EOS DETROIT Response to Block.one Stake-based Voting and Rewards Proposal

KEY TAKEAWAYS

  • Creation of a dynamic inflationary rate mechanism that is similar to the Federal Open Market Committee (FOMC) dot plot scheme, or base inflation off of the price of EOS.
  • Incentivize the individual to receive a larger share of inflation by voting for block producers who operate the network well based on objective on-chain data.

INTRODUCTION

As a Founding EOS Block Producer, EOS DETROIT is excited to see Block.One’s proactive approach in making the EOS ecosystem more attractive to both current and potential participants. EOS DETROIT believes Block.one’s continued participation will increase the competitive landscape for Block Producers and in return raise the quality of the network in terms of security and efficiency. In the past year, EOS DETROIT spent over $35,000 on hardware alone transitioning its block producer and API nodes across 5 networks to bare metal infrastructure. EOS DETROIT views the staking rewards proposal as a way to increase economic alignments between participants — a tide that could raise all ships.

IMPROVEMENT #1: TOKEN INFLATIONARY INCREASE

The target max inflation rate of 3.8% set forth by B1 is satisfactory to EOS DETROIT. However, the method in which reaching this rate could be modified to increase alignment of network actors. Increasing the inflation rate immediately by almost 3x seems detrimental to the token holders without additional deflationary mechanisms, especially when it is hard to truly estimate economic growth activity on the increases over time. The Prysm Group uses economic growth activity projections of between 2.4% and 5% as a justification for increasing the inflation to a maximum of 3.8%. EOS DETROIT suggests looking at more dynamic and alignment-focused models of obtaining an inflation rate. EOS DETROIT is proposing that this reference point be achieve in one of two ways:

  • B.) Price-Based Reference Point

IMPROVEMENT #2: Reward Individual Voters for Selecting High Performing Block Producers

EOS DETROIT believes that using Block Producer performance (% of blocks missed) is a great lever to include in the revised tokenomics proposal. However, the logic should be taken a step further and the reduction of rewards through decreased inflation should only affect those accounts staking and voting for block producers who are missing blocks.

CONCLUSION

While EOS DETROIT is in alignment with the B1 Stake-Based Voting proposal regarding the following changes:

  1. Implementation of staking rewards
  2. Mechanisms to reward network participation / lower network rewards and inflation when block producers do not perform well.
  1. Instead of penalizing the network as a whole for poor block producer performance, incentivize individual holders to vote for block producers who perform well by tying total staking reward to % of time voting for the highest performing block producer based on measurable on-chain information (blocks missed, referendum response rate, etc).

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