Recently, the EOS New York team, in collaboration with other members of the community, published their proposal to solve the disalignments of incentives of block producers that threaten the EOS governance.
Along with the proposal that Dan recently announced on Twitter (and which has now been made public), this proposal was highly anticipated by the community and proposes numerous and significant changes to the current structure of the EOS mainnet. A series of steps are planned to implement these measures, so that the transition takes place gradually.
This proposal aims to solve the following issues that currently concern EOS:
From the blog post, we can highlight the summary of the proposed changes:
- Dynamic inflation is replaced with static inflation (e.g. 50MM flat per year vs. 5% of supply per year).
- 1 Divisible Vote replaced 1 Token 30 Votes.
- Staking or lending to REX awards an account with staking rewards.
- An account that votes for a BP diverts 50% of inflation away from itself and 10% is burned while 40% is sent to the BP reward pool.
- If too few tokens vote then staking rewards are shut off, total inflation reduces, and 100% of inflation is now awarded to BPs until such time as the voting threshold is met again.
- Accounts can now set the number of tokens staked and the number of tokens voting independent from one another within a single account.
- Bpay and vpay are replaced with rank pay percentage.
- Block Producer performance determines the total inflation within any given period which materially affects the returns of all stake-holders.
"(...)100% of inflation is awarded to token-holders through staking rewards via staking or lending to REX. (...) The yearly inflation rate is modified from a percentage to a fixed number in order to reduce the effects of inflation over a long period. (...) Voting diverts 50% of inflation you would otherwise receive; where 20% is earmarked or burned and 80% is sent to the block producer rewards pool."
"1 token 30 votes is changed to 1 token 1 divisible vote where each additional block producer voted for further divides the total vote weight rather than multiplying it. Coordination of votes between large stake-holders is no longer possible. The ability to vote oneself into a BP spot with a large enough stake remains."
Disincentive to Vote Measures
Since 50% of the rewards that the token holder would receive through inflation are diverted through voting, the proposal has thought of a system that discourages an excessively low overall voting rate, the Voter Inflection Point (VIP).
"The VIP is the minimum amount of votes that must be cast before staking rewards are “turned on” and awarded to token holders. If total votes fall below this threshold then only block producers receive rewards, which will ensure proper incentive to produce blocks. (...) We also propose that the VIP also adjusts over time based on total token supply in a similar fashion to POW difficulty."
Block Producers Payment Measures
"Block Producers are now paid a percentage of EOS tokens in the reward pool based on rank, where each rank receives a fixed percentage of rewards in the pool with the highest percentage at rank 1."
Block Producer Performance Measures
"Block Producers that miss greater than a specific percentage of the total rounds for which they are scheduled within a given pay period will not be eligible to claim pay for that period. Also, once this threshold is hit within a given period by any BP, the total inflation in the system, which is issued to all stakers and block producers, decreases rapidly during that period and refills slowly over time. This ensures that BP performance is a top shared priority for all EOS token-holders."