical. Let’s set aside the existential for as we’ve discussed how those can be mitigated.

The project is asking for 70k ICP (> $700,000) from the neuron fund to seed the attractiveness of nICP. This increases scrutiny on a practical level as NF holders need to ask if the investment of that money in this project is ‘worth it’. The NF participation ramps up pretty quickly and can end up being a huge part of the investment(see NNS Dapp).

Perhaps the NNS shouldn’t be voting on the NF participation, but for now, it is and so anyone asking for these funds should expect scrutiny from the community.

Many SNS projects specifically refused NF funds for this specific reason. The NF is probably why there was a rush of not-ready-for-prime-time SNSs and now here it is causing more scrutiny than you would like for a project you are a fan of.

If water neuron were launching without NF participation I likely would not have recommended outright rejection(which I’m pretty close to no longer recommending) and would have focused on the existential issues that we need to monitor and why we need to monitor them.

I do think the bar for rejecting an SNS that doesn’t request NF funds is much lower/almost non-existent (perhaps porn/outright legal activities should still be reject) than one that does.

In Water Neuron’s case I think the large team allocation coupled with the short team lock-up was a red flag for the NF. Extending the lock-up reduces that significantly, which sounds like it is being considered. The NF can’t just hand massive chunks of ICP to Founders and let them run off with the ICP and stay in existence for long. I’m in no way implying that I think WTN team would do that, but they have ways to ensure that they don’t which I’ve recommended.

I’d highly recommend separating the NF vote from the actual SNS vote for everyone, but that is an NNS governance matter. (Even better to let an SNS launch in a disconnected state and then ‘upgrade’ into the SNS. once they’ve demonstrated competence and value. As a bonus this would make the swaps self-run and would alleviate the issues that my lawyers have advised me about where US citizens who vote to launch a token swap could be held liable for any litigation and/or regulatory violations…currently ICDevs has to reject ALL SNSs and I do so as well with my private neurons for (my stupid country’s)regulatory protection). I’ve discussed a good bit of this before(ICDevs Votes on SNS and NNS Proposals). It is a contested topic, but I’ve chosen to be safe until the US further defines it’s rules and regulations.

Upgrading a set of canisters to move from one subnet to another or to be included in a list would have no rational legal consequences, especially if the token had been previously launched and demonstrated utility.

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I believe it’s imperative to deeply analyze projects with a healthy amount of disagreement and scrutiny should there be any.

However I do empathize with the feeling of being villainized while you (a dev) just want to bring your idea to life.
That can be incredibly frustrating as well as disheartening.

I will say though that something that frequently crosses my mind is the general crypto sentiment of “Don’t Trust, Verify.” Not sure if that is relevant to ICP but it is a common idiom among hardcore bitcoiners. Although I would say this sentiment permeates much of blockchain & smart contract technology itself which seeks to create trustless systems that are enacted without fault. So I believe our need to verify that our precious blockchain is not tampered with is paramount.

I sometimes struggle to fully adopt other aspects of blockchain like allowing people to create freely without censorship and in a sovereign way. There are some projects on the IC that I’m not a fan of whether it be because it’s a meme I don’t care for or because a project does not seem it is or will be particularly successful but regardless I’ve learned to be excited for the unique way in which creation of the DAOs and dApps on ICP is. So in some sense it’s all for the better.

I wasn’t going anywhere particular with these notes but figured I’d share my thoughts. I’ll end by saying that helping people to understand the security features and protective measures available to the Internet Computer to ensure that malintent does not gain a foothold can reduce these instances of hostility towards new projects. As well as providing more visibility for projects in development because sometimes I feel like SNS proposals come out of nowhere and I’m not sure where to see how much developement and work has gone into a dApp. These are some of my thoughts.


The NF can’t just hand massive chunks of ICP to Founders and let them run off with the ICP

This will not happen as everything will be staked in an 8-year neuron, and at launch, SNS-swap participant + NF will have the majority.

In Water Neuron’s case I think the large team allocation coupled with the short team lock-up was a red flag for the NF.

We raised lock-up up to 3 years. On a side note, as long as your project is not widely successful no one can sell. There is a natural “lock-up” until you get somewhat successful because as long as there is no interest in your project you can’t sell anyway.

You can check out the changes here: WaterNeuron/water_neuron_wtn_sns_init.yaml at main · WaterNeuron/WaterNeuron · GitHub


Ponzi scheme? Come on. Did you even attempt to try to understand how WaterNeuron before attacking it?


Yes. Great design by you all. This was more of a critique of the NF in general.

