Hey chief. Hello everyone. Do I sound good? Is it clear? Perfect. Perfect.
Go, go, go. Hey Paul. Good to see you guys. Did you get the co-host in white chief? No.
Let me see if you can make it. Yep. Done. Perfect. Let me ping Cyrus and
click on. She sent you a speaker request. Cyrus is in the house. Cyrus, I think I sent
you a speaker request. Can you guys hear me? Perfect. Can you hear you loud and clear?
Awesome. I'm here. Thank you for joining in. Cyrus is still listening to me. Try to send
you a speaker request. Let me see if you can hear me. Let's wait a few more seconds
for listeners to come in and then we can begin.
Well, we have a decent number of people listening in. I think a few people already
are coming in as well. But Paul is saying it's really quiet. He wants to know about
your day chief. It was okay. It was okay. Yeah, I must really describe it. We'd love
to hear Paul's voice as well. He cracks a few jokes. I did a few in the couple of spaces
back on the expo. Yeah, he's the one doing great jokes over spaces. Do you think we should
begin? Yeah, I think we're good to go. Yeah, cool, cool, cool. Welcome, everyone. Today
I'm going to present the sixth episode of ICON blockchain's expo series. Today we are
going to talk about the new economy policy of ICON blockchain. We have Cyrus and Hispanic
on from ICON Foundation. And first of all, I would like to hear who you are, your role
in the foundation, and then we can dive into the topic. Let's begin with Hispanic on. Okay.
So thank you for inviting me, guys. I'm working with the tech team currently at the foundation.
I create technical documentation for the ecosystem, and I also work with infrastructure for running
nodes and our own private test and all of that stuff. Fun stuff. Thank you. Welcome.
And we can move with Cyrus.
Great. Welcome again. Both of you need new profile pictures. If you want to, we can design
a penguin NFT profile picture for you. That's a promise from me. And then we can begin to the
topic of the day. We're going to discuss IISS 4.0 today, which is the new economy policy of ICON
blockchain. Before diving into the details of it, can you guys give us the motivations to this
new economy policy? What were the main motivations to change the previous one? Let's begin with Cyrus
Great. Great. Great. Thank you. Hispanic on, anything to add?
Well, I think Cyrus hit all the points. Basically, we have compared to the latest version, which is
ISS 3. The difference right now will be mainly the commission rate and the slashing function that
is not active at the moment. And the IWASH is a system to support the validators so they can
have a listener responding to run the nodes.
Great. Great. And, you know, I have been researching and I've seen similar models that
other blockchain economies are using. And have you studied these use cases before creating
the structure? Like what research led to ICON's new economy policy at this point? Hispanic on,
we can continue with you. Yeah, this has been discussed for, I think, more than a year. So,
we have taken some pieces from learning from other communities, other projects. For example,
commission rate is something that's applied in other crypto projects also. But it was mainly
through discussion with the validators on the forums, back and forward, having feedback on
what is the model that best work for us and also with our technical partner, which is Parameda,
because they developed the technology on the chain. So, it took a time. It took some time
discussions back and forward, but I think we are not a very good spot at the moment.
Yeah, cool. And Cyrus, I have comments on Discord that no one can hear you. Do you guys can't hear
Cyrus? I can't hear you, but some of them are saying... I can hear Cyrus. Yeah.
Yeah, I can. Yeah, I can hear Lauren as well. Maybe something on the end.
Okay, okay. And then Cyrus, can you give us your thoughts on
have you also did some research prior to announcing these changes?
Yeah, I was also, you know, I've made my research on Cosmos and there are a lot of similar ways.
Yeah, I agree. And let's go a little bit deeper into the topic. And as a community member,
what key changes should I be aware of with the introduction of this new economy policy?
