Network-update rewards as opposed to block-rewards

[pepoospina]

• Mint pools of 1% to 5% of new ETH tokens on each of the network update hard-forks (milestones) of Serenity roadmap, and give them to the core developers.

• Tokenize these pools with a dedicated network update ERC20 token (NUPs) (using eth1.0) and give these NUPs to the developers for them to distribute as they please.

• ETH in the minted pools will be distributed among NUPs holders at the network update, and, so, core developers can sell NUPs for stable coins to fund themselves before the network update.

The key advantages of using a NUPs and diluting at Serenity release, instead of diluting at every block are:

• Incentive alignment: no delivery -> no reward -> no dilution.
• The community won't care about DEVs distributing NUPs before Serenity's release, so they won't have to be convinced of the convenience. When they get diluted they also receive a brand new blockchain in exchange.
• The distribution of the rewards can be implemented without a hard-fork, just distributing NUPs, using any mechanism that you would use for block rewards.

[lrettig]

Thanks for the proposal. Some questions:

Mint pools of 1% to 5% of new ETH tokens

1% to 5% of what, exactly?

on each of the network update hard-forks

Game theory: does this incentivize core devs to do more frequent, smaller hard forks? (And is that a good thing or a bad thing if it does?)

a dedicated network update ERC20 token

Who manages issuance of this token?

give these NUPs to the developers

How? By what metric? Who does this?

[pepoospina]

1% to 5% of what, exactly?

Of ETH total supply. The amount is proposed by the dev team and "accepted" by the community by adopting the new fork. It should be a value that is perceived as a fair price by both parties and will depend on the content of the fork. The 1% to 5% is totally arbitrary and a detailed price analysis should be done. It can be decided or adjusted weeks before the network-update.

Game theory: does this incentivize core devs to do more frequent, smaller hard forks? (And is that a good thing or a bad thing if it does?)

They might lose part of the community. The community must feel they are receiving something more valuable than what they are paying.

Who manages issuance of this token? How? By what metric? Who does this?

The problem is equivalent to deciding how to distribute block-rewards.

The good thing is that being NUPs, their value is 100% correlated to the network-update The community pays only after the delivery, not years in advance, and so they change from being investors to buyers. This should reduce the "governance burden" and leave more flexibility to the dev team.

An ETH denominated tax paid before the work is done is a clear invitation for "democratic" control of the community on its expenditure.

[pepoospina]

@pet3r-pan, just a couple of comments on this proposal, as I think its very relevant.

By tokenizing the reward with NUPs and associating it to "new ETH at network delivery" you take the community out of your neck. The community won't care about NUPs until Serenity is delivered, and by then, they will be so happy that they won't complain about dilution.

Oh! and you don't need a hard-fork to implement the reward distribution system! whatever you want this to be (DAO, faucet, Moloch,... anything), as it would work with the NUP token (ERC-20 token on eth1.0).

For me, these are only gains.