Awesome. And great point.

Any thoughts on accelerating the nICP rate to 0 after like 1 or 2% of ICP supply? I think that would form a natural barrier to give you guys wild success and make sure the platform doesn’t gin too much dominance. With that kind of set up I think the team allocation is much better balanced with the health of the ecosystem.(it also incentivizes WTN unless you find another use for the gap.)

In general I’d be super interested in the effect of what a 1% of ICP as liquid stake does for general liquidity. Like is that plenty or far from enough. I’m not even sure where to start looking for that kind of info.

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Dear WaterNeuron Community,

We, the Board of the Decentralized Entities Foundation, hereby attest that the below attached security report has been conducted by a qualified researcher with expertise in the Internet Computer ecosystem. We have verified the researcher’s identity and confirmed their qualifications. The researcher has chosen to remain anonymous to maintain impartiality and objectivity. The report has been prepared following industry-standard methodologies and best practices to ensure a comprehensive and accurate assessment.

However, it is important to note that the qualified researcher highlights the fact that code audit and security assessment projects are time-boxed and often reliant on information that may be provided by an individual or a team of developers, their affiliates, or their partners. As a result, the findings documented in this report should not be considered a comprehensive list of security issues, flaws, or defects in the target system or codebase.

The Decentralized Entities Foundation (DEF) disclaims all responsibility for any actions taken or not taken based on the content provided. It is intended to provide material for the
community to review. The goal of DEF is to help DAOs interact with the civil, legal, and physical world.

The board of the Decentralized Entities Foundation


  1. Code audit WaterNeuron
  2. DEF report

Thanks for publishing this audit.

The code is now open-source as well: GitHub - WaterNeuron/WaterNeuron: Liquid staking protocol on the Internet Computer


I agree, we haven’t seen the effect so far. If you look on DefiLlama’s dashboard for $ICP, or any other tracking tool. You quickly come to the realisation that the top DEX on chain with a FDV of ~$6 billions should have a TVL way higher than what they have currently. With unlocked liquidity of let’s say 1% of the total supply (~ 5’190’185 $ICP, or ~50’000’000 $USD), each DEX should have increased TVL and depth of order book/size of liquidity pool. This would benefit the whole ecosystem.

A project that is unrelated to DEFI most likely has a token, for their token to be interesting you should be able to offload your position or increase your current one rather rapidly. Without increased liquidity that is currently unmanageable. The newfound liquidity should be an extra incentive for new developers to build on ICP, growing the ecosystem and kick starting DEFI!

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Hey there, @DEF
It is nice to see IC-focused auditors emerge in the ecosystem.

Is there any way to see your portfolio? What other projects have you audited before?
I tried googling myself, but only thing I found is a twitter account with two posts from 2020.

Have great day!


@senior.joinu, the DEF didn’t conduct the audit. The audit was “conducted by a qualified researcher with expertise in the Internet Computer ecosystem” who wishes to remain anonymous “to maintain impartiality and objectivity”. The DEF’s role was in verifying the researcher’s identity and confirming their qualifications.


Aaah, I see. Thanks a lot for the clarification!

But… since the audit is already performed, isn’t it safe to reveal the auditor’s identity?
Even if somebody would try to affect their judgement, they already did their job and can’t update the verdict right?

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@senior.joinu, I’m not part of the team and I have no inside information: I just know what was written on the attestation and the audit report. That said, Foundation employees are probably the most qualified persons to conduct an audit of a staking protocol built on the IC, and I don’t think I’d want my identity to be known if I worked for the Foundation and conducted an audit.

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“Kick starting defi”
You’re issuing tokens with no listings and no plans on listing them. Spongepbob tokens will have hire trading volume.


A good auditor, IMO, has 3 following traits:

  1. They are experienced in reviewing similar projects, so they can quickly spot common bugs.
  2. They are not affiliated with my team, so the audit is more objective.
  3. (most important) They have reputation, so when they vouch for the quality of our code and something goes wrong, they will also suffer from the damage.

Anonymity is not a problem - I appreciate anonymity and I believe we should all be able to do stuff anonymously, when we need it.

And I can clearly see the reasoning behind the audit being conducted by a former colleague from the Foundation - you may get a better quality code review for a lower price this way (or even for a cup of coffee and pizza). This is absolutely appropriate for a bug-seeking peer review, but not for an official pre-launch audit with a report and everything.

The problem is reputation. If they risk nothing, their words worth nothing. The audit is a vouching event.

