RFC-000-051: Determining which darknodes will be protected from the increased bond size

Requests For Comment | RFC
1

Name: Determining which darknodes will be protected from the increased bond size
Status: Draft
Scope: Gather viewpoints regarding the airdrop to darknodes, which was included in RIP-000-018 “Ren 2.0 funding and Ren Foundation,” and determine precisely which darknodes will receive it.

Overview

With a clear difference of opinion being expressed in discord, both generally and in the chamber discussion created by cowboy, as well as this forum thread, we must officially determine which darknodes will receive protection from dilution as proposed in RIP-000-018.

Background

RIP-000-018 was created to decide if and how many new Ren tokens would be minted to fund Ren 2.0. Included in this proposal was the following: “To maintain the 10,000 darknode limit, the darknode bond would need to be increased in line with how much REN is minted, and a portion of the minted REN would then go to current registered darknodes to allow those bonds to be carried over to the Ren 2.0 network.”

Since this RIP was passed, we have had a significant amount of uncertainty over when 2.0 will launch and whether or not darknodes need to remain registered to receive the allowance. There have also been both current and previous DNO expressing frustration over the addition of this detail within the RIP with little previous discussion and no alternative options to vote. Some DN have deregistered, some have registered since the RIP was passed, many have asked what to do. We need to come up with a clear decision regarding this so current and potential dno can prepare.

This proposal is intended to have current registered DN decide exactly which nodes will receive the allowance.

Details

The following options should be included in the vote -

  1. Only darknodes who were registered at the vote of RIP-00-018 and continue to stay registered through activation of Ren 2.0 will receive the 18000 Ren tokens to allow their bonds to carry over to the 2.0 network.

  2. All darknodes eligible from option #1 receive the airdop. Any currently registered nodes not belonging to the above group and who stay registered through activation of 2.0 will receive an airdrop with a 2 year vesting period. All forfeited bonds return to treasury.

  3. Any darknode registered at the activation of 2.0 will receive the 18000 Ren compensation, but any node not eligible in option #1 will have their airdrop incur a 2 year vesting period. All forfeited bonds return to treasury.

  4. Darknode bond should remain at 100k and the darknode limit will rise to 11,800.

Some have expressed a desire for simplicity and to keep the bonds at 100k (option #4). This option does not shield operators from dilution of tokens or rewards, but there would then be more funds available for the treasury and no DNO would have to accumulate more Ren. Over 30 million Ren tokens would stay in the treasury to be used for Ren liquidity, development, incentives for projects to build on Ren, marketing, etc.

The vesting periods are designed to allow committed newcomers and long time fRens a chance to grandfather in with the current 100K bond, keeping the max 10k node count, while discouraging bad actors. As we are now a 100% community-led project, we should encourage participation and there is no greater motivator to participate than running a darknode. Furthermore, as the competition in this space becomes more intense, the need for a strong community and a healthy amount of nodes (decentralization) is crucial to our success. DNO interested in the long term vision should consider the road ahead and not just the mild, short term loss of monthly income a few extra nodes in the beginning will cause.

Implementation

We shall have 7 days to discuss the pros and cons of the choices, provide suggestions for editing them or adding additional choices. If sufficient approval is demonstrated, an RIP will be created.

3 Likes
2

I think Options #2 and #3 can be simplified without the vesting period.

The vesting period would add lots of complexity for the bonding contract and would only apply to a minority of the darknodes (about ~60 if i’m counting right previous registration/deregistrations). More darknodes is good for the network, a simple incentive to (re)register is a good thing.

I don’t think immediate dumping of something requiring to take quite a risk for at least 28 days (probably double that minimum even) is a showstopper, especially as the offer will have to be limited to a small portion of darknodes anyway.

Indeed, vesting or not, the offer should only be available up to 2000 DNs (roughly the # of DNs at the time of RIP18) so the airdrop “allocation” is still close to the the 30m tokens what was voted in RIP18.
As of now it means the incentive is open to the next first 248 nodes to (re)register.

1 Like
3

My inclusion of the vesting period was because cowboy said in the discord thread referenced above that it is a fairly simple implementation. I felt it a good compromise as there was a lot of pushback to allow anyone access to the airdrop that wasn’t part of the initial vote. This way more can participate but only the committed are able to keep the drop. I’ve been a dno for over 2 years, it isn’t that long. But if there is more support for your views we can always add additional options, or edit mine if I am in the minority.
I’m also good with the 2000 limit. Happy to add it if others would like to comment.

4

You know I am against any airdrop, but it is “no nice” and respectful to long term DNO to airdrop to the ones registered after RIP-000-018 vote, specially without implementing vesting period. Vesting should be a must for them if any airdrop at all. We know there are a bunch of new registrations just for the shake of the airdrop.

Also, my prefer option is keeping DN bonding 100K since will not affect current Ren holders that are planing to run 2.0 DN and they probably will not qualify for the airdrop. I think we have to respect the choice of many of not running DN giving the uncertainties around the project. We should not affect them.