HispanicCon, we can continue with you. Okay. Some guys on Discord saying that they can't hear
Cyrus. I don't know. Do you want to try and fix that first before we continue or do you want to
move on? We can continue with you, HispanicCon, at this point. And once Cyrus come back, we can
listen his thoughts. Okay. Awesome. Well, the first thing that the voters need to see is that
with this new change, we have... the change has an ability to know which validators are
actually running nodes and are active. So if you can go to the tracker, you can see which of the
validators are now part of the continuous set of p reps or validators that are going
from sub-validator to main validator. And there are another ones that are staying currently as
a candidate, which is a tag that is used for those that are either not running the nodes or
for some reason, their nodes are not capable of validating blocks. If you're voting for a
candidate validator, you are not going to be earning rewards. And so you have to make sure
that you have to be voting for a validator that is actually validating blocks because now the
rewards are funneling through the node first and then based on the commission rate that gets
distributed to the voters. So if the node is not earning rewards, then their stakers are also
not earning rewards. This is a way to promote actually that the borders supports the teams
that are actually participating in the validation of the chain. This is, I will say, the main thing
to keep in mind. And the other one is at the moment, it's not easy to tell for which validator
you will have the base rate of the risk earning because it depends on the commission rate and it
also depends on the bonding amount that they have. But on CPS, I just saw yesterday, we were
discussing about creating a web page or something like that to make it easier for the community to
know which validators will earn you the best rate. But I just saw yesterday that on the CPS that is
actually right now a project that is looking to build that web page or that web app. So I will say
first vote for active validators, support the validators that you want. And then once we have
these web apps or tools that allow you to optimize your voting and use them and figure
out which PREPs will actually be like the best way or something like that.
Great. So we have Cyrus back. Cyrus, can you give us your thoughts? We were talking about
the key changes that community members should be aware of the new introduction of this new
economy policy. You can go with the sub topics, what to expect. I have the forum post from the
foundation, which includes decentralization, rewards, inflation allocation, commissions,
minimum wage and penalties. We can continue with that and please explain us what to expect.
Sure. First, just a sound check. Can anyone from the audience hear it?
I can hear you. If you guys can raise your hand or send an emoji or something.
It's good now. All right. Yeah, I'm not sure what that was, but glad it's resolved. Yeah,
so I guess going down that list, so the decentralization that is in reference to
and this is something that isn't live yet, we'll be pushing that as a separate proposal as well
in the coming weeks, is increasing the number of active sub PREPs and decreasing
the number of main PREPs. So right now, there's 22 main and those are the ones that are always
running. And then the sub are the ones that are rotating. So there's 22 main right now,
and there's three rotating. And that's going to change. I think the number was 18 main
and nine rotating. So the intent here is to basically increase how frequently lower ranking
validators are actively securing the chain. So that was a key part of the decentralization.
The impacts of minimum wage also affects that, as I mentioned before, that's
primarily so that validators can run their node and make enough money off of the ICX to be able
to do so. And the penalties, that's the slashing that I was talking about. So the list is online.
I think we have an announcement about it. So off the top of my head, I don't remember
exactly all of the penalties, but essentially, they are just if a validator is not participating
in securing the chain, but they ought to be, then they will be penalized. And that penalty
comes from a slashing of the bond that is tied to their node. And let me think if there's anything
else. The inflation allocation is another one. And right now, it's still 90% goes to validators,
but it's going to change to 85%. And 5% of that is going to go to minimum wage.
Right now, the minimum wage is not active, but it will be in the next,
over the next few days, we're going to push a proposal out to change that. And actually,
this is outside of the scope of ISS4, but just because of the timing, we are going to
alongside that introduce the changes from the balanced enshrimens as well.
I don't know if we want to necessarily get into all that, because that's a whole other thing.
