ICX I-Rep Discussion

josephcorey17

Hello P-Reps and community members alike. Today, I want to have a discussion thread about I-Rep decrease to 5000. I have seen many discussions in many rooms surrounding this notion, as we know that lowering I-Rep affects every P-Reps rewards. I'd like to be a neutral party on this discussion but I will add my thoughts into this (please don't let it influence you and speak freely).

I have seen many arguments for the I-Rep decrease which I do agree with 100%. Inflation has been the calling card of the collapse of hundreds of currencies throughout history. An example of this as history is my strong suit. During the American Revolution, Louis XVI financed the American Revolution by printing excess amounts of money, throwing France into one of the worst depressions it witnessed up until that point. You have probably all heard the saying from Marie Antoinette "let them eat cake." This was because money became so worthless that the commoner of France couldn't even afford a loaf of bread and the royal family was too naïve to realize this. Now why did this happen, its simple, inflation. Inflation is the main reason for a decrease in I-Rep and has been the main discussion and talking point since the inception of the P-Rep system and I too agree with this sentiment 100%.

Another argument I've seen advocating for I-Rep decreases is the fact that the ICX price has risen substantially, and I agree with this as well. We should have been adjusting our I-Rep to price fluctuations to a certain extent all along, and I'm glad this discussion is on the forefront of this debate. One of the biggest distrusts the community has are P-Reps racking in rewards that do, in laymans terms, absolutely nothing for ICON. This is an argument I completely understand as well. Now lets go to the arguments against I-Rep decrease.

This is an argument I truly empathize with and understand and wish I could find a concrete way to solve. There are SO MANY P-Reps whose funding has been cut that were doing substantial work for ICON. The malice intent of the few shouldn't affect the hard work of many, and this is a main argument that many P-Reps have come to me personally to discuss behind closed doors because they're too nervous to speak out. I won't name them because I value privacy, but I will say that some of the brightest Sub P-Reps have come to me in confidence and begged me to say something, and I absolutely understand their grievance. Now lets go to the last argument I've seen.

The next argument is that I-Rep decrease shouldn't affect all P-Reps; if one P-Rep chooses to lower their I-Rep they shouldn't affect other P-Reps because the P-Rep who may have lowered their I-Rep may have massive amounts of capital whereas other teams can't afford such a drop. This is an argument I truly understand and can empathize with because in totality, we shouldn't be judging the entirety of the network P-Reps in ubiquities.

Thoughts on this discussion? There is no right or wrong answer, I'd like to garner everybody's thoughts before we have our CPS Meeting. Thanks guys!

peter

josephcorey17 You touch on some things I've been meaning to engage the community on.

There are market economics and market incentives to being a P-REP. There are many things happening right now that are going to constrain the ability for new development in Icon. Simply put, teams need finances to build for Icon. If this gets squeezed, Icon as a project will suffer.

Matt

Great post. I think I still back my initial thinking on the subject. As a long term contributor, should lowering our I-Rep be of concern?

If we are building products that result in the increase of ICX, would it really be a cause for concern?

Building out a sustainable ecosystem means we can lower the impact of inflation while also providing great economic incentive for voting ICONists.

FBM_Brandon

I think one clarification is needed: No one has actually put forth a proposal to reduce I_REP further at this point. It has simply become possible. It might be inevitable and should be discussed, yes, but it's still just a discussion.

All that said, historically, I have been all for the I_Rep reductions largely to help curb inflation. But at this point the majority of inflation in the network actually comes from staking rewards and NOT P-Rep rewards. I think people don't realize this. If inflation is the reasoning behind pushing for this change, then we really should be looking at solutions that generate transactions and even discussing raising the transaction fees on the network (which are still insanely low).

I'm not in favor of lowering the I_REP significantly further at this point. I would be more inclined to discuss a plan for incremental adjustments based on price growth going forward though. Perhaps something like raising or lowering I_Rep based on monthly averages over a certain price, if that makes sense. Like it might make sense to lower to 9000 now, and maybe 8000 if we are over 2-3 USD... etc. While some P-Reps are making a ton of money, some aren't making very much at all still. The lower the I_REP goes the less incentivized we are to have a truly decentralized network since less individuals will find it worth their time to run a node.

You'd be right when you say you can run a node for pretty cheap. But you'd be wrong in assuming that someone wants to spend the time setting up and maintaining that cheap node for free, because, despite what many think - it is work and for some of the P-Reps, there is a lot of time and energy going into supporting, educating and building the community that should still be rewarded outside of "grants" IMHO.

atburns14

This lowering and the influx of vote buying teams is a double blow to some teams that do so much work without much recognition. It is a shame that the same people that cry inflation are probably the ones racking extra ICX from said teams. 🙂

nblaze

Honestly, Im not sure what exactly the issue is and why is everyone surprised all of a sudden. Everyone here is aware of the plans to reduce the prep rewards even further with ICON 2.0 (and it will be lower then just reducing the Irep to 5k), so I dont get what the exact issue is

The focus of the fundings is obviously moving towards the CPS and that is a great thing imho as instead of having a ton of preps leaching the system getting tens of thousands usd for just running a node (there are a lot of preps like that and we all know it), the system moves on to approving concrete business plans and following through with them or you dont get funded. Is that not a better way to go - when quality preps get funded for their work, but the rest get much lower rewards to run their nodes?

