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Network proposals

What is a network proposal?

A network proposal is a mechanism for governance where Delegates can submit ideas for changes that they would like to see implemented in the ICON Network. These ideas are recorded and voted upon on-chain, which means that the proposal document and the voting results can be seen publicly by all.

Common proposal types

There are four different types of Network Proposals that greatly affect the system; Malicious Smart Contract Proposal, Delegate Disqualification Proposal, STEP Price Proposal and Text Proposal, defined as follows:
  • Malicious smart contract proposal : a proposal to shut down a specific smart contract
  • Delegate disqualification proposal : proposal to remove a Delegate from the network
  • STEP price proposal : proposal to adjust base transaction fees
  • Text proposal : a proposal to vote on an idea. No action is actually taken

Examples

See the community forum section on Governance for examples of Network Proposals. Three examples are briefly highlighted below. Note that some of the highlighted proposals use the deprecated term P-Rep instead of Delegate:

Example 1: Cap P-Reps’ ICX delegation share to 2.5% of the total delegated ICX

Proposer: Nym
The goal of this post is to start a conversation with the community and P-Reps. It is not a finalized proposal, but I hope that a fully specified IIP will be written following the output of this discussion.
This is not a proposal from the ICON Foundation. All ideas shared below are the result of aggregating fragmented short conversations with the community and P-Reps, as well as our own understanding of the incentives imbalance currently in place in the network.
Special thanks to @Benny_Options for drafting this text and laying down these ideas in clear.

Introduction

Decentralization is one of the main goals of the ICON network. Unfortunately today the network is suffering from a strong vote stagnancy, and voting is a core concept of a DPoS consensus.
This is not a good thing for the network because:
  • It discourages new P-Rep candidates to participate and compete and so the network does not have many nodes securing it
  • While every nodes have very similar costs and produce similar amount of work (specifically, producing/validating blocks and storing a copy of the blockchain), their reward is vastly unequal
  • It concentrates most of the delegated ICX into a few nodes at the top, making some nodes unprofitable while others excessively profitable

Proposed idea

Impose a maximum percentage delegation per P-Rep node of 2.5%. setDelegate function will first check the percentage of votes held by the P-Reps receiving delegation. If the P-Rep is above 2.5% of all delegation, setDelegate will revert.
In English terms, it means that a P-Reps cannot receive additional ICX delegation, if its current delegation represents more than 2.5% of the total delegated ICX on the network.

Goals

More quality nodes

By limiting the max delegation to 2.5%, it redirects newly delegated ICX to look for another node. Therefore, sub and candidates P-Reps will receive more delegation. This encourages more ICONists to run a P-Rep node as it’s easier to compete with top nodes. There would be a minimum of 40 quality nodes securing the network as a result (2.5% * 40 = 100%). It also indirectly encourages ICONists to select their P-Rep in a more attentive manner, rather than choosing the top nodes by default.

Better vote spreading

Delegated ICX will be spread more evenly across different nodes. Therefore it increased decentralization (see the next section for a counter argument).

Fair reward between P-Reps

There is no economic, business or security purpose to having one node earning significantly more money than another node for the same amount of work and expenses. All P-Reps’ costs and work are very similar when it comes to running a node, therefore the reward for doing so should also be similar.
Upon reaching the cap, a P-Rep operator could deploy another node, incurring additional cost to access additional revenue. P-Reps who are looking for additional income could also build products or services on top of the network for this purpose.
It also makes ROI much easier to predict over a long period of time. P-Reps (and those interested in deploying a node) would compare the income generated by reaching the delegation cap to the cost of running the infrastructure.

Potential issues

Service disruption

  • sICX is now a service that delegates to p-rep nodes. This service would need to be adjusted.
  • Wallet UX will have to be updated to provide a smooth voting experience without voting failure.

Sybil incentives

  • Top nodes will deploy multiple nodes in order to continue maximizing their reward, which could become a threat to decentralization if the top 22 P-Reps (main) are controlled by a few entities.
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Please share your feedback on this topic. Thank your for reading.

Example 2: ICON 2 - Monthly Reward Fund Setting Proposal

Proposer: Nym (on behalf of ICON Foundation)
The ICON Foundation submits a Network Proposal to set monthly reward fund to 3000000 ICX
Feel free to discuss this and cast your vote when you’re ready. Thank you.

Example 3: ICON 2.0 Penalty System

Proposer: Benny_Options
On ICON 1.0 we never implemented any sort of burning penalty, however, we have plans to implement a burning penalty on the bond of the P-Rep. Please see the details below and let us know if you have any strong feedback you would like us to consider:
Validation Penalty - This is currently live on ICON 1.0 and it will be the same on ICON 2.0. After missing 660 blocks, a P-Rep will be removed from block production until the next term. There is no burn associated with this and there will be no burn associated with this.
Accumulated Validation Penalty - This will be a new penalty. If a P-Rep receives 5 Validation Penalties within their last 30 chances, where a chance is defined as serving 1 term as a block producer, the P-Rep will be removed from block production and 20% of their bond will be burned. This penalty will be enforced on every validation penalty from 5 or more within the last 30 chances. In other words:
If a P-Rep get’s 5 validation penalties in the last 30 chances: burn 20% of current bond If a P-Rep get’s 6 validation penalties in the last 30 chances: burn 20% of current bond If a P-Rep get’s 7 validation penalties in the last 30 chances: burn 20% of current bond etc. etc. etc.
The goal here is to remove a down node from block production since ranking is based on the amount of bond posted. If you are a Main P-Rep suffering this penalty over and over again, eventually you will drop to Sub P-Rep status as your bond continues to be slashed.
Overall, it is important for network stability to remove downed nodes from the block production rotation, and slashing the bond until the node drops out of rotation is a less harsh way of doing this versus complete disqualification.
Governance Slashing - this will stay as we agreed in IISS 3.0, minus the slashing associated with the Contribution Proposal System since the CPS management is no longer mandatory as described here 12.