Doesn’t liquid staking undo the point of staking? ICP is staked for voting in order to tie voters to the outcome of their vote. This liquidity problem is by design isn’t it? If it’s a real problem, wouldn’t the solution be to remove the need to stake tokens in the first place, rather than to design a system to subvert the way that staking was intended?
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I have the same question. It’s really a question for DFINITY I think. They created our current time bound staking system, but now they seem to be willing to make canister controlled neuron easy. Instead of making it easier to transfer neurons, why not just get rid of the need for liquid neurons altogether. It seems cleaner to make staked ICP liquid by getting rid of the neuron dissolve delay. I’m not sure why this hasn’t been part of the discussion.
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Hello there, @Lorimer and @wpb. I agree it might be counterintuitive. However, ICP is in a unique position thanks to the NNS framework!
The NNS is all-powerful, from the nodes it controls to the subnets they are part of, the canisters that run, the ledgers, and even managing itself! People decide every proposal in the NNS, the people, the network is a liquid democracy!
How do you ensure people vote in a referendum, especially when so much is at stake? I think pride of the network and how much you care about the issue play significant roles. In the NNS, there is an extra incentive with tokens. Some of us like to vote and happily take time every day, while others follow trusted neurons and their ways of doing things (codegov, etc.).
Others who are only here for the yield—this kind of people do not exist in the real world. These people here for yield only weigh in on the everyday governance of the system; they would gladly take the yield and go home, but instead, they have to vote. I believe they represent a threat to the network.
WaterNeurons’ design neutralizes them. They can still have a high yield, but they hand their voting power to the WaterNeuron DAO, who will, in turn, make an informed decision.
In this context, liquid staking does not undermine the purpose of staking but enhances it by offering flexibility and liquidity while ensuring the network remains secure and effectively governed.
It allows participants to engage in other financial activities without sacrificing their staking rewards, broadening the appeal and utility of staking within the ecosystem.
edit: @Lorimer pointed out I was overly simple in the description of the NNS!
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Couldn’t you reframe this whole narrative as 'WaterNeuron buys votes, and votes the way it wants with the voting power that it’s purchased"?
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You are a big thinker @EnzoPlayer0ne, which I highly respect. I don’t disagree with your explanation.
I do believe this to be true. WaterNeuron seems to be well positioned to make a big improvement to NNS governance, which I think is very exciting. You and @0rions have the perfect skills and network to develop the tools and app to make the project a success. I greatly appreciate that you plan to use the NNS voting power that will come from the WTN neurons in a way that will advance decentralization of NNS governance in a healthy way. I’m very impressed and I plan to participate.
I’m just not sure that NNS governance still needs to be based on neurons with dissolve delays if we are going to break the time locked commitment. You could still have governance that is based on staked ICP and liquid democracy (using the Followee system) without the dissolve delay parameter for neurons. Long term staking could be rewarded using an amplified age bonus instead of a dissolve delay bonus (e.g. max 2x age bonus at an 8 year cap). The older the neuron, the more painful it would be to liquidate, but neuron owners would be free to liquidate a portion of their staked ICP instead of needing to liquidate the neuron itself.
Don’t get me wrong, I still prefer the original design intent of long term commitment using dissolve delays. I thought that was a reasonable fundamental design feature of ICP tokenomics. However, if DFINITY is going to acquiesce to community demand for commercial option for neuron transfer (such as idgeek, stakegeek, WaterNeuron), then I think it’s reasonable to consider if neuron transfer should be necessary when all we need to do is remove the dissolve delay.
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Users mint $nICP with $ICP, and that $ICP gets locked. Locked $WTN holders vote for all the $ICP staked on the protocol. I’m not sure where you see the buying of the votes happening.
Users are offered financial reward to lend their voting power to WaterNeuron (this can be described as buying votes in my opinion). Please help me see the difference 
Another interesting point is that locked $WTN holders control the WaterNeuron vote, and are offered a staking bonus. Isn’t this essentially the model you say you’re trying to move away from (staked ICP for which voters receive a staking bonus)?
