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John Wiegley

Update of the Gen1 Node Provider Remuneration

# Update of the Gen1 Node Provider Remuneration

Node providers receive rewards (remuneration) for operating node machines that run the IC network. The single source of truth for node provider rewards is the NNS, where changes can only be made through NNS proposals adopted by the IC community.

Gen-1 Hardware was purchased by Node Providers prior to Genesis launch according to the planned usage at that time. We are now two years post-launch, and changes in the roadmap and planning are being realized. We propose another update to this remuneration to realign rewards while still honoring our commitment to these Node Providers.

This document details a proposal to further refine Gen-1 minted rewards so they are aligned with current IC usage. We propose to do this through three actions:

1. Remove the rewards for [type-2 servers](https://wiki.internetcomputer.org/wiki/Node_Machine_Hardware) from the NNS, for reasons explained below
2. Create type-1 minted amounts to cover total costs for [type-1 servers](https://wiki.internetcomputer.org/wiki/Node_Machine_Hardware) now that the storage is installed
3. Reassigning nodes from type-0 to type-1 for all nodes where the node provider paid to upgrade the storage in their nodes

**Current status**

The NNS currently mints ICP tokens totalling approximately $1.4 million XDR each month for Gen-1 Node Provider rewards. (This represents 22.1% of the total ICP tokens minted by the NNS each month.)

The Foundation has been covering rewards for the additional storage costs incurred by node providers to purchase and install the storage in the interim period between when the storage was purchased and when it was installed. Now that the IC can begin to utilize the storage, these node assignments must be changed from type-0 (no extra storage) to type-1 (additional storage added). We propose type-1 reward values according to the chart below.

**Type-1 Remuneration Values**

We propose to add new type-1 node rewards according to the following chart. These type-1 values include both the original equipment costs incurred by Gen-1 Node Providers and the varied costs that Node Providers incurred to purchase the additional storage, ship it to their data centers, and get it installed in each server. (Costs for additional storage varied due to taxes, shipping, and installation.)

| Reward region           | Reward value (XDR) Type-0 | Reward value (XDR) Type-1 |
|-------------------------|---------------------------|---------------------------|
| US - California         | 1087                      | 1600                      |
| US - other              | 873                       | 1499                      |
| Canada                  | 891                       | 1624                      |
| Slovenia                | 1087                      | 1720                      |
| Switzerland             | 1087                      | 1696                      |
| Germany/Romania/Belgium | 1087                      | 1584                      |
| Singapore               | 1212                      | 1824                      |
| Japan                   | 1212                      | 1773                      |

If the proposals are accepted by the community, the new total of ICP tokens minted for Gen-1 NPs would become approximately $1.7 million XDR per month.

**Type-2 nodes**

Approximately $217k of the total current NNS-minted rewards for Node Providers are for the type-2 subset of Gen-1 nodes.

These type-2 nodes have not yet been utilized by the IC/NNS. It has been determined that the hardware (specified [here](https://wiki.internetcomputer.org/wiki/Node_Machine_Hardware)) is no longer suitable for the original intended usage, and the Foundation is exploring other uses for these servers. We therefore propose to remove the rewards for these nodes from the NNS, and the Foundation will assume responsibility for these Node Provider rewards.

**NNS PROPOSALS**

The relevant NNS Proposals will be added to this forum thread once live. They will include:

* A motion proposal first
* One proposal to add the type-1 node remuneration table
* Proposals to update the affected nodes from type-0 to type-1
* Proposals to remove the type-2 node rewards from the NNS

**What we are asking the community**

We are asking the IC community to review these NNS proposals, ask questions, vote ACCEPT or REJECT.

You can discuss the proposal in the forum: https://forum.dfinity.org/t/update-of-gen1-np-remuneration/10553/7