But that impacts the inflation allocation as well. And the way that commission works
is validators can set their max commission, their max amount that they can change their commission
within a term. And also, the commission itself, where commission is the amount of rewards that
the node receives that the validator themselves takes versus anything that they don't take. So
anything that's not their commission goes to the voters. So if you see on the governance page of
the icon tracker, for example, somebody has 10% commission, that means that 90% of the inflation
that goes towards that validator goes to the voters who voted for them. And the idea here is to also
help distribute votes more evenly and more actively, and to provide transparency around
if you vote for a validator, and then they suddenly change their commission rate so that
you earn less as a voter. There's some transparency to what they can do within a term and how high
they can set their commission rate to, and so forth. Yeah, it's just like what Cosmos is doing
with the commission system. Yeah. Perfect, perfect. So you were talking about a lot of things,
and there is obviously a timeline with the implementation of this new economy policy,
some new parameters are being introduced. So where do we currently stand in terms of
which aspects of IISs 4.0 are live? Sure. So I guess before IISs 4, the inflation allocation
was 77% to the voter, and 13% to the validator, and 10% to the CPS. Now it's, and this is live,
it's 90% to the validator, and then they can set their commission so that we get rid of
the direct inflation receipt to the voter, and then 10% still goes to the CPS. That's where we
stand right now, and alongside that is also the jailing functionality, which actually that's
another penalty that I didn't mention alongside the slashing is if a validator has missed
participating in the block of production, but they should have, then their node gets jailed,
and in order to get out of jail, they have to request to be on jailed. And then there's a,
I think that takes one term to do after they request to on jail. And so basically the idea
here is if a validator is offline, or if they're not participating, we assume that they're offline,
and they don't participate until they actively say that they're online again. That's the current
penalty that's in place. And then you also miss out on the block production rewards if you are in
jail, which would mean that your voter also misses out during that time. And that's in place,
but the slashing that would additionally happen, that's not, that's going to come later on. We
just wanted to kind of have a smoother transition from no penalties to more significant amount of
penalties. So we're doing kind of like one at a time. And that will be the slashing stuff will
probably wait a few months until things settle down before proposing that. And like I said,
the minimum wage, that's not currently there, but we'll be proposing that within the next week.
And alongside that will be the balance changes and the changes to the number of p reps
that are the main p reps and the rotating ones that will be proposed probably two weeks from now.
So almost immediately after the inflation changes or the inflation allocation changes.
And yeah, that's, that's kind of the whole timeline. There is a notion page that's in the
announcement about it. And it's kind of been a little bit of a loose thing in terms of like,
what date actually everything is occurring. Part of that's because we don't act like once,
once you submit a network proposal, it's the lag time to one that's activated is based on
how long it takes for validators to vote for it. And then once they vote, we just immediately apply
it. And based on our estimates, we're actually a little early now because validators have been
validators who vote for these proposals have been almost immediately voting on when we
propose these, these network proposals. So we're a little bit ahead of schedule. And,
and it's been a little loose in terms of like, when these things all come online.
But yeah, that's, that's where we're at right now.
Perfect, perfect. Since this, these are all technical structure, I guess we don't have to
go with Hispanic on for this question, but I have a question for him.
So basically minimum wage from we have covered the main sides of the topic of today. I have
a lot of questions from the community. So there are a few about minimum wage. And so do you think
introducing a minimum wage will actually help with the needs of the validators to cover their expenses?
Yeah, at the moment, it's actually an instant is incentivized new validators to actually come to
the shame because so the idea was to the calculation of the I wage was done at somewhat
current prices and with 100 validators. So it was a calculation to give around 300 to $400
at current prices with 100 validators. So what happens now is that we don't have 100 validators,
we have 41 validators that are currently participating on the chain. So the same
amount of inflation that was used was calculated to those params is now going to be distributed to
the 41 validators that we have right now. So basically, they're gonna earn twice as much.
So this is incentivized, this is an incentive on the chain, so it can balance or equalize until
it gets to an amount of validators where basically the percentage of the I wage they're going to
receive is that that value. But if the price goes up, this is paid in ICX, so you will get more
incentivized on actually coming to the chain. So I think at the moment, we are a very good place
for new teams to come and help us validate the chain. And I'm very excited to see
how it's going to change our ecosystem at the moment. When people start realizing that it's
very profitable to come to ICANN and run an O, I will expect for many new teams to come and
run money there on ICANN.
Cold Cyrus, do you have anything to add?
Yeah, I think one way to think of it is there are all these different barriers to running a
validator. One is that essentially, it's running a server. And running a server is not something
that people commonly want to do because it's a technical thing and maintaining it. It takes
work to do. That comes with, that's just part of there being a blockchain, that any validator
who's operating on it is going to be running their server. But the other side of it is the
financial piece, which is that in order to run that server, you have to either pay electricity
on it if you're doing it in-house or you're more commonly paying cloud costs to have it hosted
somewhere else. Previously, in order to justify operating the server, which is already in itself
like a burden to have to do just in terms of the activity, it wasn't guaranteed that you would
be able to pay for it or that you would earn enough that it would justify running that cost.
