Telos Amend Proposal — Transition to PoS/DPoS Hybrid

Problem Statement: Although Telos validators hold a crucial role in securing and governing the network, the existing system allows for and in some cases even encourages passive participation. Such limited engagement compromises both network security and the integrity of the Telos governance structure.

Current Situation Analysis:

Delegated Proof Of Stake (DPoS) allows voters to stake and vote for up to 30 block producers.

Pros:

• A segment of validators is proactive in funding Telos-centric businesses.
• Some validators retain a significant portion of their rewards and actively participate in governance.
• With Inverse Weighted Voting, vote manipulation is more difficult to attain.

Cons:

• Ascending to a paid validator position is challenging due to the prevalence of stale/old votes. This also causes BPs to be less engaged due to a lack of competition from new entrants.
• Many have argued voting is not dynamic enough due to a lack of vote decay. There is a large discrepancy between validator performance and validator place.
• Several validators limit their participation strictly to block production with no other participation.
• Some validators utilize BP rewards to fund non-Telos ventures.
• Highly aligned and active holders have limited incentive to get involved due to the difficulty of achieving a paid slot.

Proposed Solutions:

Phase 1 — Transition to a DPoS/PoS Hybrid

20x Multiplier for all tokens self-staked to BP account
While the original DPoS votes will remain untouched, the introduction of a PoS voting function would augment voting dynamics. The total votes for a validator would combine their DPoS and PoS votes.

Examples:

Example 1: Voting Breakdown for Validator A:

• DPoS Voting: 20 million votes.
• Self-Stake to BP account: 100k TLOS.
• After the 20x multiplier, PoS vote is 2 million.
• Total votes for Validator A: 22 million (20 million DPoS + 2 million PoS).

Example 2: Voting Breakdown for Validator B:

• DPoS Voting: 20 million votes.
• Self-Stake to BP account: 1M TLOS.
• After the 20x multiplier, PoS vote is 20 million.
• Total votes for Validator A: 40 million (20 million DPoS + 20 million PoS votes).

In both examples, it has not yet been determined if the stake weight will be determined by resources staking, REX, or both combined.

Anticipated Outcomes:

• Encourage validators to increase their stake in Telos, thereby strengthening their commitment and alignment to the network.
• The augmented voting power for self-staking validators will drive more vested parties to the network as a validator.
• New validators can now reach higher ranks with less effort by buying their way into paid positions. This approach not only boosts competition but also enhances the utility of the $TLOS token.

This proposal aims to revamp the Telos network’s current validator dynamics, ensuring increased participation, commitment, and overall security for the Telos ecosystem.

Beyond Phase 1 — Taking a Look at Potential Future Phases

Below are examples of additional amendments that could strengthen the transition to a DPoS/PoS hybrid model. The plan is to assess the impacts of Phase 1 to determine future phases.

Minimum Stake of 100k TLOS for Validators

To fortify the Telos network with committed stakeholders, a minimum stake of 100k TLOS within their account to register as a producer could be required. The system contract would then also be updated to monitor these balances and issue a kick for a BP whose balance dropped below 100k TLOS.

Enable Voter Decay

Research is required to scope and determine the work involved to enable the voter decay system without the pitfalls of the current implementation we have seen on other AIO networks. If we are able to resolve those issues on Telos, it would likely be well supported by the community.

Staggered pay opportunities

In order to increase competitiveness and further incentivize self-staking, we should explore further adjustments to BP pay by possibly staggering votes in groups. For example, the top 5 BPs would be paid the same, followed by the next 5 that would be paid less, and so on. This too will increase competitiveness between BP organizations in addition to encouraging the staking of tokens.

Longer tail of BP’s

Currently, there are 42 paid positions and around 50 total validators. Increasing paid positions will further decentralization, participation, and competition.