The top 10 prep currently receives $30k and the top 3 - $75k. Thats in the current ICX price.. If ICX jumps to 10-15$, that would mean that each top prep team will receive close to a million USD per month (taken from the inflation, yes, so thats bad for all of us) with the formal requirement just to run a node, which costs 2-3k to run. Does that make sense to any of you?

You may say - but the CPS isnt out yet. Well same thing for the Irep reduction, nobody has done it yet. The rewards for the preps are actually higher at the moment than they were several months ago (when the Irep was reduced), so there is nothing to complain about imo. I really dont see why we have to discuss this subject each month and why is everyone getting their panties twisted in a bunch like this is something new and unexpected

Matt

nblaze

Thank you for your input. The majority of me (90% or so) agrees with what you said. I think looking at it objectively and from a business point of view, I do think that it may potentially limit the growth of the ICON ecosystem. Believe me, we definitely know which P-Reps are grinding and those who aren't (more on this in due time), but it could still potentially hurt the ecosystem. As we move forward and renowned business enter the space (Danal, Binance, etc.), as well as P-Reps expanding from increased demand in, teams will need to provide sufficient funding to their teams. As an example, I would love to see teams such as ICONPLUS or iBriz truly expand into an even broader scope due to their continued efforts. Those efforts should be proportionate to the monetary incentive they put in as the ecosystem expands.

Looking at things long term, $500K for a P-Rep team be seem big if you're a validator, hobbyist, or as your said, "leech", but when running things as an actual big business (if you don't want to take my word for it, this is the Foundation's/ICONLOOP's goal for this year and beyond), paying a salary while maintaining overhead adds up extremely quick. While we all look forward to the CPS system and what it can provide, we still have to objectively look at how funding will take place. Will we actively fund teams that actually build? Will these things actually contribute to the overall growth of ICON in a positive way? I believe this should be discussed between active P-Reps so that we all provide funding towards a common goal, and so that funding doesn't stray off course.

I still stand behind my initial thoughts from months ago. In theory (at least for me), if we have teams actively contributing to the ICON ecosystem in a positive way, regardless of whether it's CPS or something else, reducing I_Rep will never become a concern. As teams increase the utilization of ICX through active development and marketing, there will always be a balance as the ecosystem rapidly matures, expands, and grows. Even though I have this opinion, I always look from the outside in and how it can affect the overall ecosystem as a whole.

There's nothing wrong with discussing governance in a periodic manner. In fact, it's something we should all do, and it's our responsibility as a community to oversee it. It's extremely easy to become complacent in an ecosystem with rapidly growing changes that greatly effect the longevity of the project, and to lose focus of what's most important moving forward. I don't see these as complaints at all. We are a decentralized ecosystem with varying opinions due to its very nature. The overall goal is to find consensus among those opinions so we can move forward, and contribute to the actual long term growth of ICON in a positive way.

nblaze

Matt I see your points but being an active part in discussions such as this one for 2 years already, I am beginning to think that POC is an idealistic approach that could not work in a decentralized system without a huge amount of 'policing' and very aggressive rules and limitations (which are near impossible to set - there will always be a way to exploit those, no matter how hard we try imo)

Do you think that if teams start getting $500k or more/month, that the majority will put those resourses into production? Do you think that the ones that will try to game the system will just disappear? Do you believe that we could ever create rules so specific that they cover any kind of abuse?

I dont want to even go into vote buying and how large prep rewards can never coexist with such structure if we want the funding to grow the network

For me the solution should be more simple - we go down the CPS route, where mandatory reports, planning and proof are required for funding and if necessary expand the CPS funding, not the general prep reward amounts. We can even expand the CPS to include specific team based projects or ongoing expenses (so teams could have employee/member structures but they are still funded as long as they provide results) but we still tie those up with regular reports and quality checks.

I think that we have filled enough the pockets of enough 'politicians' on the network - teams that promise the world and then either dump their rewards, make excuses that they have not done a thing or are posting a tweet or two per day and are pocketing tens of thousands usd per month.

Its about time that we stop viewing the network rewards as a free 'charity' fund that we are giving away 'because they seem good guys' or based on empty promises and start behaving like a proper business structure where the funding is applied to actual business plans and results. Thats mandatory imho if we would like the network to progress in the direction that we are all hoping for. Its about time that we view the preps as contractors hired to expand the system with all the requirements and rules that will come to that, instead of providing large payments to people that do nothing, speak and act against the chain or even use the funding to build projects for our competitors

Matt

nblaze

Love these responses. Appreciate your constructive and well thought out input on this!

Primo

Just my though as an iconist on the matter
As I understand it inflation via the I rep was meant to Incentivizes validator securing the network as well as serve as a basis for further contribution funding in the DPOC ethos.
The main problem is that there is no way to enforce Contribution of validators team with this architecture.
This has led to a free rider problem that was further intensified by voter apathy and lack of vote spreading.
(Free riders here refer to p reps and sub p reps who apart from running a node do not contribute in the growth of the network.)
Now the launch of the CPS is going to allow contributors to get fairly remunarated and it is only natural imo to gradually lower the I rep to weed out free riders incentives in being part of the network.
Now I also think that it is something that should be done gradually while monitoring the development of the CPS and the icx price to allow teams to run operations in a viable way.
But there is no point in wasting inflation on I rep if it does not grow the icon network even more with the CPS in place.