Now, it's a very simple and straightforward value proposition where if you are in the top 100 for
validators, then you're going to be making money off of it. And in order to be in the top 100 right
now, all that you would need is to bond 10,000 ICX and have any number of votes. And that would be it.
And so it becomes very, very easy for somebody to do. And like Fidel mentioned,
until we have 100 validators, the rewards are going to be skewed in favor of the first commerce,
because that same reward amount is spread among less than 100 people as opposed to 100 people.
So it's a very, very easy value proposition to tell people, hey, if you run a validator note on
icon, you will make money off of it. Previously, that wasn't the case. And that's been like the
biggest barrier to convincing people, hey, why should you help secure this network?
Yeah, 100%. I agree with you. And this is going to be a little off topic. But
most of the validators are using centralized web services like Amazon Web Service.
And I have noticed different products like Flux. And I guess you are aware of it. Have
you been able to reach to them and check if it is applicable to the icon notes?
You are talking about like the one-click note providers?
A lot of them, they have upfront costs of if you want to be listed on their service.
And we actually had a team come in who has built similar products for other chains.
And they did some user research among the validators that we spoke to and everyone
of is that kind of a service helpful for them? And at the time, the answer was no,
because in order for somebody to run a note on icon already, it is close to one click as it is.
It is like one command. So it is not quite, you know, you still have to go through
the AWS cloud and set up the server through the normal way that you would do that.
But then once you have the server, it is just like one command basically to run the note.
And the validators that they spoke to felt that it was already as bootstrapped as it could possibly
be. So there wasn't that much space for a product like that. Now that we have this
financial piece of the barrier kind of removed, and there is more just easy justification to bring
new people in, I think if we see that people are still not coming in and that it becomes a big part
of the reason is that they genuinely have trouble launching a server and running the note, then we
will likely explore that option. Yeah. Cool. Cool. Cool. I was also brainstorming about this because,
you know, about the costs. So there are also decentralized clouding services now, and they
also have their own narrative. I guess maybe we should do some research in the future for,
you know, make icons, you know, publishing a validator on icon more, you know, catchy, let's say,
but this was off topic and we can continue. Let me check my questions for a second. And yeah,
I've seen Hispanic on answer the question over discord lately. So it was about bone slashing.
The idea of bone slashing is new to the community and community bonders are
worried about how it'll impact them. So what should they know? This question goes to Hispanic on.
Yeah. So I saw the comment first and I wasn't aware that they were talking about community
bonders and to be completely honest, that's a fairly new, I didn't know that it's existing.
I don't know how widespread is community bonders concept on the validators because
it's normally the validator that will set the bond for the wrong validators. But I realized
there are a couple of projects that allow for people to bond to the validators that they're
supporting. And in that sense, if the validator gets slashed, whenever we activate that feature,
yeah, it will. That's a risk that the community bonders will also have because
the part of the bond will get slashed. But aside from that, because I don't think that's the
it's not like a big part of the community that is bonding or participating in the bonding process
with their validators. The other, what I was trying to reply is that
if you're voting for a validator, you're voting for a peer, the only risk that you have
is not early reward. If you're not participating in community bonding, the risk is not early reward
when the validator either goes to jail for not having an active note or it's already
a candidate validator, which is basically it's not active. So the incentive is for the voters to
every once in a while, make sure that they are voting for validators are actually active in
the chain, protecting the chain and participating in the validation process.
Great, I have my answer. And Cyrus, do you have anything to add to the question?
Um, I think that covers everything. The only thing I would add is that, you know,
if you're a voter, and you go for a validator that is not doing their job, then you should
change your vote. And the reason that we added this slashing for for bonds is similar. It's also
so that, you know, if you're bonding for somebody who's not participating as they should, then you
should bond for somebody else. And that these are, these penalties are a way to incentivize
that the people who are actually doing what they're supposed to are, are, are the ones who
are being voted for and bonded. Yeah, cool, cool, cool. Fair enough. And I have a great quick
question, which was highlighted under the forum post of IISS 4.0. There are some community members
they who expressed concerns about the disqualification aspect. Will this potentially
lead to negative politics among validators? Or is it ultimately beneficial for the governance
framework? I need your opinions on this. Let's let's continue with Cyrus with this one.