2 Likes
5

Another option I didn’t include was keeping bonds at 100k but coding in a 10k node limit.

Also I assume this vote would be some type of weighted or ranked system, so for instance if the first 3 options had a majority of support but not any one was greater than #4, that #4 would not be selected? If anyone understand this well please comment, thanks.

2 Likes
6

Thanks for putting this together Shiny. Here are my general thoughts on the subject, but I’m starting to lean more towards option 4 for a number of reasons:

  • Previous long-term supporters who deregistered will ultimately be forced to pay a token minting levy/‘tax’ to register their nodes once again depending on the airdrop requirements chosen by the DAO. I think we should be incentivising anyone with a history of operating a DN to come back with as little friction as possible. I wonder if the ~18k increase will lock out ex-supporters if they happen to be in a position of running multiple nodes.

  • E.g. 5x nodes with an ~18k increase per node would require an extra 90,000 REN to bond those same nodes back to the network if they didn’t qualify for any airdrop(s). Given the uncertainty around the project and the launch of Ren 2.0, I can’t imagine any ex-supporters forking out an additional 90k tokens just to bond their old nodes back to the network (should that be the case).

  • Given the theoretical max node count will almost never be reached, the increase in max nodes doesn’t particularly concern me. If the possible max count before was 7k-8k nodes, then this will probably increase to 8k-9k nodes with the new ‘node ceiling’. Not taking into account REN tokens held on exchanges or nodes permanently lost to human error etc.

  • While the number of increasing nodes may still dilute the token value, this will happen over a longer timeframe as the network slowly absorbs additional nodes coming online in the future. This seems to be a smoother transition to handling the inflation than potentially hitting specific DNOs with a sudden ~18% bonding surcharge overnight to re-register.

  • An increase in theoretical max nodes will make the network more secure from a BFT perspective, as a trade-off for new DNOs diluting the token value.

  • +The devs don’t need to make any changes to the bonding contract(s) or codebase.

  • +The DAO treasury will have more funds available (especially for crucial areas such as marketing for Ren 2.0)

  • +It stays true to the original 100k vision set out in the original whitepaper since the ICO.

  • Also it’s just so much simpler for the entire community and project as a whole, and we won’t need to communicate to new users every 24hrs that the bonding requirement has changed (this will require a lot of communication).

–
With all the legal proceedings taking place and the upcoming foundation setup, I think we should be minimising complexity as much as possible in all areas of the project.

6 Likes
7

Hi All,

I was a DNO since about 1mo in starting in 2020. Long time holder and supporter of the project. I thought we were supposed to dereg and convert all of our RenBTC when this news of the bridge shut down came out. Can we add an option for a cut off date for those that supported the project and still have not sold their holdings?

8

If nothing else changes, options 3 & 4 would not leave you out.

Thank you for commenting, this is why we are having this vote to decide the best path forward!

9

During RIP18 we clearly voted for the airdrop to “current registered darknodes” “at the time of this proposal”. So I am definitely for option 1 only. If we now vote here differently (meaning other options), I and likely many other DNOs would have voted differently during the RIP18 vote. I don’t think it sets a good precedent.

3 Likes
10

I was originally in favor of option 1 but now I lean towards option 4 as it would be the simplest for everyone involved.

Lifting the DN limit to 11,800 should be a non-issue since the Foundation will hold and distribute those tokens to investors (with any vesting schedules) and grant recipients & Ren 2.0 will introduce burning of REN which will help with the 11,800 ceiling from being reached. 180M REN won’t flood the market right away and (in my opinion) seeing a spike in DNO’s to even come close to the original 10K ceiling is slim. Another clear benefit of option 4 is leaving all of the REN to the foundation to expand the ecosystem.

If we go with option 4 then current operators can de-register their nodes and re-register when 2.0 launches without worrying about any airdrop, wasting money of server costs, and pick up where they left off in terms of # of nodes they ran. The only thing they may lose is voting power which outside of the scope of this RFC.

3 Likes
11

TLDR - Option #4

The way I’m reading RIP 18, if the added portion doesn’t go to the existing nodes, these nodes would need to come up with additional token in order to be carried over to 2.0. Given that we needed to mint added tokens in order to urgently establish foundation and facilitate 2.0 in the first place. We overwhelmingly voted pro-active airdrop in light of these factors.

However, as time progressed, discussions into development into 2.0 may not need to increase the bonding. Although these were indirect comments, as yet again, the ‘development team’ is essentially silent on what options are possible for the foundation and/or DAO to consider. Also to add tax and legal implications on providing some node owners with an airdrop, but others may not be included for whatever the reason. Which of course didn’t really matter who was/is registered or not, as the minting needed to be shut off anyway; at the time leaving about 400renBTC in the open. There still about 370 renBTC sitting at risk after having random burns in small amounts over the past few months. I guess luckily the system can still remain in operation, the sense of urgency provided for in November hasn’t yet materialized. I assume someone cleaning up Alameda is being reasonable about this problem. Anyway, the point being that what we were considered at the time of RIP 18 was done in a sense of urgency to keep this project going. We need to setup a foundation in order to get 2.0 up and running.

