Proposal to Revise the Current Staking System

Hello everyone, I’m Nirvana. I’ve been a dedicated Polkadot investor and voter for quite some time, primarily observing the landscape from an investor’s perspective. I’ve also been involved in some projects on other chains as a programmer and have worked outside of web3 for many years. I believe we can significantly enhance our approach to staking to encourage more active voting. It’s not enough to just voice complaints about others decisions, we need more votes to further decentralize our entire ecosystem. This post aims to gather opinions, discuss potential issues, and explore whether there’s general interest in a new approach, which I strongly believe there is. I’m looking forward to hearing your thoughts and starting a constructive dialogue.

Proposal to Revise the Current Staking System

Enhancing Engagement and Decentralization Through Active Participation

  • Objective: Modify the existing staking system to incentivize both staking and voting, aiming to increase active voter participation and further decentralize voting power.
  • Core Idea: Transition from a passive, APY-focused model to one where earnings are directly linked to voting activities.

This proposal seeks to address the current lack of voter turnout and the widespread dissatisfaction expressed by non-voting members. By tying rewards to voting, it encourages more stakeholders to participate actively in governance, effectively combining utility with pleasant engagement. The revised system is not just beneficial for increasing the number of votes but also aligns with the spirit of community and shared responsibility within Polkadot, ensuring that every voice has the potential to be heard and every vote truly matters.

Mechanics of the System:

  • Stake and Earn: Validators and nominators can stake any amount, starting from 1 DOT, to participate in the governance system. This allows all participants to vote and earn rewards based on their referendum activities, ensuring active engagement across roles and stake sizes.
  • Referendum Tiers: Establish different tiers for referendums, with more crucial ones offering higher earnings for votes to encourage participation in significant decisions.
  • Voting Power: The power of a vote remains dependent on the amount of DOT staked, ensuring that all votes have proportional influence.
  • Participation Requirement: To earn rewards, users must actively participate in votes. This rule applies to all stakers, even those with just 1 DOT, ensuring everyone contributes to decision-making.
  • Non-voters: There should be a discussion on whether non-voters should receive a minimal baseline reward or none at all. Alternatively, the rewards that would have been allocated to non-voters could be burned.

Continued Voting Rights Post-Unstaking: Users retain their voting rights in referendums even after unstaking (unbounding), although their voting power decreases, which corresponds to lower earnings from voting activities. This encourages continued engagement even after financial commitment changes.

This approach aims to maintain engagement even after users have (unbounded) unstaked, though with a scaled-back reward system to reflect their reduced stake in the network. Essentially, the system ensures that users are still part of the decision-making process but acknowledges their lesser commitment with correspondingly lower rewards.

This system proposes a shift towards active participation in governance as a fundamental aspect of staking rewards, aiming to create a more engaged and responsible voter base within the Polkadot ecosystem.

The idea aims to compel everyone to vote, thus preventing complaints about decisions and ensuring active participation in securing the network.

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Great proposal, I agree. We could also develop an app that makes the voting process easy and and X account that would announce every proposal that is coming to vote and when it’s time to vote

Great work, I hope this moves on to the next stage

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I like the idea to change something.

I don’t have a strong opinion on your ideas yet, but I like the idea that tiers be introduced.

I don’t think voting should be rewarded, because it would be gamed. I’d rather have different tiers - voting or non-voting, similar to shares - and for voting nomination use a longer lock/divesting period in exchange for the right to vote. Non-voting could get out as quickly as now, but they’d earn less and be unable to vote.

One of the reasons I’m unsure as to what should be done is I wouldn’t want to either encourage voters (to avoid gaming) or punish non-voters (if they just want to nominate for less and not participate in decision-making, let them) - neither is a good idea. But I don’t know how that can be done :slight_smile: Interesting topic!

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Can you elaborate when you say encouraging voters is gaming?

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My initial thoughts on this is that I don’t think rewards should be entirely linked to the activity of voting in governance, as we absolutely need to reward for staking to secure the network. Perhaps there could be an influential scaling factor added to the reward distribution to encourage governance participation based on voting and governance activity. Maybe a dynamic value based on an idealized governance participation percentage? Once ‘enough’ DOT is being used in voting we return to a normalized, non-scaled reward amount. If too few DOT are seen voting in an Era, then reward voting participators +10% and reduce non-participators -10% or something like that?