If you remove the dissolve delay, someone could come and stake everything, vote on the outcome they prefer, and then leave the system again immediately! Which I personally think is detrimental to the system.
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Not in my eyes. In the current model, some people come to vote just to earn voting rewards. Hence they’re not preoccupied by the voting outcome, which is an issue when the NNS controls the entire network. You can’t have people who vote just to vote without much concern with the issue at hand in a direct democracy system.
In the WaterNeuron DAO system, they still earn the yield they were after without engaging in governance. $WTN stakers handle the governance aspect for them instead, so they don’t have to vote whatever just to get yield.
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But IC isn’t a direct democracy… it’s a liquid democracy. Anyone interested in yield over voting will set up neurons to follow, and they’re incentivised to follow the most active neurons that have the networks best interests (and therefore their stake) at heart.
It sounds like the whole premise for WaterNeuron is based on a strawman argument. Can you agree that it’s very misleading to keep describing IC as a direct democracy (regardless of what the default state of a new neuron is)?
Completely separately from the above concern, another is that the holders of $WTN can fall foul of the very problem you’re trying to solve (unless I’m mistaken on this part - please correct me if so). Essentially, how do you make sure $WTN holders vote responsibly, instead of just seeking their yield? I’ve reread your answer, and see that I missed your point - ‘they still earn the yield they were after without engaging in governance’. But of course, the current status quo is such that ICP stakers still earn their yield, even if they don’t manually vote…
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I agree, I missed your correct point earlier! It’s indeed a liquid democracy. I like to simplify it to direct democracy to explain it to people outside the ecosystem, but you’re correct. Thanks for the correction!
Thanks, exactly! I think this status-quo is an issue for people who are only here for the yield. I personally think offering them an alternative where they can still earn yield and not vote is a better outcome!
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How is this different than liquid neurons? Other than the fact that liquid neurons are typically sold at a discount relative to the time locked ICP in the neuron. Doesn’t discounted ICP actually make the liquid neurons more detrimental to the system?
I recognize that there are two mechanisms for liquidity for WaterNeuron…dissolve your liquidated 6 month neuron and wait or sell it immediately at a discount. My concern is that we have the ability to sell immediately with all of the commercial options. That’s where the time locked restriction is broken and why I think the time locked restriction could be removed in a cleaner way.
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But users who stake their ICP can already earn yield and not vote (manually). Can you elaborate on why WTN delivers a better outcome?
As a separate concern, I currently have a neuron that I use for voting, and obviously have staked a bunch of ICP to acquire this neuron (just so happens to be staked for 8 years - I’m in it for the long run). Does WTN offer me a convenient way to divorce myself from this long term commitment? Essentially, does it work just as well for ICP that’s already been staked, or is it just intended for new ICP that needs staking in a particular way?
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Yes, you can already do that in the NNS! However, when you do so your $ICP is locked, only your voting rewards is not. $nICP helps you mitigate that, you do not vote, you earn yield, and you are liquid with the $nICP token.
It is only for $ICP that is not locked in the NNS. As like @wpb was saying, you are not allowed to transfer NNS neurons!
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Thanks for taking the time to go through it with me @EnzoPlayer0ne. My understanding is that WTN’s value proposition is that it decouples governance from yield. I can see why this is appealing to individuals driven by short-termism/self-interest. I’m still not clear on why this is a good thing for the long-term health of the network (given that these individuals are already neutralised by liquid democracy). Are you able to clarify this particular aspect?
Are you also able to offer any thoughts on why you think IC might have been designed this way - offering yield to voters? Ultimately, this is what WTN attempts to change if I understand correctly.
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(I’m moving this conversation to this most recent/active thread).
Is there a reason that liquid staking needs to have voting power at all?
This is intended to be a financial instrument not a “community DAO” correct?
