Mainnet parameter discussions: Knowable's proposal

Hi! :wave:

I’m Gavin, I’m responsible for the Knowable team, which includes Spork and Dave :milky_way: :telescope:
We’re considered one of the core Namada teams, and we work alongside (but independently from) the founding teams, Heliax and the Anoma Foundation, almost exclusively on Namada and a bit on Anoma. We’re actively seeking to grow Namada’s set of core teams: join us!

If you’ve spent time in the Namada community, you’ll likely be familiar with some of our work. Together with CryptoDruide and a number of friends/supporters, we’re founding a Namada community collective called Luminara, which we aim to grow to support a core Namada community. Having a strong core community will be essential to stewarding Namada’s vision, mission, roadmap and priorities, and perhaps most importantly, our culture. Today we’re proposing an initial set of parameters for the Namada protocol ahead of our anticipated mainnet launch :rocket:

The NAM token :yellow_circle:

Tokens are often conflated with money because they share some of the same properties. We think of NAM as something that will be more than a financial asset, because it will represent material ownership of the Namada network. NAM is designed to enable the holder to permissionlessly transact on the Namada network (and networks that Namada serves). We are expecting the Anoma Foundation to propose a set of Namada addresses with corresponding NAM allocation amounts. Together with the parameters we agree upon, Namada validators can make the genesis files needed to launch the Namada mainnet.

NAM holders can choose to “stake” NAM (ie. help secure the network), and to vote on proposals to coordinate decisions and actions about the network and community. If a holder has 500k NAM and the supply is 1B, for example, this holder owns 0.05% of the Namada network. If the supply increases and their holdings do not, the holder loses proportional ownership. Namada will increase its supply, issuing new NAM to incentivize three kinds of things: staking, public goods / public goods provisioning, and shielded set deposits. Often people refer to this new issuance as “inflation.”

Incentivizing staking :balance_scale:

Namada’s protocol guarantees will be secured economically. We think that there will need to be adjustments, depending upon how much value is secured by the network, but initially we suggest a target of 40% of the token supply at stake to guarantee the protocol. Since the phases of mainnet propose to launch Namada with staking inflation turned off, we think that the staking inflation rate should begin at 0. However, we suggest agreeing upon a maximum staking inflation rate ahead of Mainnet Phase 2, and we think that a maximum staking inflation rate of 5% should be sufficient to incentivize holders to stake 40% of the token supply.

If 33% of the supply is staked and staking inflation reaches the 5% ceiling, for example, the staking reward rate will effectively be ~15%. A maximum of 5% means that the Namada protocol will issue no more than 5% of additional token supply annually for rewarding staking to secure the network. At this rate, for example, a holder of 500k NAM that does not stake will own 0.0476% at the end of Year 1, versus a holder that stakes 500k NAM, who would instead own 0.0548%. Note that this staking inflation parameter is a maximum: as we get closer to our targeted stake, the rate of increase slows down, and if we exceed our target, the actual staking inflation rate will decrease, and can decrease to as low as 0 (more here).

We’d prefer for the unbonding period for staked tokens to be relatively short, and our understanding is that Namada could have a 14 day unbonding period without introducing much risk of weak subjectivity.

Validating :white_check_mark:

We’d like for Namada to have an active set of 255 validators to help ensure that the barrier to become a validator is relatively low. In our experience, stake tends to be sticky: once holders delegate, they often don’t later redelegate to different or new validators. If there’s less competition to be in the active set, we think that there will be a more level playing field for validators to attract delegations as early as possible, and our understanding is that 255 validators shouldn’t meaningfully decrease network performance.

However, we think that a validator should need at minimum 10k NAM 1000 NAM in stake/delegations to qualify for the active set. A validator can be created with any amount of NAM, but the protocol needs to rank all candidate validators, so we should ensure that the performance of the network isn’t slowed by having to rank too many candidate validators.

[Edit: after discussions in the Namada Validator Circle, we have updated our proposed delegation minimum from 10k NAM to 1000 NAM to qualify for active set]

Validators need not be online at all times with CometBFT, but a validator will be removed (“jailed”) from the active set if offline for too long. In this case it would be nice to see the threshold for jailing be relatively high, like 15 hours of consecutive downtime before being jailed. Ideally a validator operator has enough time to recover from a node issue without feeling pressure to do something risky that could result in a security fault. Jailing won’t result in being “slashed,” but a validator and its delegators will not earn staking rewards, their governance voting power will not be part of any voting tallies while jailed, and it will take two epochs (12 hours) after unjailing to return to the active set.

