A Simplified Look At i_rep: The P-Rep Reward Variable.
ICON network is designed to allow P-Reps to specify changes to the network through the use of governance variables. These governance variables include
- i_rep, the variable that determines rewards
- And step, the variable that determines the minimum transaction fee.
i_rep’s Definition
As described in the ICON Whitepaper, i_rep is a governing variable that is used to calculate the monthly reward for the top 22 Main P-Reps and 78 Sub Preps.
“ This variable represents the monthly amount of ICX that is assumed to be required for the operation of the Representative node.”
It is defined as the value that a P-Rep calculates to be their monthly cost for operating their node, running an active P-Rep team and returning some profit. A P-Rep is to consider those expenses and decide on a personal i_rep value to be submitted. This personal i_rep is calculated along with other P-Reps’ submissions by tallying and averaging the submissions together to decide the final i_rep. The final averaged i_rep value will be the i_rep that will be applied to all 100 P-Reps and their rewards.
A common misconception is that the i_rep listed by a P-Rep will be the same as the irep that will calculate their rewards. As pictured, the i_rep listed by ICON Foundation is 40,000 but the final i_rep that they, along with the other 99 P-Reps, will use is 40,922: the average of the submissions.
Note: ICON Network only rewards the top 100 P-Reps so P-Reps after 100 unfortunately do not receive rewards and must gain enough votes to enter 100 before receiving Representative Rewards.
i_rep’s Calculation And Use
i_rep is the stake-weighted average of submissions made only by the 22 top P-Reps. Although the final i_rep affects Sub P-Reps as well, only the i_reps of Main P-reps are factored into the calculation to decide the rewards of all. Furthermore, the Main P-Reps with the most staked votes have “more weight” or higher effect on the final calculation.
At the time of this article, the current irep was 40,922. This is used to calculate the Monthly Rewards. The Monthly Rewards requires calculating both the Block Validation rewards that 22 Main P-reps receive and the Representative Rewards that all 100 P-Reps receive, this is done each term or every ~24 hours.
To calculate the Representative Rewards the final i_rep is divided by 2, then multiplied by the number of P-Reps (100) and then that number is multiplied by 1/1,296,000. 1,296,000 being the total number of blocks generated per month.
To calculate the Block Validation reward the final irep is divided by 2, then multiplied by the number of Main P-Reps (22) and then that number is multiplied by 1/1,296,000.
Calculation: (irep* ½)*100*( 1/12390000) + (irep* ½)*22*( 1/12390000)
I_rep: 40,922
P-Rep Rewards Per Month: 2,491,619
Important Irep Considerations
Before changing i_rep, each P-Rep must carefully consider a number of factors.
- ICX pricing
In the original design for irep, ICON Foundation calculated the default irep to be 50,000 at an icx price of $0.40. To reflect the fluctuating price of ICX, P-Reps should also be flexible in adjusting the i_rep, whether decreasing when ICX pricing is high, or increasing when ICX pricing is too low.
- Vote Disparity Among P-Reps — Not enough slice of the pie
A large gap between P-reps and their delegations means an uneven reward system for all 100 P-Reps. With over 50% of votes or roughly 90 million votes, delegated to only 5 P-Reps (the top 5), they earn a disportionate percentage of the overall reward fund that is meant for all 100 P-Reps. This results in a case of 55% of P-reps earning less than US$2000 and the bottom 10% earning less than $100, whilst top 5 P-Reps earn a more jarring amount at $40,000–$110,000.
- Node Operation Costs
The recommended specifications to run an ICON node is priced at over US$1200 per month. The actual costs to run a node varies from P-Rep to P-Rep as most P-Reps have adjusted the specifications to suit their needs. For example, while Main P-reps require the specifications needed to produce blocks, Sub P-Reps that have very low possibility of becoming a Main P-Rep to produce blocks, do not require as high specifications and their node costs may cost somewhere between $25 -$700.
- Effect On Inflation
ICON network is disinflationary in design and unable to exceed a 15% inflation limit. P-Reps are able to reduce inflation a bit further by adjusting i_rep so the amount of ICX needed to reward contributions is less than the network transaction fees.
An example of i_rep’s effect on inflation:
Irep: 50,000
Monthly P-Rep Rewards: 3,044,351
Staking/Voter Rewards: 3,183,776.4
Total Supply: 823,356,833
Inflation: 9%
Irep: 40,000
Monthly P-Rep Rewards: 2,354,298
Monthly Staking Rewards: 3,183,776
Total Supply: 823,356,833
Inflation: 8%
Difference in rewards: -690,053
Difference in inflation: -1%
- Effect on Sub P-Reps 23–100
Although all 100 P-Reps are able to suggest their personal i_rep, only submissions set by the top 22 Main P-Reps will be factored into the calculation for the final i_rep. Thus it is recommended that some consideration should be extended to the financial needs of P-Reps as well.
The ICON DAO i_rep Rewards Vote
Our team believes in the vision and future of ICON’s decentralized platform. As one of its earliest investors and biggest supporters, we always aim to conduct our activities in the best interest of the network and its community. Presently, irep is a sensitive and highly discussed topic among ICONists and P-Reps. After considering the opinions of our community members and the stance of ICON Foundation, we have agreed to lower or work with the community to address the irep situation proactively through consensus.
ICONVote app
Developed by ICX Station, ICONVote is a voting platform for P-Reps and ICX token stakers to communicate their views and collaborate on decisions. Through P-Reps holding votes and their delegators using their weighted delegation to vote for options, ICX stakers are able to vote for options and help P-Reps in making decisions that reflect the community’s interests.
Currently our ICON DAO team is using this tool to offer the ICON community the chance to participate and have direct influence on irep, one of the most publicized topics within the community. Vote here.
The current options are:
1. I_REP INCREASE: 60,000
This option was given with consideration of the ICX pricing being lower than the estimated pricing in the ICON Whitepaper.
2. I_REP MAINTAIN 50.000
This option was given based on the default i_rep and ICX current pricing.
3. I_REP DECREASE 40.000
This option was given based on the effect on inflation and feedback from the community.
Note: I_rep can only be increased or decreased by 20% per term. If there is a demand by the community to decrease further than the options provided ICON DAO will hold another vote to lower irep again, as well as other votes covering a variety of topics.
ICON DAO aims to use voting in this capacity as a way to represent each of our voters individually and give each voter the right to make decisions in the governance of this P-Rep team and, by extension, ICON Network. The ICON DAO i_rep Rewards Vote is the first demonstration of our community-led, honest and transparent DAO node, and marks the beginning of many key decisions our voters will influence in the future.
For more updates on our work as P-Rep or ICON activities in South Korea, please check our twitter and telegram chat linked below. And if you like the work we are doing, vote ICON DAO!
ICON DAO is an ICON Network-based decentralized organization committed to providing the tools and services needed for users to easily develop and manage decentralized communities to collaborate and fund projects.
