Networks’ governance updates
In Citadel, we believe that an active participation in governance is a key element for network’s health and growth.
As projects mature, users and team members analyze mainnet data, validators provide feedback, and the community shares their thoughts, some design flaws and room for improvements become apparent. That’s when the governance mechanism kicks in, and proposals are made to apply changes to the protocol. In this article, we overview the latest significant governance changes of networks supported by Citadel.
Icon
ICON Incentives Scoring System (IISS) 3.0
THE latest ICON network proposal by ICON Foundation was in April this year, describing improvements to the current IISS model, originally designed and detailed in a yellow paper released on July 24, 2019, by the ICON team. The proposal was voted on and approved on April 23, 2020, by 100% of P-Reps. ICON estimates the changes to be implemented in Q4 2020.
Contribution Proposal Fund (CPF):
The CPF adds the ability for P-Reps to reward ICON ecosystem contributors via on-chain voting. Anyone would be able to submit proposals to contribute to ICON through the CPF, P-Reps themselves included. The CPF will have a cap of 1,000,000 ICX, after it is reached, all additional allocations to the CPF will be burned. The purpose of the cap is to encourage active management of the fund and to prevent the situation in which Main P-Reps are incentivized to steal the ICX held in the CPF.
10% of P-Rep rewards will be allocated to the CPF. With the adjustment of how i_rep works, this will not materially impact any teams because of the increase in B2 rewards. When teams have more than 1% delegation, the network will allocate more inflation to the CPF (analogy with progressive tax).
Changes to P-Rep rewards:
The B1 reward for Main P-reps will be removed entirely, I_rep will only represent the rewards received per month for getting 1% of the vote. B1 is planned to be removed because it will always incentivize a Sybil attack (creating multiple nodes) on Main P-Rep slots. Having any additional reward for being a Main P-Rep creates an incentive to create multiple Main P-Reps.
As a result of this decision, i_rep will be reset to maintain relatively consistent inflation from IISS 2.0 to IISS 3.0. The exact number will be determined closer to the time of launch, as it is not possible to forecast what inflation will be at that time.
Changes in rewards and inflation distribution can be seen in the graphs below:
P-Rep Bond Requirement:
The minimum bond requirement of 5% of the delegation received is intended to meaningfully lower the benefit of vote-buying while also requiring P-Reps to have “skin in the game.” Additionally, this bond will be used to pay burn penalties; voters will no longer be affected. The main idea behind the bond requirement is to increase P-Reps involvement in network governance, creating an apparent direct connection between rewards and P-Reps’ stake.
Ranking, rewards, and governance power will be based on “bonded delegation” rather than the number of votes received. Bonded delegation is equal to the number of bonded ICX divided by 5%. This change will make vote-buying less profitable, as a P-Rep would need to both increase his stake as well as pay for votes.
The option for a P-Rep to stop additional delegation would be included as well since it will be essential for nodes to more closely manage the amount of delegation they receive.
Governance Slashing
The purpose of this change is to incentivize P-Reps to stay active and deter passive self-delegated nodes from running Main P-Reps and disrupting the governance process. Right now, there are no penalties for P-Reps passive behavior whatsoever.
The timeframe to vote for Network Proposals would be increased from 1 day to 5 days to give teams enough time to submit a vote. There would be an additional step to submit a Network Proposal to stop malicious nodes from submitting proposals in hopes of catching teams off guard, and votes will no longer close upon reaching the majority to allow all teams to vote.
The new proposed penalties are as follows:
- Missed Network Proposal vote: burn 10% of the bond
- Missing a Contribution Proposal Vote (not currently live): burn 10% of the bond
- Submitting i_rep outside of range (50% (+/-) from current i_rep): No burn, just rejected by the network
This proposal is a big step forward for ICON as it enforces P-Reps to become even more invested and involved in the Governance process and helps to prevent and penalize improper behavior. CPF activity will also be exciting to follow, as it will allow P-Reps to vote for contributions to the ecosystem and affect the direction of development.
[Network Proposal] Increase the Transaction Fee
The latest proposal on the ICON community forum is a proposal to increase transaction fees posted on July 17, 2020, by the ICX Station.
Quick Take:
- Transaction fees in USD are currently extremely low, unnecessarily low
- With our current average transaction fee, it would take ~43M transactions per day (~500 tps) to break even
- With 10x the transaction fee, we could be counteracting inflation entirely with ~4.3M transactions per day (~50 tps)
They propose raising the base transaction fee to 10 times what it currently is over some time, making sure it is not causing disruptions in the network along the way.
There are some concerns about SCORE deployment price becoming too high and mainly affecting developers. For now, the idea is to slowly increase transaction fees 25% until we reach a maximum of 2x the current fees. The first proposal should be submitted today.
IOST
On-chain Governance Mechanism
On May 27, 2020, IOST held May Global Node Conference and first introduced its On-chain Governance proposal. There were no objections from the nodes, and the proposal was approved, this mechanism will ensure further development of the IOST ecosystem and allow top 30 nodes to submit the proposals on-chain. The proposal process is showcased below:
In 3rd round voting right is divided into 3 parts:
- Voting Rights by The IOST Foundation
When the on-chain voting first starts, the foundation will hold 30% of the total voting right, and then it will decrease by 1% every quarter until reaching 15%. This 1% will be divided between Staking and Contribution-based rights equally (0,5%). Foundation has veto power — it can reject a proposal that has more than 66.6% of the votes, it will automatically initiate a new voting round. If it gets more than 80% of the votes in the new round, the proposal will pass.