Now what were looking at is what is best for the nodes and the project. I don’t think the airdrop will do anything beneficial long-term if we can keep the same node parameters, other than increasing the total nodes from 10k to 11.8k. Since we have never come close to this, and given the past performance of Ren Project to gain market share in defi (or lack thereof), likely we will never see any level of registered nodes close to the max amount. To plug my other idea again, if we wanted to offer node owners that stuck with the project, provide the option to double their node count, although these bonds would need to be halved at 50k at the same time we have 100k. I don’t know if that is even a development possibility. It’s certainly not popular option in open discussion of stakeholders.

I would now be in favor of no airdrop if we can keep the node parameters at 100k/node. It will be the cleanest in terms of a transition and also provide more resources for the foundation/treasury to get this project back on track. Avoids the impending debate of who is or isn’t ‘in’ the airdrop. Would also not require a prolonged illiquid period of the 2 years (which I think will be against the original concept that began this project, that being to provide liquidity). And, should avoid the added tax and/or legal implications of dropping added tokens to a select group and excludes others at the same time.

1 Like
12

Thanks for getting this started as an RFC @shiny!

As I have said before I too am in favor of option (4), I won’t repeat the reasons as others have done so quite eloquently already in this thread.

Additionally I wan’t to emphasize the point made by @BlockchainBard:

To this end I think we should modify the vote options in favor of the bond increase and airdrop to include anyone who operated a DN at the start of the FTX debacle as eligible, as I don’t think we should hold it against anyone if they derisked by deregistering when it became clear that funding was not safu. If memory serves me well this is only about ~70 nodes anyway. We would be doing ourselves a disservice if we disenfranchise any committed community member in this group.

1 Like
13

I am interested in consensus regarding quorum for this vote. I just asked cowboy if tagging all in discord is appropriate for gathering attention to this RFC. I don’t want this topic ignored by many as it does involve considerable treasury value and impact to future DNO.

Thoughts on quorum? Also voting type? (Ranked choice, etc.)

14

Thank you Shiny for putting this RFC together.

My preference is 1 with the option that any node that was registered at time of the voting but deregister after can re-register now before the airdrop to get the airdrop. As you have made it also conditional to be active during launch of ren2.0, there is still time for people to re-register.

I think this option is the one that is closer to what was voted in RFC18

I think RFC18 was clear in the parameters of who was going to receive the airdrop and why. We will never know how the voting would have gone had we removed the airdrop option and opens the project in its early days of governance to some questioning: is future voting even worth it if it’s going to be changed later anyway? is the amount of inflation to be minted also in the table for change? Why only the airdrop part is now in question? etc. the reality is that another option could have won if we kept the airdrop out, maybe less inflation? We will never know.

So disregarding this fact or trying to alter the result of the voting seems not serious and we look like not trustworthy.

I understand and probably would agree with option 4 if a vote had never occurred but trying to ignore the result of vote RFC 18 does not sit well with me.

2 Likes
15

Very good idea. It’s not a big amount (still within 2k DNs) and allows people who had to derisk to come back easily when clarity is back: simply by rebonding their 100k they didn’t sell or by buying back whatever portion of the 100k they already sold.

It gives option to those who depended on RenVM income and had to reduce their DN exposure due to lack of revenue and clarity.

2 Likes
16

I think option 1 is the right one, this was already voted for in 018, because you have to vote for it again

2 Likes
17

I agree with this line of thought. I ran two DNs since Epoch2 and spun up another five about a year prior to FTX meltdown. I deregistered those DNs in the face of Alameda uncertainty, missed one epoch, and spun them back up again. I believe the epoch I missed was the epoch that the RIP passed. It sounds like there are a few others in a similar position. It would be a shame to exclude longtime REN supporters due to missing one epoch. I think options #1 and #2 should have additional flexibility to take care of long term REN supporters in this position.

2 Likes
18

How about merely make new registrations 118k though those who have remained registered with 100k don’t need to change anything?

Seems simpler and rewards those who have stayed the course. Also anyone with several DNs would likely register more from their airdrop.

1 Like
19

The first couple options sort of do that by dropping them 18k so they fulfill the 118k obligation. I don’t know what type of complexity coding two different bond sizes would add. Plus one of the reasons given for raising to 118k would to keep the 10k maximum node limit. Having about 1700 nodes at 100k and the rest at 118k would alter the max limit some.

20

Option 3 would include anyone wishing to fire up a node before the airdrop occurs. Only downside is you would have to stay registered for 2 years or you lose the airdrop, but anyone serious about running a node shouldn’t be concerned with this.
I was even thinking about including a vesting period in the first option, so anyone who wants a free 18k token airdrop have to commit to two years service. But I felt existing nodes would not like that and not vote for it.

1 Like