The Evolution of "i_Rep"
Welcome to this week’s edition of RHIZOME Wire!
The Evolution of i_Rep
Several days ago, the ICON Foundation made a significant announcement that proposed to essentially re-define iRep, a variable that each P-Rep team can set to essentially calculate reward rate paid out to P-Rep teams.
Rather than iRep referring to the overhead costs of running a node and supporting a team — as it previously had been — it would instead shift toward serving as a “commission” paid to P-Reps as compensation for their efforts to operate a node and support the network. While the structure and mechanisms behind iRep won’t change all that much, the shift in meaning is important.
iRep has been one of the more contentious issues within the community, so it’s important we understand just where it came from, and why there was a desire to see it changed.
To begin with, let’s look at how iRep was originally envisioned (this is from the ICON Yellowpaper - “ICON Incentives Scoring System (Ver 2.0)”:
A variable that determines the reward amount for contribution by Representatives. This variable represents the monthly amount of ICX that is assumed to be required for the operation of the Representative node. It is determined by the Representatives via a stake-weighted average of their submissions.
Here is more:
The Monthly Reward Variable for Representative (iRep) is the Representative reward submitted by the 100 Representatives (only submissions of the top 22 Representatives are averaged into the final number). iRep represents the amount of ICX required to cover monthly operating costs and profits of a Representative.
Representatives should consider their operational costs, profits from running a node, and the amount of transaction fees on the network when submitting iRep. This variable has a significant impact on the monetary policy of the ICON Network.
In addition, the Yellow Paper also laid out a hypothetical example of what iRep might be set to if the price of ICX was at $0.40:
Meanwhile, when the ICON Network officially launched and decentralized, the iRep for each team was automatically set at 50,000, consistent with the table above.
Accordingly, without much guidance beyond these figures, many P-Reps and community members presumed that there was an expectation from the ICON Foundation that the average P-Rep team would set their iRep around this 50,000 figure to start, and could raise or lower it depending on whether the price of ICX increased or decreased (presuming that, with a lower ICX price, a higher iRep would be required to cover operational costs of P-Rep teams, and vice versa).
After several weeks, it became clear to many community members and the ICON Foundation itself that the impact of that iRep regime was to generate a potentially unpalatable level of inflation — especially as the price of ICX hovered around 10 cents toward the end of 2019 (leading some teams to raise their iRep).
This conclusion was reached in the shadow of other changes being made to the IISS system as originally proposed. Those changes would eventually be incorporated into a proposal for IISS 3.0, which was approved by P-Reps earlier this Spring.
Following the approval of IISS 3.0, the ICON Foundation pivoted to formally resolving the iRep issue with their recent announcement.
Here is the core of the thinking behind ICON’s process for altering iRep:
Other networks, such as Cosmos and Tezos, have the concept of a commission or fee charged by block validators. Block rewards are given directly to validators, then are passed on to voters after the validator takes their commission for the service provided (block validation and governance). Each Validator chooses their own commission rate, and the example below illustrates a Validator that charges a 15% commission.
Rather than presenting iRep as a way to represent P-Rep operating costs, the ICON Foundation wants to present it as the % of generated ICX that flows to P-Reps as opposed to the community at large:
When P-Reps raise the P-Rep Commission Rate (i_rep), they raise rewards only for themselves and not for voters, leading to dilution of ICX holders. The number of ICX going to ICX holders remains the same regardless of P-Rep Commission Rate (i_rep), only the number of ICX going to P-Reps is effected.
When viewed this way, it’s clear that ICON is an outlier among the blockchain industry:
Commission Rates on other networks (Cosmos, Tezos) range from 0% (promos offered by new validators) to more than 20% (typically offered by the largest validators that don’t want extra delegation). The current P-Rep Commission Rate, based on an i_rep of 37,500, is 36% (not including Main P-rep rewards), almost double the highest commission rates on other networks.
