Just jumping in to beat this dead horse. It’s a hard no from me for all three proposals.
-Measure 5: DeFi governance is already so heavily incentivized that we get people over leveraging on Folks. This wrecks borrow rates in the short term and makes people reliant on the AF to act like our mommies and save us from irrational over leveraging. The only reason to up the rewards is to pay for the DeFi consensus bonus, which I object to for reasons that many others have stated.
Measures 6 & 7: Like others, I am against these proposals. Consensus incentives should be paid for the act of participating in consensus, not because you participate through a particular platform. There is no reason I have seen to limit this to DeFi participants other than a weird fetish for driving Algos into DeFi to pump our TVL numbers. IMO, matters of decentralization/network security should not be dictated by things like TVL growth. This is especially true given that only one platform would seem to offer this.
It’s not like you said, please read carefully the Measure: it’s open to every project that meets the requirements. Even AMM could participate in this program with the liquidity in Algo present in the pool, for example. The requirements, in their first iteration, are the ability to efficiently monitor Consensus participation. p.s. Together with Adriana, I am currently also in charge of the Governance
That’s the thing, the wording technically says it’s open to everyone but that’s practically not the case.
DEXs have one account that holds all the assets of one liquidity pool. So if you put this account online (which is probably not possible as the current SCs won’t allow this) on which node does it go online? Does the dapp have to run a node per liquidity pool and we have to trust them? Doesn’t sound really feasible to me
While I agree that’s important for consensus that more Algo is staked online and incentives are a good way to funnel participation, I don’t think that this measure cuts it. There should be a fair period of trial for more dApps to propose a PoC, test it and then proceed with the allocation, while in the meantime consensus incentivization should be done by boosting the normal governance, maybe adding a feature for consensus tracking where nodes that stop validating lose the boosted rewards. For Folks Finance I think that % of boost is a bit too much for the amount of time advantage they are given. Right now normal node runners are already put at a “lower level” vs defi governance stakers and with this the risk/reward would just make it too much attractive resulting in more stake moved to the FF escrow system. It should be at that point a MUST that node runners follow this practice:
as otherwise we can imagine that not only the additional runners stake would drop, but also the stake from previous node runners moved to FF would behave the same way and result in a security deficit.
To make this proposal acceptable the measure should lower the reward amount to DeFi and add a measure to boost traditional governance with consensus rewards for node runners.
Once the trial period is over and enough alternatives are provided to reach a decent amount of decentralization then more rewards can be added.
P.S. My opinion is that we should also take delegation into consideration since node running requires a certain attention to how the node operates and even with larger rewards the result obtained might not be the desired one. DeFi participation drove a good amount of participants into DeFi, but not as many new users from outside the chain, just like approaching a new chain higher rewards don’t bring as much behavioral change as an easier approach. I’d go as far to say that delegation might improve %stake online more than higher rewards. A restaurant gets more costumers if it’s built in high traffic zones instead of being hard to reach but gives out big discounts on meals.
I think we are seeing the same topic but from two different angles, so no one is right or wrong. The current online stake is dramatically low, if the urgency is to bring as much as possible online stake in the shortest time, this Measure can address it, with the possible side effect that some projects, which are not prepared for this integration, could temporarily lag behind: I am sorry for this but I truly believe that devoting rewards to incentivize consensus is currently one of the best possible uses.
The proposal by @Gary2 is actually an interesting one that can address the issue: what do you think? p.s. We are here to discuss and find the best solution, not to defend apriori the first iteration, whose real added value is to have sparked a fruitful discussion like this about Consensus incentivization.
incentivization of consensus is the key problem to solve, so let’s not blend it in with the “provide liquidity” problem. Consensus stake can be incentivized through traditional governance.
DeFi/ FF node runners are already incentivized by the fact that they can earn double the rewards through gAlgo vs the trad gov node runners
the one problem here is:
< if we add rewards to trad governance the rewards won’t be as attractive as DeFi rewards>
So if the intention is to drive users into consensus with rewards they won’t take the smaller rewards if they get more by just minting gAlgo…but if the goal is to make the most people participate then delegation HAS to be taken into consideration, one click nodes don’t address the physical problem, not everyone has a mini pc they can operate and know how to set up, also they probably won’t even understand how the whole process works and the security implications. Thinking that most of the stake is in the hands of users who understand this much about Algorand can be understandable now that the adopters are few, but long term if the stake has to spread to everyday users we can’t expect them to know all this stuff or operate them without creating a security issue.
I understand that this decision is almost forced towards FF and it makes sense to go that way, but the way it was presented without allowing for more opportunities to compete with that is forcing the decision.
My suggestion is. Let Algorand Foundation allocate 1M algos for consensus incentivization for next quarter.
