DFINITY Foundation

Internet Computer Association

Synapse.vote (formerly ICP Maximalist Network)

Arthur’s Neuron (used to be cycle_dao)

ICDevs.org

CryptoIsGood

Anvil

ICPL.app

The Fools' Court

ysyms

The Accumulators’ Neuron

RawTech Venture

Paul Young

ICPMANUAL

8yeargangDAO

John Wiegley



# 1. Introduction

To encourage additional users participating in the governance process of the Internet Computer we suggest adjusting the rules for the minimum dissolve delay and dissolve delay bonus for neurons. In particular, we suggest that the minimum dissolve delay for voting should be set to 1 month (instead of 6 months) and the dissolve delay bonus should be extended by a linear function with values between 0 and 1.0625 for the time between 0 and 6 months. As a consequence, new users will be able to try out the governance process due to the lower minimum dissolve delay, while still keeping the incentive for users staking for longer periods due to much higher voting rewards for long-term staking. 

This proposal describes this change and arguments for and against the change to help you make an informed decision.

# 2. Motivation

On 7th of June 2022 we created a forum post proposing to reduce minimum staking time for expanding governance participation. The community response for the proposal has been great and very engaging. The post received 180 replies with passionate arguments for both for and against the proposal. Overall sentiment from the community was positive and several community members believe this proposal will benefit the ICP ecosystem.

* The voting power of a neuron is computed as the product of the staked amount, the dissolve delay bonus and the age bonus. 
* The dissolve delay bonus historically has been a value between 1 and 2 and a linear function of the dissolve delay (which has a maximum value of eight years). The current minimum dissolve delay for making a neuron eligible for voting and receiving voting rewards is 6 months. 
* Currently, a neuron with a dissolve delay of 6 months has a dissolve delay bonus of 1.0625. A neuron with a dissolve delay of 8 years has a dissolve delay bonus of 2. 
For a detailed description of the Network Nervous System and the determination of voting power please refer to this article. 
* With a lower barrier to entry, we believe that more retail participants will be able to experience the entire workflow of staking ICP, casting votes and accruing voting rewards Our hypothesis is that the proposed change described in the next section will significantly increase the number of community members participating in the IC governance. We also believe that over time some of these community members will start committing to longer staking periods that offer larger voting rewards. 

# 3. Proposal

* To encourage additional users participating in the governance process we suggest that the minimum dissolve delay for voting should be set to 1 month instead of 6 months. 
* Given that we would like to keep the current incentive to stake for longer time periods greater than 6 months, the dissolve delay bonus between 0 and 6 months should be much lower compared to longer periods. As a simple solution we suggest that the dissolve delay bonus should be extended by a linear function with values between 0 and 1.0625 for the time between 0 and 6 months. From 6 months to 8 years the dissolve delay function should be unchanged The new function is illustrated in the following chart. 
* For a newly staked neuron, this would result in APYs depicted in the following chart. The values for 1 month are new (previously the APY was 0% as no rewards were given) and the values for 6 months and 8 years are unchanged. 


# 4. Impact and Assumptions

* The overall average APY would change from 15.72% to 15.46%.
* Approx 2m out of 116mn daily rewards (i.e. 1.7%) would be allocated to neurons with dissolve delay < 6 months. → The overall impact is relatively small.
* An additional 27mn (24mn dissolving, 3mn non-dissolving) of staked ICP becomes eligible for voting/rewards 
* This results in an additional voting power of 14mn. This is based on neuron data from the dashboard API, ignoring any age bonus (which would only affect the small porting of non-dissolving neurons).

# 5. Arguments for and against this change

* Community has discussed this proposal extensively in the original [forum post](https://forum.dfinity.org/t/proposal-reducing-minimum-staking-time-for-expanding-governance-participation/13586).
* Prominent Arguments which were against the proposal are answered [here](https://forum.dfinity.org/t/reducing-minimum-staking-time-for-expanding-governance-participation-next-steps/15164).

# 6. Alternatives considered 

* With respect to extending the function for the dissolve delay bonus to the time between 0 and 6 months, we also considered concave and convex alternatives. A concave (respectively convex) approach would provide higher (respectively lower) voting power and APY compared to the proposed linear function. Given that the precise choice turned out to be irrelevant for a 51% attack as outlined in the section Security, we concluded to use the simplest approach via a linear function. We also considered extending the same function but ruled it out as it will offer significant awards to people staking for very short duration such as 1 month which is counterintuitive.
* Alternative Proposal which reduces the minimum dissolve delay to pay voting rewards to 1 month AND increases the maximum dissolve delay bonus to 3.5 was considered. While we think it is not a fair argument (as discussed above), we feel that the new proposed 30 days dissolve delay completely eliminates this issue as well. We believe that the proposed change is not relevant. If an attacker has 51% of the voting power, then also the minimum dissolve delay can be adjusted. Thus an attacker would likely stake for 8 years (instead of staking for a shorter period) receive a dissolve delay bonus of 2 and then attempt to change the rules.

# 7. Conclusion

The presented proposal is our hypothesis on what could drive the maximum impact. Based on our discussions with various ICP holders, we found that there are several people that are sitting on the sidelines due to the 6 month minimum lockup requirement. We feel shortening the duration will enable them to get some real skin in the game when they start to see accrued rewards. Staking 1 ICP does not have the same impact as the accrued rewards are not that significant in value. The eventual goal is about giving people more flexibility to choose with a lower barrier to entry. 

# 8. What we are asking the community

* Review comments, ask questions, give feedback
* Vote accept or reject on NNS Motion

Developer forum: [https://forum.dfinity.org/t/reducing-minimum-staking-time-for-expanding-governance-participation-next-steps](ttps://forum.dfinity.org/t/reducing-minimum-staking-time-for-expanding-governance-participation-next-steps)



Proposal for Reducing Dissolve Delay