As a result, the Foundation is hoping to accomplish two things:
Ensure the community begins to view iRep in a similar manner (as a commission, rather than compensation)
Codify this new viewpoint with a Network Resolution
In order to change P-Rep Commission Rate adjustments from a Governance variable to a Network Proposal, Main P-Reps must pass a Revision Proposal. The ICON Foundation would like to make this proposal around the middle of July, subject to change based on unforeseen development factors. We hope to see this Revision Proposal passed by Main P-Reps in an effort to continue down the path to sustainable economics. In the meantime, we are also providing guidance to Main P-reps to lower their i_rep to 14,000 (P-Rep Commission Rate of ~17.5%) for the reasons mentioned above.
RHIZOME, as well as many other teams, have already announced their support for this new paradigm. Here is a quote from our announcement of this decision:
By shifting the terminology and definition of the current i_Rep system, we will introduce a metric that is more familiar to other DPoS participants while providing greater clarity and transparency to voters regarding the impact that P-Reps have on inflation. We think both of these changes will increase the number of voters over the long-term.
In addition, RHIZOME and many other teams have also proactively lowered (or are in the process of lowering) their iRep to 14,000.
Once again, the decentralized governance structure of the ICON project has prevailed in a manner that has led to a more sustainable economic model. In this case, the proposed resolution followed a lengthy debate and discussion that has been occurring since the early days of decentralization. Just another reason to be bullish on the ICON Project.
News from ICON World
P-Rep Governance meeting #4 has been released!
ICONLOOP CEO JH Kim gets talks development and shares insight into what to expect in 2020
What’s of particular interest here is ICONLOOP’s expected revenue for 2020. As of last year, ICONLOOP recorded $8M in revenue. With products such as MyID expected to come into fruition this year, that revenue is expected to nearly double.
LCX releases details on their STO launchpad
Recently, LCX has released details on their STO launchpad. In the past, LCX has announced a partnership with the ICON Foundation for the development of security token infrastructure.
ICON Foundation releases their monthly development update for May
ICON Foundation has released May’s monthly development update. Some notable features include:
P-Rep key dualizing. P-Reps can register additional key to be associated with the P-Reps. Secure storage of bond requirement, Ledger wallet, etc.
Stake and vote via SCORE. This allows for smart contracts to stake and delegate on behalf of the user. Brings up use cases for automation of staking, periodic randomization, etc.
Allow ICONists to vote for up to 100 P-Reps rather than the current limit of 10 P-Reps.
RHIZOME has pushed a new MetrICX update for iOS users
Recently, RHIZOME pushed out a new update for iOS users who were having difficulties saving their wallet address.
In more recent days, this problem seems to have persisted for a few users and a new update is currently in test flight undergoing testing.
RHIZOME has reduced i_rep to 13,999
As enumerated above, RHIZOME has completed its promise to reduce i_rep and align with the foundation’s vision and guidance on sustainable economics.
ICONalyst gets a makeover!
Espanicon has started translating RHIZOME’s MyID Alliance infographics in Spanish
RHIZOME shares a cumulative list of content they have produced
Blockchain Industry News
A Picasso artwork was just sold for cryptocurrency - Decrypt
The artwork, translated as Belly dance before impassive man, was bought from a private seller by a Swiss company calledIdoneus, which made the announcement on Tuesday. It states its aim as expanding the value of the luxury asset market.
Minecraft gains blockchain assets thanks to Enjin plugin - Decrypt
Enjin’s newly-launched, open-source EnjinCraft pluginmakes it possible, letting Minecraft Java Edition server operators enable blockchain functionality within their online worlds.
Crypto Criminals Have Already Stolen $1.4B in 2020, Says CipherTrace - CoinDesk
On Tuesday, the blockchain analytics firm said fraudsters, malicious hackers and thieves have amassed $1.36 billion in ill-gotten crypto through the first five months of 2020. CipherTrace published the findings in its June 2020 crypto anti-money laundering and crime report.
Bitfinex and Tether Reject 'Baseless' Lawsuit Filed Against Them - Cointelegraph
The updated lawsuit, filed on June 3 in the Southern District of New York, accuses Bitfinex, Tether, Poloniex and affiliated firms of allegedly manipulating the crypto market. The initial lawsuit was filed in October 2019.