Slashing :scissors:

Slashing is an economic penalty that happens when the protocol uses evidence to permanently remove a portion or all of a validator’s stake, which includes their delegated stake. While downtime won’t be slashed, there are two different kinds of slashes by the Namada protocol: a duplicate vote (aka “double-signing” or “equivocation”), and a light client attack. In the case of either type, the penalty is exponentially proportional to the amount of stake involved in the fault to a maximum of 100% slashing. There’s a floor parameter, a minimum slashing penalty, that we propose be 0.1%. We think it’s important to be aware that if two or more validators commit the same fault in the same epoch (6 hour period), the penalty will be exponentially proportional to their combined stake. If it’s large enough, all stake that is delegated to these validators could be permanently removed by the protocol. While providing more robust security, there’s also potentially the fringe benefit of nudging stakers to better distribute their delegated stake amongst validators.

Provisioning and rewarding public goods :handshake:

We’ve too often seen delegated proof of stake network protocols reallocate ownership toward the largest, earliest stakers. However, a growing ecosystem needs to maintain their early set of adopters while also growing by creating opportunities for new waves of community member contributors. We think Namada can strike a better balance between early supporters and newcomer stakeholders with its new token issuance policies.

Namada’s protocol can issue new NAM tokens to fund public goods (PGF), such as the work that will be needed to develop and advance Namada’s roadmap, community and ecosystem, to recognize allies advancing our broader vision, and to attract these allies to our mission. Using PGF inflation to reallocate Namada ownership will enable us to create opportunities for new contributors to secure a meaningful Namada position. Since the Phases of Mainnet plan proposes that PGF inflation be turned off in Phase 2, we suggest that PGF inflation rate be 0 at genesis, then 5% at Phase 2, and 10% at 3 months after Phase 5.

We will be one of the first communities to do this. We’ve seen in Cosmos and other ecosystems that foundations tend to be some combination of unsustainable and unaccountable to the community of the network that they’re mandated to support. Rather than being dependent upon an unaccountable foundation, PGF should enable our community to be self-sufficient. Using the value of our own ecosystem, we can reallocate Namada ownership to reward effective efforts and to incentivize necessary developments. The bet is that if we’re all willing to own less of the protocol, we can allocate it effectively enough to make ownership of our community more valuable. How? A dedicated stewardship organization can be elected, rewarded, and held accountable for championing Namada’s PGF work. We suggest beginning with 1 steward organization slot to experiment and observe before updating our protocol to be extensible to multiple, independent steward organizations. We also suggest the same graduated increase for rewarding the PGF steward organization: from 0 at genesis to 0.5% inflation at Phase 2, and 1% at 3 months after Phase 5.

We foresee the entire Namada community benefitting from supporting contributors that maintain and advance the progress of our mission, as well as our broader vision of a data-protected digital world. If well-resourced for self-directed development, we strongly believe that Namada can and will grow to be a self-sufficient, self-organized, decentralized community. We intend to begin a dedicated discussion about Namada’s PGF mission and vision as soon as possible: initial considerations such as PGF priorities, roadmap, and expectations about the steward role.

Incentivizing shielded set deposits :shield:

At launch, Namada faces a “chicken-and-egg” :hatching_chick: kind of problem: there’s no data protection without deposits, and the earliest deposits won’t benefit from data protection until there are more deposits. So we’ll need to bootstrap Namada’s data protection by attracting early deposits for each kind of asset. We can reallocate ownership to those who help bootstrap the security for data protection by rewarding early asset deposits with “shielded set NAM rewards,” similar to our security budget for staking.

For example, if we agreed that we wanted to target 7 500 ATOM :atom_symbol: and 100 000 OSMO :test_tube: with a maximum of 0.2% inflation each, the maximum the protocol will issue for shielded set rewards will be at a rate of 0.4%, and the rate of issuance will decrease as we approach our targets and issuance for each will stop when its target is reached. Therefore to understand Namada token issuance, we think maximum NAM “inflation” for shielded set rewards should not be a simple addition of staking plus PGF plus shielded set rewards to determine Namada’s issuance rate–there’s nuance here.

