CIP-0082 | Improved Rewards Scheme Parameters

[TobiasFancee]

This is a new CIP for improving rewards scheme parameters. This proposal includes removing minPoolCost, adding minPoolRate, and increasing k. These are some of the most requested parameter changes discussed by the community. These changes will level the playing field for all stakepools while ensuring established community pools receive sufficient revenue via minPoolRate. This CIP does not deprecate CIP-0075 and is meant to be an alternative. While I still believe CIP-0075 to be useful, it simply makes too many changes to be implemented anytime soon (would require additional research). This CIP offers smaller changes that do not alter the incentives scheme. Rewards calculation for stakepools and pledge benefit are not changed (other than the addition of minPoolRate). In that way, I believe this CIP has a better chance of being implemented.

Forum Post:
https://forum.cardano.org/t/cip-improved-rewards-scheme-parameters/112409

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(current proposal, rendered from branch)

[rphair]

thanks; I read this one on the Cardano Forum already & in my opinion it's explicit and well-written except for the rank of the section headers.

I already wrote something about whether multiple CIPs should be submitted by the same author to accomplish the same thing (#387 (review)). I believe this is another one of those cases where the proposals should be merged, but also that this is a moot point without an engagement process from IOG for considering RSS change proposals.

These titles (including #421) are also more compelling without the subjective language. If there were a universal definition of "fair" or "improved" then original RSS mightn't have been disputable in the first place. I've tried to come up with objective alternatives but that's not easy either: "Decentralising" is hard to prove; perhaps "distributed" or "favouring distribution"?

[TobiasFancee]

I've made the suggested changes to the headers. Let me know if they are good now.

As for IOG considering RSS changes, I think we need to write the CIPs regardless. The community and SPOs need to be able to point to a CIP when asked about what they want.

As for subjective language, I agree that it is difficult to come up with better titles. An alternative might be "Updated Rewards Scheme Parameters" but that is quite generic. I actually think it's okay to have subjective titles in order to get community support. The community should understand it's a proposal and that they must form their own opinions. As for the title "Improved Rewards Scheme Parameters", I don't think it's that bad. This is an "Improvement Proposal" after all. If I did not consider it an improvement, I would not have posted it. Also, important to note CIP-0023 "Fair Min Fees" has a subjective title and it has been merged. Overall, I don't think the title is that bad, but I am open to suggestions for a new title.

Maybe a more objective title might be "Pledge Benefit Optimization" as this CIP makes pledge more important by removing minPoolCost and increasing k? But it doesn't change the pledge benefit, so I wouldn't want there to be confusion.

[rphair]

@TobiasFancee: ... changes to the headers. Let me know if they are good now

Thanks: the header outline structure looks fine now 🤓

[rphair]

Some notes for community consideration of this CIP have been made by the author here; most of this will already be known to RSS reviewers already but it is a pretty good review of this proposal's Rationale: https://twitter.com/TobiasFancee/status/1613949612766760960

[prometheus-pool]

I believe minPoolRate would be a huge improvement over minPoolCost for many of the reasons outlined in this CIP. At the same time I am not convinced a minPoolRate is necessary, and I believe it suffers from one of the major problems that minPoolCost suffers from, that it hides the most rewarding pools from delegators. Specifically, there will be pools that don't need to set any fixed cost because the minPoolRate covers their operating expenses and then some, and some of these pools would charge less than minPoolRate were they allowed to do so because they would still be profitable. Yet to delegators these pools will look the same as many other pools that are not being run as efficiently, meaning minPoolRate will make it difficult for delegators to select the best run pools. Such pools may rightfully feel frustrated that they are unable to leverage their competitive advantage to attract delegation, and the network may end up again paying people who are the loudest rather than the best at operating the network infrastructure.

An additional comment, I don't think it is necessarily true that "the pledge benefit on its own has no means to combat zero fee sybil pools" as you say in the CIP, it is certainly possible for a pool to leverage its pledge benefit to offer greater rewards than a 0 fee pool while still charging fees to cover its operating costs, how common this is comes down to the current parameter settings as well as the distribution of ada across the ecosystem. It seems like it would be valuable to test and adjust the protocol's researched parameters (after removing minPoolCost) before attempting to pre-empt potential problems by adding a new parameter such as minPoolRate to the protocol.

[rphair]

Notes from CIP meeting today (cc @KtorZ)

#421 (comment) is also applicable here because the companies listed as Implementors ("Implementors include IOG, CF, and Emurgo") haven't agreed to implement or engage with this.

Also this would have to be merged as Inactive rather than Proposed because there's no framework for IOG to discuss or implement these proposals. It's been resolved at the meeting that we will have to do this for all RSS proposals, even ones that have already been merged.

[TobiasFancee]

So I guess these CIPs really are useless. At least they are educational. Let me know if there is anything else I need to do to get it merged.

[rphair]

@TobiasFancee lots of people value your contributions and in my opinion all the RSS proposals support governance goals which have long term use beyond pure education.

[rphair]

It looks like this is therefore ready to merge but based on prior discussion (I can dig up some links if needed) it should have a state of Inactive because there is no way to activate the RSS proposals.

The same would be true for #421 with the same modifications, and also fixing the header levels as for this one: #421 (review)

[rphair]

Suggested change

	Status: Proposed
	Status: Inactive (no IOG support)

... or some such "justification" which indicates the problem. @KtorZ we may need your help choosing a justification tag that will be (grimly) applied to all RSS proposals. Mentioning the specific company name seems undiplomatic but it is not inaccurate or open to interpretation either so I believe it should be stated baldly as such.

[KtorZ]

I'd simply go for: "project area not enlisted for CIP process", which goes back to CIP-0001 and the need for a project to explicitly states their engagement to the CIP process.

[TobiasFancee]

@KtorZ @rphair I've removed any mention of entities with genesis keys and changed the status to "Project Area Not Enlisted for CIP Process" Let me know if this can be merged now or if further changes are necessary. Sorry I haven't been active in making these changes. I've had a busy month. My goal is to at least have this CIP ready for Voltaire.

[rphair]

on the contrary @TobiasFancee I am happy you are following through with this. I would prefer to see this on the books during this period as well, but there are a couple more format nitpicks.

Also you will have to rename the project folder from CIP-Improved_Rewards_Scheme_Parameters to CIP-0082 before we merge it. 🤓

[TobiasFancee]

@KtorZ @rphair I've made the requested changes. Let me know if there is anything else needed to merge. Thanks.

[rphair]

you're welcome @TobiasFancee - this looks ready to merge at or before the next CIP meeting.