Sure. Yeah, I thought this was an interesting thing that I think Gio pointed out originally.
And there's actually been a few other validators who have either reached out to me or commented on
this idea. But the summary is essentially like, so first, I think there was a little bit of a
confusion about what this disqualification is. So just like any other network proposal,
a validator can propose to disqualify another validator. And that's if, if that's
voted and agreed upon by the other validators at the quorum, then that
validator who was proposed to be disqualified will be disqualified. That's all I think that's
always been there. That came along with with icon. I don't know if that was an icon one,
but that was at the start of icon two. Yeah, yeah. So it has it's not anything new with is for
what is new, though, or what was kind of maybe proposed, but but lost along the way, was that
that same validator who gets disqualified, their bond would be slashed 100%.
And that's currently how it is right now. What's what's active. And the, you know, one thing about
all of these changes is they're all on chain governance. So just like how about a validator
can vote to or submit a network proposal to disqualify another validator, they can also
propose a network proposal to adjust any of these numbers that we're talking about.
And that includes how much bond would be lost by a disqualifying validator. So right now it's
still set to that 100% number. And there has been some controversy about that. And for that reason,
we're going to have a separate network proposal to adjust that. I don't know exactly what number
we're gonna, we'll just say 0% for now. I don't know what we'll do. But in any case, like,
that's something that anyone who's a validator can propose, like anything that they feel
should be changed. They and this is something that, you know, I think it would be great for
the network. Like my concern with with us doing it, proposing these things is, because it's coming
from us, it's more likely that people will just say, Oh, okay, that's probably good for the network.
But in reality, like the reason that we would propose this specific piece is is to have
everybody be able to share their voice on on this matter. What ends up happening when we do a
proposal like this, though, is if people see that it's coming from us, then they're just going to
vote yes to it. But like, I personally think that the 100% number is what it should be. So,
so that would be like us actively proposing something that like, I actually disagree with
in the first place. So that that's something to keep in mind is like, any of these numbers,
anybody can change, we will put out a proposal specifically for this, because it's been raised
by enough people that justifies doing so. It wasn't raised by enough people to justify
initially setting it to zero, because there was only like three or four validators that raised
this. And you need a quorum in order to in order to actually pass something. So we'll see if that
ends up being passed. And one last thing I want to say about this, it is like a very, very rare
corner case. And the reason that I feel that it should be 100% is the only times that a validator
would be disqualified is if everybody is in it, or it's sorry, if an if a quorum is in agreements,
that they should be disqualified. And in order for there to be a quorum, that's the
two thirds majority. So that's a lot of that, that's a decentralized network, that's a pretty
substantial amount of agreements to disqualify somebody. And the reason that that exists is,
like, if a validator is a criminal, for example, they, there needs to be a way for them to be
removed from the network. Because if they buy enough ICX, and they just vote themselves into
the main into the top 100, so that they're active, then it becomes an issue. So that's why that
exists. And that's pretty much the only time that this would happen is like if somebody is a
genuinely bad actor, and two thirds majority agrees that this person is a bad actor, or that
this validator is a bad actor. That's when this disqualification would occur. And then as a result,
the bond would be removed with 100% slashing. And that, you know, for one, that's it's pretty
unlikely that we're ever going to see something like that occur in the first place. But the other
thing is like, you know, if the bonder knows that the person is a bad actor, and they still bond,
then their bond should be removed. Like, that's the reason why we set it to 100%. And that was
the reason that I felt that that should be 100%. But again, because there has been voices of
concern about this issue, we will put another proposal out. And it's not something that I feel
particularly strongly about because of how rare of a case this would be.
Yeah, and also even if it doesn't, if it never happens that we have a bad actor on the chain,
just having that value set as something 100% something above zero is in of itself a deterrent,
it will stop, it will help. Because depending on how much this bad actor has as a bond,
they are not incentivized to do whatever that act that we're planning on doing. So I think that
having some value there is important. Yeah, you made some great points. But as you said,
it's going to be another proposal. Maybe we can inform the community in a better way for this one,
for the proposal. But yeah, I understand what you said. And I have another question about commission
rates. And let's say if a validator, if a validator haven't set its commission rates, what happens if
I stick with a validator that hasn't set a commission rate? Currently, every validator that
haven't set, which I think is only like two, because I'm looking at the tracker, I can see like only two.