Since the phases of mainnet propose to launch Namada with shielded set rewards turned off, we think that no assets should be designated yet. However, we strongly suggest beginning a dedicated discussion now about how we should govern shielded set parameters and agree upon: a) the initial set of assets (ie. how many? which ones?) that we’ll want to incentivize, b) the amounts we want to target for each asset, and c) the maximum inflation rate that we want to designate for each asset type. We expect that there will be representatives from different communities advocating for deposit rewards for their respective community assets, so we should determine a basic initial approach for decision-making that can be improved upon over time.
Edit: we have initiated this discussion here: Preparing to kick off shielded set rewards :arrow_backward:

Just as staking is designed to protect the integrity of transactions, we think of shielded set deposits as securing transaction data (but deposits will not be locked by the protocol). Bootstrapping the shielded set will be critical for Namada to be useful, and we are the first community offering rewards. Therefore we are strongly in favour of prioritizing an attractive reward rate to attract the asset targets that our community agrees upon (and ideally attracts some intrinsically motivated depositors, as well!)

Governing :ballot_box:

Namada has a plutocratic governance structure: the more stake you delegate, the more governance voting power you have. Validators inherit their delegators’ voting power, but a) validators can only vote for just over 2/3 of the voting period and b) delegators vote the entire voting period and can override and decide how to use their voting power. If a validator is outside of the active set (ie. jailed or outranked) when the voting period ends, the validator and its delegators’ governance voting power won’t count.

Currently there are three kinds of governance proposals: 1) default - a generic proposal that can carry wasm code to be executed; 2) StewardProposal - updates the designated PGF steward account; 3) PGFProposal - for conducting PGF activities. They have different quorum and majority thresholds, among other properties that are not governable parameter values, which we intend to propose should be made governable in the near to mid future.

All governance proposals are currently subject to the same parameters, and we are proposing that they be:

  1. 2000 NAM deposit
  2. a maximum 2 day delay after proposal launch before the start of the voting period
  3. A minimum 7.25 day voting period (which gives validators a minimum of 5 days for voting)
  4. A maximum 21 day voting period
  5. at minimum a 2 day grace period before a successful proposal is enacted

We think that we should begin a dedicated discussion about Namada’s governance process now. It would also be helpful to begin discussion Namada’s roadmap.

In the near future we strongly suggest proposing an IBC-specific gov proposal type that can be expedited to recover a frozen or expired IBC channel. This helps to ensure that deposited IBC assets are not stranded with Namada, and the governance process would require wasm code and (with our proposed parameters) would take at least 9 days to recover the channel.

There were originally plans for Namada to have a “liquid democracy.” A liquid democracy would enable us as stakers to delegate our governance voting power to any account, whereas the current implementation has staker governance power only delegated to the validators we’ve staked with. We would strongly support implementing what’s needed for a liquid democracy in the near to mid future.

It could also be nice to be able to create governance proposals with a smaller amount of NAM than the deposit required, for which other participants could add to the deposit amount. We think it would be helpful to be able to signal strong support by co-sponsoring a proposal.

IBC :chains:

Since the phases of mainnet propose to launch Namada with IBC transfers turned off, we think the IBC limits should begin at 0, and afterwards any token transferrable to Namada by IBC should be specified by governance proposal. We think that we should begin a dedicated discussion about how we should govern IBC limit parameters: considerations such as amounts, and expectations like the steps we should take for increasing amounts, and the assumptions and needs to secure IBC asset deposits.

Onward! :rocket:

The full set of proposed parameters can be found at the bottom of this doc: draft proposal for Namada mainnet parameter discussions - Google Docs

That’s it! Let’s discuss :slight_smile:

19 Likes

oh! and some of the network settings are determined by individual validator configurations

we suggest making the default config file setting for block time → 6 seconds

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I’m impressed with the level of detail and quality of this post/proposal.

I feel a small summary table of the protocol parameters proposed would be helpful.