2. Staking-Based Voting Rights by Nodes
- Nodes will initially have 35% of the voting rights based on staking volume and will increase by 0.5% quarterly reaching 42.5% of voting right.
- The staking-based voting power calculation is similar to the income tax calculation.
3. Contribution-Based Voting Rights by Nodes
- Same as staking-based rights, they will be 35% initially and then will increase by 0.5% quarterly until reaching 42.5% voting rights.
- The contribution-based voting power comes from previous and current Tier placements.
Voting rights calculations can be found in this medium post.
On July 1, 2020, the IOST on-chain governance mechanism v1.0 was launched. The first two proposals come from XPET and IOSTABC:
Proposal by XPET
The goal of XPET is to create original IP of blockchain games based on IOST public chain, enable blockchain to empower games and make games become the real use case on the public chain.
The proposal includes a plan for XPET development with the core ideas: to ease traditional gamers onboarding process, creation of game assets exchange (as NFTs), introduce OTC and Stable coin channel, and further development of games.
Proposal by IOSTABC
They propose to improve IOST partner node voting mechanism — to allow voters to change the node they are voting for, without the need to withdraw the votes first and wait 3 days. This will help voters to not miss out on the rewards since there will be no frozen period.
- Users can directly change the vote, reduce the cost of changing the vote, and play a positive role in promoting the contribution of partner nodes.
- If the partner nodes’ income fluctuates greatly, it will increase the possibility of users changing their vote.
By adding an on-chain voting mechanism, IOST allows node holders to submit network proposals and actively engage in the governance process in a decentralized manner. This will undoubtedly have a positive effect on the project, and help with its development, as those proposals come from both the biggest stakers and most significant contributors.
Orbs
New Staking model — locking mechanism
In April 2020, Orbs introduced their stake locking mechanism — staked ORBS tokens will be set to a locked state of 2 weeks (14 days). The new staking contract went through professional auditing to ensure the security of the staked tokens. The source code is available for review at github.
There is a 3 months transition period, which allows delegators to learn and understand the new staking mechanism and switch to it. During this period, delegators will still be able to use the original staking mechanism, but after this period ends, participation via the first year staking mechanism will be discontinued.
The new mechanism will positively affect the Orbs network security and stability, and delegators will no longer be able to transfer their delegated tokens, which resulted in a minimal commitment and lower level of network security. By enforcing stakers to lock their tokens for 14 days, the network is increasing the cost of an attack, since attackers will not be able to transfer and exchange their tokens immediately. The new staking mechanism, if widely adopted by network participants, will be highly valuable for the Orbs network.
Orbs POS V2
For some time, there were talks of new Orbs POS V2: Age of Guardians. And in this month’s blog post Orbs’ team mentioned it:
“In the last few months, we have been busy discussing the proposed new features with the Orbs Guardians, getting their important feedback and contributions.
There is not much more we can say about this issue at the moment. We will publish our proposal for the community to review soon!”
When it is released, we will make sure to write an article about it.
Tezos
The Carthage 2.0 proposal
The last proposal on Tezos was submitted at the end of last year and was implemented in March 2020. The Carthage proposal was a joint effort from Nomadic Labs and Cryptium Labs, it focused on code cleanup, adding optimizations, and fixing small issues. The baking reward formula was changed to make it linear in the number of endorsements included instead of a step function. The formula was further modified to make it more resistant to certain types of attacks. Carthage also contains several minor improvements to Michelson.
It also included an increase in the gas limit:
- The gas limit per operation was increased from 800,000 to 1,040,000
- The gas limit per block was increased from 8,000,000 to 10,400,000
Sapling integration
Right now, there are no ongoing proposals in Tezos, but for a long time, there were thoughts about Sapling integration in Tezos, which will most likely be the next proposal by Nomadic Labs. By extending the Michelson smart contract language, this integration will allow for the exchange of digital assets in a privacy-preserving way.
Sapling is a protocol enabling privacy-preserving transactions of fungible tokens in a decentralized environment. Thanks to significant performance improvements of Sapling, privacy-preserving transactions are finally practical, with approximately ~0.5s needed to craft a transaction and ~10 ms to verify it on a regular laptop.
As soon as the proposal is submitted, we will make sure to make an article about it. Overall, Tezos takes pride in its self-amending protocol, and we have already witnessed several protocol updates, Tezos have already proven that validators show high involvement in governance.
Final thoughts
It is exhilarating to see projects update their governance and actively develop new features. On-chain governance allows projects to function in a truly decentralized way. It reassures us as holders and validators that projects think about their future, and tackle flaws in their original design, as well as add new mechanics to meet the demand. The active community is also noteworthy, most of the network updates are proposed by validators and developers, which shows their involvement, showing that these people are here for the long run.
About Citadel.one
Citadel.one is a non-custodial Proof-of-Stake platform for the management and storage of crypto assets. Users can create public addresses for all supported networks with one seed phrase, connect their Ledger or Trezor device, or import an address generated by another wallet. The analytical dashboard provides relevant information on wallets’ balances and networks’ main metrics. One of the main functions of the Citadel.one platform is participation in the PoS consensus — users can stake and delegate their assets, claim rewards, and follow the latest network proposals in the voting tab.
Citadel.one offers its users instant cryptocurrency exchange services that allow fast and secure crypto assets swap, and it is also possible to buy and sell crypto with a credit or debit card. Among PoS platforms Citadel.one supports Cosmos ($ATOM), ICON ($ICX), IOST, Orbs, and Tezos ($XTZ). For our user’s convenience we also support Ethereum, Bitcoin, and Tether ($USDT). Mobile and desktop versions, new networks, including Polkadot and Ontology, are scheduled for the upcoming updates.
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