ICONation Update: November, 2020
Thank you for checking out our latest news release. Please see below for ICONation related updates for November, 2020.
P-Rep Reward Reduction
ICX Station submitted a proposal to lower i_rep (P-Rep Commission Rate) from 15,000 to 10,000 in late November, 2020. The vote wound up passing, but it did not do so without several P-Reps abstaining from the vote.
ICONation voted to pass the proposal. More details on why can be heard in the video linked below. But here’s a summary…
The DPoC model was centered around ICONists voting for P-Rep teams that were making the most significant contributions to the ecosystem. The idea was that P-Reps that did more for ICON would receive more votes and, as a result, would receive more rewards (money) to perpetuate their contributions.
On paper, this is a beautiful thing.
Unfortunately, there were some issues in practice with the DPoC model. Stagnate votes, in particular, led to some issues with the model. Many holders wish to simply stake their coins, vote, and then forget about their coins. Many holders don’t wish to constantly need to be evaluating the ecosystem and moving their votes around to teams they believe are contributing the most.
This mentality led to a lot of holders staking their coins with teams that were more active during ICONSENSUS. Things have changed since then, however. Some of the best and brightest teams campaigning for votes during ICONSENSUS have since lost interest in contributing to the ICON ecosystem for a variety of reasons, but they retain their votes and rewards nevertheless.
Moving forward, the intent behind the P-Rep commission rate is to pay P-Reps to be block producers, but not for anything beyond that. Those contributing to the ecosystem beyond block production can be paid through the CPS (Contribution Proposal System) which is due to be live in December, 2020. This will be helpful to a team that needs funding to build something but is unable to finance it because they aren’t earning enough through block rewards. This will not be good for teams that are high in the ranks that are earning a lot of money but not necessarily doing anything with it beyond putting it in their own pocket.
I might argue that the CPS should have come first (and been tested), but I digress…
Ultimately, ICONation believed that reducing P-Rep rewards would help to further reduce inflation, which is good for ICONists. We believe that teams that need funding but aren’t getting enough through block rewards will now be able to get the funds they need through the CPS. We also believe that this offers a bit of a solution to vote stagnancy issues. In a nutshell, we believe these changes are good for the many and not for the few (including our own team).
Having said all of that, there are certainly some fair arguments and valid counterpoints to consider.
How will the reduction in rewards incentivize new block producers to join the fray?
How can/should a P-Rep that has already seen something like a 60%-70% reduction in rewards this year respond to another reduction? Typically, when you cut someone’s or something’s pay by 70% it’s reasonable to expect a reduced effort from said entity, right? Many ICONists in the community seem to expect P-Reps to embrace a further reduction with open arms despite valid criticisms of the reductions.
See more valid points in Brian and Will’s discussion from episode 23 of the Rhizome Report below.
Additionally, there has been a notion that the price of ICX is/was being impacted by the P-Rep reward rate. If this is the case, why didn’t the previous reduction from 37,500 to 15,000 have any negligible impact on ICX’s price? ICONists were all ears when it was hinted that the P-Rep Commission Rate was negatively impacting the price of ICX.
Has anyone out there noticed a positive change in ICX’s price since the initial reduction in rewards back in June/July, 2020? Perhaps the reduced inflation rate will help the price in the future but it could be argued that, to date, reducing P-Rep rewards has had no discernable impact on ICX’s price.
Note: P-Reps earn under $1 million annually, collectively. The ICX market’s volume is often over $20 million daily. To presume that the P-Rep rewards are having a significant impact on the coin’s price might be a stretch.
Back to the matter — Is it wise to reduce the rewards of P-Reps to the point where some of them are no longer interested in participating in the ecosystem? Is it good to cut the profitability margin for lower ranked P-Reps any thinner? Has the ecosystem lost more than it has gained by reducing these reward rates? There are a lot of legitimate questions on either side of this discussion.
ICONation understands why some teams and/or community members might have been opposed to this further reduction in rewards. If this change winds up hurting P-Reps more than it winds up helping ICONists, ICONation would certainly be open to supporting a proposal to increase P-Rep rewards. All of this is fluid and changes will occur until we’re able to collectively find the sweet spot, which will likely also move over time.
ICONation Monthly Financial Report
Below is a summary of rewards and spending in November, 2020.
The following rewards were claimed and distributed on November 1, 2020.
Reminder: All public ICONation wallet addresses can be found here.
As always, please feel free to reach out to us if you ever have questions about ICONation and thank you for stopping by our Medium for the latest!
By ICONists, for ICONists