100k Algos will be given to public nodes where people can create their participation keys for free… In fair system… each node gets 1 point for each minute online. if node is not updated to latest version of algod, it will not get any point. if node is producing false blocks it gets blacklisted in current period. Payout period will be one hour, where all points are calculated and hour distribution is distributed to all nodes in proportion of their points.
900k Algos will be given to users who make their stake online. If node they selected is online they will get each minute 1 point for 1 algo they stake. Payout period will be one hour, where all points are calculated and hour distribution is distributed to all nodes in proportion of their points.
This system includes also the Folks escrow online accounts.
@trekianov, @JohnWoods, or @Adri … i can create this system open source, in two working days for free if you are interested to use it
overall it’s important to pass a measure to incentivize consensus, considering the important subject at hand I think that it wouldn’t be too unwise to delay the voting for this one. @trekianov I’d suggest (and I think it would be greatly appreciated by the community) if this measure could be turned to a bounty system, have builders from the community come up with ad hoc solution. Then incentivize the ones that are delivering a solution. Folks would already have one ready. Other platforms and projects will be incentivized to deliver a new working product.
Also give more time to the community to come up with solutions to reward traditional runners outside of DeFi
@benedettobio couldnt attend the space unfortunately but apparently you dont know how your own protocol works so heres why your answer to the “participation stakes vanishes problem” is wrong:
after the period ends FF gathers all the ALGOs to allow redeeming which means at this point all the nodes loose potentially their whole online stake. even if they register their normal wallet that wont help since they need to manually redeem their gALGO to get their ALGOs back to increase their online stake again. so even in this case there will be a sudden drop in online stake
@trekianov tagging so you know that this isnt a solution at all
heres such a group tx where FF gathers the ALGOs and apparently opt this escrow account out of the g7 app and then opt it in to the g8 app. at this point that account has like no voting power anymore:
and in general i would have expected you to argue against some of the problems brought up in here instead of just saying that some community members are against it and then marketing this forum to add comments in favor of that measure. at the very least this should have been your job @trekianov imo as more of a neutral person working at AF
I currently run a node that hosts both the participation keys for my regular account and my folks escrow account. The stake in my regular account is currently 0 since the algo was moved to my escrow account, which is fine - the regular account simply does not end up being selected to vote or generate blocks.
Af the time I burn my galgo, the algo is returned to my regular acount. That move does not impact consensus because the algo is simply shiifted from one online account to another. Both before and after the redemption, both accounts remain online.
I’m not sure where the vulnerability is occuring with such a setup?
Thanks. Would folks taking that central pool online themselves resolve the issue in your view?
Secondly, could the amount suddenly removed ever leave the network with less online than if they didn’t incentivize in the first place? If not, wouldn’t the network still remain more secure overall, even with a temporary drop?
As a representative of AF I assume your priority is to preserve the integrity and security of the protocol at all times, as number 1 priority… This proposal is clearly late notice outside of defi committee and has not been given sufficient time for other defi builders to prepare for (with exception of FF and possibly gard).
Given the nature of the galgo-algo redemption mechanism I have yet to hear a clear explanation about how the added risk from this predictable cyclical event can be properly mitigated.? With the profit motive of incentives, it is logical to assume existing non incentivized consensus participants will reorg to benefit from the defi 1m which as you admit will be clustered initially around FF at least for 1 or 2 cycles due to their headstart. For that reason alone it defeats its stated purpose and may increase consensus risks for the protocol at specific times above the status quo.
Please be patient and do this properly for future gov cycle supported by more defi options which don’t all share galgo-algo redemption timing implications.
On a personal Ievel I really appreciate what folks finance has done to bring attention to consensus and I think a reduced amount could be risked on defi specific rewards, maybe max 250k. But much preferred would be alternative distribution mechanisms across all participants in interim before the protocol level enhancements arrive. Please let @scholtz and others prove what they can do quickly and let others review as FOSS, under a Hackathon incentive…
For anyone reading all these comments from the most active builders in the space like @d13co , @BunsanMuchi, @Swaggelwander , @scholtz (outside of FF/gard) and @lobo as a leading defi advocate. all are in agreement on the issues (late notice) and potential risks with this proposal.
Nb. @Adri , @trekianov - Collaboration is really great between AF and active teams, when it looks like collusion… it’s not so great, neither is knee jerk proposals. Please note I think this is only how it looks and I’m certain it has been well intentioned.
The only antidote to that on a truly decentralised platform is 100% transparency and proper due notice.
Can the AF committees (incl defi) publish all their meeting notes as matter of course? Simple audio recordings posted onto AF website within 48hours would prevent these situations and save lost times due to necessity of giving due notice on proposals so people are not wrong footed… We all are feeling impatient but security is paramount. As it stands i do expect this to synchronize the loss of algo in online participation at predictable points in time. Until that is properly mitigated/resolved/explained it must be delayed or much less proposed to be put into the defi consensus particpation pot ( eg. <250k).
