[POLL] Should we consider redirecting ICS rewards?

We don’t mean to undermine the immense complexities involved in changing the whole economics behind the ICS reward distribution. Currently these rewards are distributed to the stakers, leaving most holders with a lot of dust tokens in their wallets. This liquidity ends up being heavily fragmented and mostly “lost in the void”. Regarding the enormous amount of work this would take to gather reliable data and build a model to guide a governance debate on this subject, we thought it would be wiser to perform a “temperature check” first.

Please vote on the following poll to signal your willingness to enable such research or not:

  • YES
  • NO
  • ABSTAIN
  • VETO
0 voters

*Votes are anonymous, we also provided a VETO vote to show strong opposition.

In any case we would be pleased to have a brief explanation on the reasons that motivated your votes in the reply section below.


Edit 28/01/24:
To ensure the topic remains relevant, we have edited the title to clarify that we are not proposing any specific solution. There appears to be a misunderstanding as we initially suggested redirecting to the comm. pool. In reality, our intention is to initiate a broader discussion to reassess the current system.

We hope this clarification helps people better understand the scope of this post. If the community expresses interest in this debate, we will collect and compile data from all existing ICS rewards, analyze their distribution, and stimulate a governance discussion on potential improvements, if needed. While numerous possibilities exist, this is not the primary objective of this topic.

The sole aim is to ensure there is no strong opposition to this idea before we proceed to compile the data. Recognizing that the ICS reward debate may be intricate and potentially divisive, we aim to provide data to guide it appropriately. Considering the time required to gather this data, a temperature check seemed appropriate to ensure we do not invest time without community support.

12 Likes

It would be useful to include where the rewards currently flow to.

This would allow for a Pro & Con list to be developed.

2 Likes

Thanks, I’ve updated to mention the current distribution to stakers. The goal of this “temperature check” post is to make sure the community is willing to open these pros & cons discussions. We want to avoid another mess like the inflation debate where most people were deeply uninformed. Instead we want to lead an informed and data driven reform on this ICS reward subject. To do this we will have to gather a lot of data and build models to show the changes certain modification would do to the entire Hub’s economy.

Though this vote we want to make sure there is a community interest in this matter, otherwise we won’t bother collecting the data and building the model!

5 Likes

I’m supportive of research on rewards going more towards the community pool and validators than stakers.

One of the earliest incentive alignment issues with ICS was that stakers are fully incentivized to bring on as many consumer chains as possible because there is no cost to them, whereas validators must be much more selective in onboarding chains due to the infra costs. This misalignment is stressful, as the relationship between stakers and validators can hinge on governance votes, and validators should not feel pressured to race to the bottom (in terms of validating consumer chains for inadequate rewards) to appease their delegators.

2 Likes

I tend to agree with everything that Lexa has put forward.

2 Likes

I’m definitely in favor of this initiative. I’ve been waiting for a change in the ICS reward distribution system. This fragmentation impacts the overall ecosystem’s efficiency.

I am open to discussing possible alternatives. The current model is not bad, but it also not good.

  • Wallet Dust
  • Fragmented Liquidity
  • ICS Benefit Optics
  • PITA when doing taxes.

I think on a thread somewhere someone said something that was a good idea. Having a function that wallets could implement to convert tokens in a wallet to ATOM. I think Stride may have something like this on their application called “Dust Sweeper”, I have never used it. This wouldn’t solve my tax filing woes though. lol

Alright, I will stop throwing out ideas and suggestions as this is off-topic and this is just a temperature check.

1 Like

Have we giving up on the idea for rewards to subsidise atom inflation? I was under the impression that was always plan? @ThePowerCosmic raises a good alternative and we could explore integrating a “Dust Sweeper” via fee abstraction in the future.

1 Like

I agree with Lexa’s note about misaligned incentives.

But taking all incentives away from stakers (bar bigger community pool) isn’t the ideal solution.

Don’t validators get block rewards anyway?

On the fragmented liquidity and dust sweeper, perhaps a better solution is to have ICS rewards paid to everyone as ATOM? So convert at distribution time - more frequent swap actions, automated, instead of stakers performing an action.

ICS rewards paid to everyone in $ATOM YES, that is definitely a very good one indeed.

@meandme, @Pookybear ,
I don’t dislike the idea of getting rewarded in ATOM, but then the argument could be made, why get rewarded in any of these shared security tokens at all? It would be interesting to get paid in USDC if Noble gets onboarded as a shared security chain. Though, I can see regulatory scrutiny and the optics with that one (i.e. interest).

At the end of the day, I think the dust is the main problem for delegators.
No sizable chunks to do anything with.

I feel like we just came full circle on “atom as ICS currency”. I think there was a reason for not doing this on the onset. Can’t remember what the argument was at that time.

1 Like

Word?
I would guess the ATOM would have to come from somewhere or you would be inflating ATOM even more? I am also not sure how such swaps would impact the other coins price (if at all). If someone knows anything about this, please chime in.

1 Like

This Trojan Horse proposal to overhaul the ICS reward system is not only misguided but a clear threat to Atom’s core tokenomics. It should be rejected.

Let’s call this out for what it truly is: a setup for a money grab. First step, centralize the value, second step, then the whales will extract that value for their own benefits. They will be laughing all the way to the bank.