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Hey somedude,

Thanks for sharing your thoughts! I appreciate your concerns about directly rewarding voting due to potential gaming and agree that creating a system that incentivizes active participation without adverse effects is crucial.

In the proposed model, the idea of different tiers based on referendum significance does incorporate a way to balance the influence of votes, ensuring that crucial decisions have a stronger impact. This should help mitigate gaming by making it less profitable to manipulate votes on less critical issues.

Furthermore, by requiring participation in votes to earn rewards and decreasing earnings for non-voters rather than punishing them, we can foster a more engaged community while still respecting the choice of those who prefer to remain passive. This system ensures that everyone’s voice can still influence key decisions proportionally to their stakes, aligning with the principles of fairness and decentralization.

We’re also considering maintaining voting rights post-unstaking (with reduced power), as you mentioned. This approach would encourage ongoing engagement and ensure that even those who have decreased their financial commitment remain involved, helping to maintain a diverse and active voter base.

Would love to hear more of your thoughts or any suggestions you might have!

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Hi Nukeme3,

Thanks for your thoughts! While I understand the concern about not exclusively tying rewards to voting, I believe that the system I’m proposing could actually enhance network security more effectively by promoting active governance.

By linking rewards to participation, we’re not just incentivizing voting, we’re ensuring that those who are actively involved in the network’s decisions are rewarded for their engagement. This approach could increase the overall health and decentralization of the network, as more stakeholders are encouraged to either participate directly or delegate their voting power responsibly.

Moreover, such a system ensures that securing the network and governance go hand in hand. Those who choose not to vote could still delegate their votes, ensuring their stake is still contributing to network security without forcing them to participate directly. This way, we create a more resilient and dynamic governance structure that adapts to the community’s active involvement, rather than remaining passive.

I believe this approach can fundamentally strengthen the link between staking and network security, as active and informed participation is the cornerstone of a truly secure and decentralized system.

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The following idea is a flawed design as it is part of the unfiltered governance incentives which is not sybil resistant and very prone to spam.

Giving minted rewards to voters causes spam which Dfinity’s Internet Computer has already faced due to the fact that the IC vote incentives are generated by inflation (i.e. minted)

Unless there is a centralized entity providing anti-sybil blacklists (in the IC case Dfinity itself and Dfinity splinter entities like the ICA) this idea will only entail spam attacks and non-governance participant holder dilution something never presented on the tokenomics of the DOT token.

Bear in mind that dramatic tokenomic changes such as these have been causes of heavy concern on other chains and dapps.

Unless a robust design for those changes is introduced then only foreign token drops to voters should be tried and tested first.

The counterexample these accounts are gonna use is Jupiter which is a dapp governance token and tokenomics differ significantly from economic security as well as deeper liquidity on exchanges and price significantly hence the IC is a more appropriate comparison.

The unique flavor of this proposal at this late state of Polkadot tokenomics is that it will be punitive for non-governance participants and it will have the side effect of wealth redistribution more than anything. Something that shouldn’t be encouraged as this only has one possible outcome (Already explored by Juno on the blockchain case outside “real life economics”). These designs have to come early in the tokenomics in order to not disturb many of the participants who may not want to participate in later experiments. A lot of value is at stake, literally as economic security as well as tokenomics assurances. As of now the DOT token purpose is economic security and governance. So this has to be threaded carefully.

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Hi Saxemberg, thank you for your insights. While IC uses centralized anti-sybil measures, our approach is decentralized. We leverage the economic stakes inherent in Polkadot ecosystem, aligning voting power with stake size, thereby making it costly and risky for malicious actors to manipulate outcomes.
The introduction of different tiers for referendums, where more significant decisions offer higher rewards, is strategically designed to prioritize crucial votes and discourage frivolous proposals. This tiered system not only incentivizes serious participation but also scales the rewards accordingly, making it economically unreasonable to spam the system without substantial investment.
This setup encourages genuine engagement and deters spam by aligning incentives with meaningful participation in governance.
Our aim is to create a governance system that is not only spam-resistant but also enhances active participation and decentralization. I believe that with careful planning and community feedback, we can achieve a robust governance framework.
Would love to hear any further thoughts or concerns you might have on making our system even more secure.

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Besides increasing the number of votes, what prevents voting at random to get the rewards (with a bot for example) in your proposed system?

Maybe it will lead to better outcomes than “informed” and intentional voting, it’s impossible to say.

