The EOS Worker Proposal System, Necessary, Or Useless?
At it’s current valuation of nearly 40 million dollars, many have described the WPF (Worker Proposal Fund) as a pot of gold waiting to get plundered by greedy whales. But many have also argued in favor of the WPS (Worker Proposal System). What are the WPS and the WPF, and what makes them so special?
What is the Worker Proposal System?
The EOS System creates inflation of 5% each year. 1% is dedicated to fund the Block Producers who run the chain, while the remaining 4% is paid into the Worker Proposal Fund (WPF). The WPF is intended to be a source of funding for community driven ideas that help grow the ecosystem. The exact definition of what that entails is an exercise we the community have to solve together.
-Josh Kauffmann
Anyone that wants to offer a service, can offer their service to the community using the WPS, and get paid for it using the WPF.
The WPS has sparked many debates and the direction of the WPS is not clear. It has as many opponents as proponents, for various reasons. To help you form your own opinion on the WPS, we will list some of the more popular arguments for, and against the WPS.
The WPS is described in the following way in the EOSIO whitepaper:
All proposals are sorted by the stake-weighted votes of EOS token holders, using the same stake used to vote for producers. Each account can vote for up to 20 proposals at a time. Votes decay using same method as votes on producers (by increasing the votes per staked token over time).
Each day N EOS tokens are allocated where N = EOS_SUPPLY * 5%/365 — PRODUCER_PAY_PER_DAY
Once per day proposals are sorted by total votes and for each proposal who is between startdate and enddate is funded all N EOS are consumed. The EOS is deposited to the receiver contract which may then do with it as it chooses.
A fee is required to create new proposals in order to prevent abuse. This fee is set by the block producers and should be equal to 1% of the daily EOS requested by the proposal. The smallest daily request allowed is 1% of N. This will keep the maximum number of funded proposals less than 100 and keep the number of proposals up for consideration relatively small.
Advantages of the WPS
The WPS is supposed to support great ideas and teams in the EOS ecosystem. It’s an incentive for everyone to develop on EOS and to actively improve it.
Many volunteers are already working on various features for EOS, but to ensure quality development in the future, there will always have to be a financial incentive for people to develop on EOS.
Due to the decentralized nature of EOS, there are not enough incentives for individual community developers to spend their time contributing patches and upgrades needed for efficient and scalable advancements. To ensure that EOS.IO keeps up with the changing needs of the community, a Worker Proposal System was introduced in the initial design of the software. This would allow for an allocation of funds to be reserved that could incentivize developers to work on community needs, critical patches, and forward-looking upgrades.
-WPS Working Group
The reimbursement of volunteers on the EOS network also boosts the overall morale for everyone involved with EOS. A system that can maintain and fund itself, and keep it’s users and developers happy, is a strong one.
It also helps keeping EOS decentralized. EOSIO was created by Block.one, but EOS is now a decentralized community chain. While Block.one’s input and development is heavily appreciated, it should not be relied upon if EOS identifies itself as mostly decentralized. The WPS allows everyone with a valuable skill to propose their ideas, get community support, receive funding and to create their ideas.
Disadvantages of the WPS
As described in the latest post from the WPS Working Group, the community has expressed 4 main concerns about the WPS.
Whales will vote for personal interests
This is bound to happen in a stake weighted voting system, where there is money to be made. Without proper reviewing of proposals in place, whales will dominate the WPS and will empty the WPF on the first chance they get. Even with a good reviewal system in place, there’s still a risk that whales create convincing proposals with no intent to go through with them.
$400M/year is too much money until proven useful, 4% is too high of inflation
4% inflation is a lot of EOS, and at the price of 10 dollars per EOS token, it’s a really, really, really big fund. Such a fund can fund a lot of development and innovation, but will also attract bad actors. One thing to keep in mind though, is that Block.one was earning over 20 million USD a day at the peak of the token sale, and VC investment in EOS is over 1 billion USD.
A new centralized group will be ineffective and waste money
A centralized group could end up being corrupt and hurt the reputation of EOS. To make sure this can’t happen a new, on-chain, mechanism would have to get implemented, ensuring that this centralized group can’t do anything not approved of by the community.
Block Producers or Block.one can pay for these projects instead of WPS
Block.one and Block producers have already gained a lot of funds, they could also fund these projects, since they already have the funds and developers capable of developing the things EOS needs.
WPS proposals
So far there have been many proposals, but the proposal that has gotten the most support by far, is by the WPS Working Group. They address the above concerns in the following way:
Whales will vote for personal interests
Large stakeholders will vote for personal gain, this is inevitable. This is the same challenge that we face for block producer elections. Nevertheless, as a decentralized Worker Proposal System, the design must still ensure that anyone can be part of the process. The community would not want to block the next great idea because it comes from an unexpected source — in fact, the existence of whales should not prevent the endeavour of designing a sensible worker proposal system. Therefore, in order to prevent fraud, there will be a reviewer system in place; the reviewers responsible for each category will help discern clearly non-legitimate proposals, solely based on an objective and public “proposal checklist”. Keep in mind that this is true of the initial Emergency Committee, but the future categories are yet to be designed by the community. Each category should have different design.
$400M/year is too much money until proven useful, 4% is too high of inflation
The goal of the Worker Proposal System should be to spend wisely in ways that benefit and enrich the whole community. There is no need to spend it all. In fact, our first proposal for referendum is to move only a small, fixed amount from the eos.saving account to the worker proposal account (eosio.wps). This will be less than 20% of the eosio.saving account. In the future, the community may even suggest a proposal for burning surplus funds in the eosio.saving account. We are proposing to start the WPS system with a very contained and risk-reduced environment.
A new centralized group will be ineffective and waste money
With the current design of the Worker Proposal System, no centralized party has control over the funds. As it is programed, the eosio.wps account is community owned, meaning that those funds can’t be accessed without proposal reviews and votes. The main purpose of the Emergency Committee, and other categories in the future, is to remove malicious proposals from being passed on to the community. It is to manage the input of ideas and defer projects that do not fit clear public criteria.
Block Producers or Block.one can pay for these projects instead of WPS
Block producers and other groups such as Block.one will continue to produce exemplary work for the community. Companies can be very efficient in developing resources. However, a community-managed fund can support projects that are not a priority for block producers or private companies. For example, who will fund the management of the github repository with indifference? Who will support the arbitration forum (ECAF)? These projects add value to the community as a whole, but are not profitable on their own. No independent business would fund these vital projects, as there would be little to no ROI, nor should some of these endeavours be built with the need for a return.
They have also created a flowchart, which explains how the proposed process will work:
Conclusion
The WPS system could end up being a gold pot waiting to get emptied by whales, but with the right amount of care and caution, it will much more likely end up being a driving force behind EOS innovation, empowering all who seek to improve and develop on EOS.
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Written by Yannick Slenter for Blockgenic