Furthermore, the portrayal of smaller token holdings as “dust” is a deceptive tactic that grossly undervalues their true potential in the crypto landscape. Such misleading language aims to distract from the real issue: the long-term growth potential of these assets. Every token, no matter its size, forms the backbone of the Cosmos ecosystem’s strength and future economics.

A dusty amount of BTC 0.10 is worth over $4k. It’s not only the quantity of a token that matters, it’s also the price.

A straightforward and fair alternative, without needing a governance proposal, is to post the community public wallet’s address. This way, anyone who wishes to donate their tokens to the community pool can do so voluntarily. This approach avoids taking tokens from those of us who would rather keep them. Anyone who supports this proposal can vote simply by freely donating their tokens.

We are still in the crucial early stages of ICS economics, and unwarranted changes now will severely jeopardize Atom’s growth and the trust of Atom Stakers. Stability in rewards is not a “nice to have” but a necessity for a healthy, thriving ecosystem.

The potential of ICS, particularly in its early stages, is immense. We stand at the precipice of exponential growth, with the possibility of hundreds of projects leveraging ICS, significantly benefiting Atom stakers. To deviate from this path now will not only undercut Atom stakers but also prevent us from benefiting from a future that has the potential for significant returns.

Alarmingly, this proposal will pave the way for centralization and will be another attempt to siphon off economic value from Atom stakers. Our current model, while not flawless, skillfully maintains a balance between decentralization and fair reward distribution. The community can find other ways to support validators within our existing structures, without resorting to drastic overhauls.

The proposal’s oversimplified view of liquidity fragmentation and token economics is not just a red flag; it requires a unified front among all Atom holders. We must dissect these proposals with a critical eye, ensuring they uphold our values and the long-term interests of the Cosmos ecosystem.

This proposal should be rejected. Protect our ecosystem’s integrity and ensure a lucrative future for Atom stakers. Don’t let this Trojan Horse destabilize our journey to unprecedented growth.

1 Like

it should be a choice to keep the rewards in dust tokens, or to autoswap it by an ics dex, or whatever

3 Likes

Govmos’ claim of not proposing any specific solution directly contradicts their recommendation to redirect funds to the community pool. This isn’t just a subtle recommendation; it’s a clear-cut proposal that speaks volumes about their intentions.

Let’s cut through the noise here: what we’re seeing is a classic bait-and-switch tactic packaged in the context of “communal benefit”. This isn’t about communal benefit; it’s a thinly veiled attempt to centralize control, setting the stage for a select few to hijack the system for their own gain. It’s a strategy as old as time - gather the resources in one place, then let the big players sweep in and take it all. They’re not just undermining Atom’s core tokenomics; they’re setting us up for a fall.

For those championing this proposal, put your tokens where your mouth is. If you truly believe in this, donate your tokens voluntarily to the community pool. Don’t hide behind governance proposals to force others to give up their holdings.

This proposal is an alarm bell for centralization and a raid on Atom stakers’ value. The oversimplified view of this proposal on liquidity and token economics is a glaring red flag. Reject this poison outright. Don’t let this Trojan Horse throw us off our path to remarkable growth and success.

Your post raises concerns about the incentive alignment in ICS, particularly regarding validators and stakers. However, this argument lacks solid data to back up these claims. If you’re asserting that large validators are facing economic hardship due to infrastructure costs, then it’s crucial to provide concrete evidence.

If validators claim economic hardship, they must prove it with fully audited financial disclosures. No more beating around the bush – we need transparent, concrete evidence of these so-called expenses and revenue streams. Without this data, their claims hold no water. Validators, it’s time to lay your cards on the table. Show the community the real numbers or drop the argument. The Cosmos Community demands and deserves this level of transparency.

Your post about ICS incentive issues is all talk and no evidence. Claiming validators face economic hardship? Prove it. Where’s the hard data on infrastructure costs? What does “much more selective” actually mean in numbers? Talk of a ‘race to the bottom’ is empty without solid proof. Are validators really undercompensated? How’s it affecting the network? These are bold claims. The Cosmos Community needs facts, not just words. Bring out the real data or this argument doesn’t stand a chance.

2 Likes

Tbh a simple dust sweeper would solve this.

Maybe, auto-converting all Stride tokens to St ATOM ?

1 Like

Voted no, Would rather see the rewards all get converted to atom or statom before rewards go out to stakers

1 Like

It is a big no for me. Communty pool receives ICS rewards through 10% community tax. Why do we need to take all from stakers and validators to fund the community pool.

Even though this rewards are small they are rightfully theirs since by staking they are securing the network. This can be resolved by making a dust sweeper that turns rewards into ATOM.

Is there any specific reason community pools need an extra funding? At the moment current worth of the pool is almoust 80 million dollars. I do acknowledge that more than 50% is NTRN and that some other blockchains have bigger pools but Cosmos Hub was asked multiple times for funds. I did a quick glance of the community pool spend for the last year and there was spent about 4 million ATOMs on which I think about half was spent for LP pools.

We could wait for community pool to stockpile for a while and maybe be conservative of how we use the community pool or we could use NTRN and other assets frrom the pool to fund future projects/initiatives.

2 Likes