If they haven't set any value, 100% of their wars will go to the voters. It's the validator that
is not going to be early. Because validators should be more active in the sense that this
is a change that has been coming. We all know we have to contact the validators. So at this point,
pretty sure that 100% of those four validators are active at the moment already know this.
So for the voters, there's no issue. If you're voting for someone that haven't
set their commission rate, the 100% of their wars that they will be earning are going to
be distributed to the voters. Perfect, perfect. And I guess we covered all the questions, but
I have a question about IISS 4.1. I know you guys, I don't know if you guys haven't been directly
involved with it, but I'd like to hear your thoughts on asset backed emissions. The community
is very worried that an increase in emissions could negatively impact ICX tokenomics. What's
your take on this? Let's go with Saris with this one. Yeah, I think that's a reasonable concern and
certainly looking at the increase at first glance, it makes sense. I don't remember the
exact numbers that we landed on of what the increase would be, but let's say it's pretty
significant. It's like double or something like that. And if you think, oh, we just double the
inflation, that does sound like it could be negatively impacting ICX tokenomics. However,
the interesting thing about it is those emissions from the newly increased amounts
can only be used in certain ways. And because of that, they actually don't negatively impact
ICX tokenomics. So if we break it down, I think something like 80% or 90% of the new emissions
go towards protocol owned liquidity. What that means is that 90% of those new emissions
only ever get used when trading another asset. So if we have a cross chain connection to Ethereum,
for example, and we have 300,000 ICX that have emitted in this protocol owned liquidity bucket,
we can now buy 300,000 ICX worth of Ethereum and hold that on the ICON network.
So now it's not like this just goes towards nothing, or it's something that people can
directly sell to the dollar or something like that. It's only to trade crypto assets. And I
don't know the specifics of how we're going to do risk management as far as what basket of assets
should be held. But because this is a portfolio management type of emission change, it actually
should improve the ICX tokenomics, because now suddenly the network itself is not only exposed
to ICX, it's exposed to many different assets. And other chains that have done, I don't know
if any chain has actually done exactly the way that we're doing it. But other chains that do
protocol owned liquidity have been quite successful as a result of that. And that's the vast majority
of where the new inflation is going to go. The rest also only ever gets emitted during specific
instances that are all incentivized towards increasing the value of ICX actually. I don't
remember the specifics of what the other 10% is. I think like 2% goes towards an insurance fund,
so that if some vulnerability occurs, then this will get emitted or this inflation will be released
so that the people who were affected by some exploit that causes them to lose funds
have this insurance. And once that exploit occurs and they lose those funds,
then they get something back from this bucket. And then another, I think there was one or two
other buckets and those were both associated with promoting traders to actively participate
in providing liquidity towards specific asset pairs. There's something like that. It was like
a farming incentive. I don't remember exactly. But in any case, all of these emissions are
specifically things that only get released in certain events. And all of those events
improve ICX tokenomics. And the reason that the change looks drastic, let's say that it's double,
is because we actually wanted to just keep the same as what we currently have for normal use
cases and how things would regularly be released and then just have all this other stuff separate.
So that's kind of the thing there.
Yeah, thanks for the explanation. Espanicon, do you have anything to add?
No, actually, Saris has more knowledge than me in this particular subject.
There's nothing I can add to that subject.
Yep, sounds fair. And I guess we have covered all the topics for today.
Do you guys have any other questions so our guests can answer?
No, I think, I think, well, unless the chat is quiet right now. So I don't I don't see anyone asking
anything. Yeah, I mean, I mean, yeah, I'm not seeing any comments. Any questions yet?
Let's in my job out to the chat and hear his voice.
That should be a separate space altogether, I think.
Yeah, yeah, yeah. Yeah, I agree. I guess this is the end. Espanicon and Saris,
it's been a pleasure for me to talk to you. It was great. It was a great explanation of the
new economy policy of ICON. And we are closing this one at this point. Thank you for attending
everyone. See you in the next one. Bye, guys. Thank you for inviting us. Thank you. Thank you.
Thank you so much for joining. Take care, guys.