Seems like @DEF is in the role of reputation source in this case. But they don’t have any.
This is their first post at the forum. Their socials are empty. Their website is empty. I tried finding out more info about it, and it seems like they are the guys behind Gold DAO and Bochsler Finance. But you have to dig to find that info, which means that they don’t want these brands to associate with each other - otherwise they would cross-reference each right on their landing pages.

I’m sorry for being like that, but it just makes no sense.
Running a public sale, your first priority is to reveal as many details about the project as possible in the most transparent way you can think of.
So, the most fool-proof step here would be to get super-ordinary code audit from a super-common auditor, like Trail of Bits. This would certainly raise zero questions from the community, because ToB are well-known and people trust their judgements when it comes to the IC. (because they vouched for the IC and the IC vouched for them in return)
Instead you find an anonymous, with zero official conducted audits and zero reputation. And then you find an entity, who has reputation but hides it, to vouch for that anonymous auditor. Makes no sense to me.


The IC has a liquidity issue. In other blockchain networks, staked tokens are often tradable, allowing for greater liquidity and participation in DeFi activities. However, on $ICP, staked tokens are not tradable.

This design choice is intended to prevent malicious flash actions that could compromise the NNS, which seats as the core governance mechanism of the network. While this approach enhances security and stability, it also locks away significant capital.

Currently, approximately $2.5 billion is locked away and unable to participate in DeFi activities. This restriction limits the potential for these funds to be utilized in various DeFi protocols, reducing overall liquidity and economic activity within the ICP ecosystem.

The effects are evident on-chain. If you look at DefiLlama’s dashboard for $ICP, you quickly realize that the top DEX on chain with a FDV of $6 billion should have a TVL way higher than what they have currently. This is through no fault of their own, it’s because of liquidity!

As the liquidity is simply not there, there needs to be a plan to bring it to DEFI. The goal of @waterneuron is to unlock that liquidity! By having a token that delivers early higher yield than the NNS. Fully on-chain. Fully decentralized project from day 1.

To achieve this, WaterNeuron needs to be interesting in a couple of ways:

  • yield-wise - WaterNeuron offers a yield that is initially much higher than the NNS. The yield for $nICP, the token representing staked ICP in WaterNeuron, is designed to be attractive to early users. The yield will eventually settle around 7.2% to 7.3%, which is competitive with the NNS. The yield of $nICP only drops below the NNS when the TVL reaches approximately $100 million.

  • airdrop - To incentivize early adoption, WaterNeuron will conduct an airdrop of $WTN tokens. This airdrop will continue until around 10 million $nICP tokens are minted. This strategy aims to attract users and increase the initial liquidity of the protocol.

  • liquidity - Unlike NNS neurons, which are not tradable as they represent voting power, $nICP does not represent voting power and is only associated with yield. This design choice allows $nICP to be traded freely, thereby enhancing liquidity within the ICP ecosystem.

Why does this benefit the IC ecosystem?

If 1% of all ICP tokens (approximately 5,190,185 ICP or around $50 million USD) are swapped for $nICP, it would significantly increase the TVL and depth of order books/liquidity pools on each DEX within the ICP ecosystem. This increase in liquidity would have a trickle-down effect, benefiting the entire ecosystem. Projects unrelated to DeFi, which often have their own tokens, would also benefit as increased liquidity would make it easier to offload or increase positions rapidly. This newfound liquidity would serve as an extra incentive for new developers to build on ICP, thereby growing the ecosystem and kick-starting DeFi activities.

Without increased liquidity, that is currently unmanageable. The newfound liquidity should be an extra incentive for new developers to build on ICP, growing the ecosystem and kick-starting DEFI!


All of the points you mentioned make absolute sense. To launch, we needed an audit from an external auditor who was as qualified as possible. But we want to do an audit with Trail of Bits for sure for the exact reasons you mentioned in your post, now the question is when. We are already talking to them the only issue is that these audits take a lot of time and they tend to be pretty busy as they are probably the most popular auditors in a lot of areas.

Now regarding the foundation, it is a publicly registered foundation in Switzerland: Fondation pour les entités décentralisées (Decentralized Entities Foundation) - StiftungSchweiz. It’s goal is to develop Decentralize Autonomous Organizations such as WaterNeuron. Sorry if this wasn’t clear in the original post.

The problem is reputation. If they risk nothing, their words worth nothing. The audit is a vouching event.

This is unfortunately not true, in reality, the only thing that matters is the quality of the auditor. For the broad public, the name is worth something but as you can find numerous examples on https://www.web3isgoinggreat.com/, code that has been audited by these firms is regularly hacked and the auditing firms are not closing down after these unfortunate events.