(Just a thought) Let’s say dfinity were able to add a function that liquid staking DAOs/neurons were able to declare itself as such, it could void it’s own voting power in return for receiving the full voting rewards as if it were an active voting neuron staked for the same period e.g 8 years. The maturity would be the same, which is the purpose of liquid staking, but the voting is void.
As this proposal in its current form poses a substantial threat to the de-centralisation of the ICP and voting.
Also to clarify, are you planning on receiving ICP from the neurons fund? As I don’t see how some of these yield numbers can be met if you are not.
What you are proposing, is literally the opposite of decentralisation. It is centralising a large amount of voting power. But the purpose is the ROI yes? So voting power should be irrelevant to a liquid staking platform. Do we agree?
It’s also been said that this is to take voting majority away from dfinity, but now instead of voting no to all, you’ll follow the majority votes on the ICP proposals on the NNS an hour or so before expiry.
But you’ve also stated that most neurons follow DFINITY. So in effect you’ll be following the majority which you’ve stated already follow dfinity, which essentially means you’ll be following dfinity for voting.
The difference is, people who follow dfinity can revoke that at any time in their neuron. From what I understand of this, this is irreversible. You get the voting majority of hundreds of thousands of ICP after the SNS launch and people cannot choose to revoke who you are voting on. Is this correct?
It’s been stated quite categorically that, first you would be voting no, then this was changed to following the majority of voting on the NNS. This implies that your team, not the community will have the majority of voting power as to how the ICP neuron is voting. Is this correct?
Would you be opposed to revoking voting power if your earned maturity stayed the same as though you were voting on all proposals? (If you are, why?). I also believe a hard cap is necessary on this type of project as the extreme centralisation of voting power this would achieve is worrying to say the least.
This would still meet the criteria of your goal, which is to achieve a better ROI on liquid staking, but it would not centralise so much voting power. What are your thoughts on that?
Is this possible from dfinity side of things? As in revoking voting power (not the maturity, but voting power) from projects intended to be liquid staking platforms. People are liquid staking for the ROI, not to centralise voting into the hands of a few.
In terms of the SNS swap what is the breakdown?
Ie how are you able to say “we will vote no on all topics” (I understand that has now changed to “we will vote with the majority on the NNS proposals”), but regardless, how can you say “this is how we will vote”, isn’t that up to the community with staked WTN?
Saying this implies that you know factually that you’ll have the majority of voting power on the DAO and in turn which way it votes. Is this true?
What is the breakdown of voting power of WTN tokens available to be staked for the community following the launch?
Ie how decentralized is WTN if you’re able to specify in advance what the vote will be?
If the neurons fund does not commit to any of the launches, will you be able to meet the ROI that you’ve stated?
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@Mpeiz raises a large number of very good questions. I’ve cherry picked my favourite above ^
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It obviously is not a democracy, liquid or otherwise. A pillar of democracy is equal representation (“one person, one vote”). Voting power scaling with wealth is the antithesis to that principle.
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That’s just the democracy we’re used to, isn’t it?
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I’d like to attempt to answer my own question.
Are you also able to offer any thoughts on why you think IC might have been designed this way - offering yield to voters? Ultimately, this is what WTN attempts to change if I understand correctly.
I expect the answer to this is - optimism that users would avoid making decisions that are in their short-term interest to the detriment of their long-term interest.
After taking a long bath and some paracetamol (I have a splitting headache - unrelated), I think I’ve come to terms with Water Neuron (there’s some unintended symmetry in this sentence 
).
My current understanding is that WTN attempts to eliminate short-term/irresponsible thinkers from the pool of individuals that can affect the outcome of an NNS proposal. I believe it attempts to do this, ironically, but enticing them with short-term rewards that tail off over time to the point where they would eventually actually have been financially better off staking their ICP directly in the NNS (unless they were lucky enough to have traded out of their positions at the right times).
Is this correct @EnzoPlayer0ne?
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