Will be interesting to know if a pure random choice leads to better outcomes than intentional reasoned intervention, but the experiment is difficult to set up… (joking, will incentive tons of very bad proposals)

Hi Sodazone,

Thanks for your comment. In the proposed system, the effectiveness of any bot-driven or random voting is substantially reduced, not through the sheer number of votes, but through a more nuanced approach based on points. In this setup, each wallet doesn’t simply represent a single vote. Instead, the voting power of each wallet is determined by several factors such as the amount of DOT staked, the tier of the referendum they are participating in, and whether their stake is bound or in the process of unbonding.

This means that voting influence is nuanced and proportional, not just to the amount staked but also to the engagement level in the governance process over time. This structure encourages deep, informed participation that goes beyond merely casting votes for rewards, reducing the likelihood and benefit of any random or automated voting strategies.

The aim is to foster a governance model where the commitment to the network’s health and decision-making process is rewarded, promoting both security and active, thoughtful participation.

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This explanation does not address the issue.

If you get rewarded by voting, nothing prevents using a bot to vote randomly just to get the rewards.

Hi Sodazone,

Could you clarify what you mean by using bots in the context of our voting system? Are you considering the feasibility of bots automatically casting votes, or is there another aspect of bot usage you’re concerned about? Understanding more specifically what you’re envisioning can help address the issue more directly.

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My concern is that people will be incentiviced to just vote to earn the rewards without even reading the proposal. On top of that it could be trivially automated so no human needs to be involved.

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The fear of bots indiscriminately voting for rewards is understandable, but the design of this system actively discourages such behavior. By reducing rewards for those who don’t participate in voting and tying the voting power directly to the stake and engagement level, it becomes less economically viable to use bots. The focus is on meaningful participation.

More active involvement from the community, even if initially spurred by incentives, can lead to better understanding and more informed decisions across the ecosystem. This is about evolving the conversation and refining our approach through discussions like this one. The proposal is designed to adapt based on community feedback, ensuring we collectively create a system that truly reflects our values and goals.

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A hybrid system might be the ticket but the point is we need to incentive individuals to vote. This cannot have governance concise of 12 whales deciding our fate. The people need to be active and they will if they get rewarded

I feel the health and prosperity of our network depends on this. What’s going on now isn’t an acceptable level of decentralized governance

Individual voices need to make up at least half the votes

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There would be some of that but Tbh that would be better than what we have going on now, which is whales fighting for their own agendas, not the peoples.

Having a Polkadot DAO handle that post the proposal would help get voters thinking about how they want to vote, so when the time comes, they already know how they want to vote. Jupiter DAO does this and it’s highly effective

The polkadot DAO should work for the people, not the other way around. It’s time to make an change and this is a step to allow the voice of the people run the show

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That’s an excellent point.

I’m just concerned about a way to avoid ‘gaming’ the system as someone else suggested such as a whale creating dozens of bogus referenda and voting for them to be disproportionately awarded for zero value added activity. This is assuming that voting activity were linearly proportional to reward dispersion.

Maybe a threshold of voting could act as a gate filter to enable rewards when dispersed. It could be tied to a minimum number of voting actions, or a percentage of total wallet DOT holdings in conviction during the era.

The more I think about connecting nomination rewards to governance participation, the more it seems to make sense.

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Hi Nukeme3,

You’re right to be concerned about the potential for gaming the system. The idea, however, is structured such that the effort and cost of creating bogus referenda and the required voting wouldn’t be worth the potential rewards. This is because the rewards are not distributed simply based on the quantity of votes or proposals but are tiered to emphasize more significant and impactful governance actions.

Implementing tiers ensures that only the votes that truly matter—the ones that could change the direction of the network—are incentivized strongly. This minimizes the incentive for anyone to ‘spam’ the system with meaningless votes since these would not yield significant rewards. The cost of setting up and executing such schemes would outweigh the benefits, making it economically unfeasible.

We’re looking to refine this system continuously based on community feedback. It’s great to see active discussions on our Reddit and my Twitter feed—it shows that the community is engaged and cares about shaping a robust governance model. Please keep the feedback coming, as it’s crucial for crafting a system that is transparent, fair, and effectively deters gaming.

Looking forward to more insights and suggestions!

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Reminder that 1k validators got grilled for auto NAYing everything when they were required to vote. A vote requirement to combat against vote inflation will only accentuate this former issue exponentially. There is no way out of this behavior with the current design.

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