In my view, bringing inflation into the ecosystem, is also bringing in one of the most difficult aspects of traditional capital economies. It may serve some purpose, but also should be limited as to not devalue the holdings of current holders too much.

My tentative opinion is that 5% pa is reasonable, while 10% is too much. Maybe some middle ground could be found.

I strongly favor allocating a good portion of the rewards towards NAM in the shielded set.

pretor

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I think 250 validators are much . I would suggest 120.

Agree on that! In terms of upgrading software & voting proposals, it would be optimized by having smaller set of validators

When will the tokenomics blogpost be released? It is important to know the % of the supply for each entity, including how much supply for the foundation/Namada team. It seems initially there won’t be a foundation delegation program yet, however to reach the 40% staked supply I assume the Namada team/foundation will stake most tokens, I guess some criteria will be needed to stake even not yet a delegation program? As @cwgoes mentioned in the AMA the performance/uptime in the Shielded Expedition will be an important criteria?

It seems the target block time will be 6 seconds, but what is the actual expected block time? Several networks have significant lower actual block time than the target block time so the tokens emissions are higher, to understand this please read this blogpost

Even if there are 255 active set slots, it is likely that many won’t have the 10k NAM minimum, so effectively there could be like 100-150 empty validator slots?

I think this should be better explained. The staking rewards inflation is as a % of the total supply, but this % for the PGF inflation is also based on the total supply? If so, it seems way to high. I assume it refers to a % of the staking rewards inflation? That would be in line as the % for the community pool in many other networks.

People new to Namada may have no clue about what a Steward is, I think it should be better explained what Stewards are, what is their mission and tasks, how they are selected, etc.

Stride already shared a blogpost where they explain that Stride’s LSTs could potentially be the main assets for the Namada shielded set because holders of their LSTs earn staking rewards and the shielded set rewards. This is a good point, if the shielded set rewards are small compared to staking rewards or other DeFi yields, the incentives would be insufficient to attract assets to the shielded set, given the opportunity cost. However, if most assets in the shielded set are Stride’s LSTs and Stride depends on the Cosmos Hub for security, then it would be too dependant and centralized on the Cosmos Hub. I think the first asset for the shielded set should be NAM, or stNAM also since if NAM staking rewards much higher than shielded set rewards then most people might choose to stake. I understand the Namada trustless ethereum bridge is paused for now, but I think it is very important to attract ETH, stETH or other ethereum assets to the shielded set, ideally BTC also but not sure how possible this will be when Namada launches the mainnet

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建议验证者减少到100个以内,加快主网进程

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I think we should have tokenomics before deciding mainnet parameters

Yo, what’s the deal with the timeline on this proposal, Knowable team? If everything’s all set, when are you gonna get NAM allocation lists published? If you don’t have a solid timeline again, this thing’s gonna drag on for months

Milestone % are going in the back direction. Phase 1 was at 89% before, but now it’s down to 74% :melting_face:

UPD. And wen tokenomics blogpost?

Amazing job with the details in the post. :clap:
But almost everything mentioned here depends on the tokenomics details.
for example, we can’t tell if 10k NAM to become a qualified validator is enough or not

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Hi, that’s an interesting suggestion.
I would still like to wait for tokenomics from the team to understand how to move forward.

But one thing bothers me.
I see in here direct contradiction of your proposal with the position of Chris @cwgoes and therefore the entire Heliax team.
Here ( Proposal for mainnet launch phases - #44 by cwgoes ) he writes:

" It may not be the case, for example, that Namada can support the costs of hundreds of validator operators - but far better for them to learn that now, than set up a whole operational setup on the basis of a distorted price signal and have much trouble in the future when that signal is corrected."

So I think the team is not interested in hundreds of Validators.
So I think this number should be reduced.
Or we need more clarification on this issue.

1 Like

Thanks for raising this, I can see that this might be confusing - just to clarify this specific point:

  • Heliax does not have a position on how many validators there should be - that’s up to the Namada community, and in particular up to individual decisions made by validators (whether to validate) and by delegators (who to delegate to).
  • CometBFT (Tendermint) has some practical limits on how many validators can quickly produce blocks, due to n^2 message complexity. 255 validators should be possible from this perspective, but e.g. 1000 probably wouldn’t work, or at least wouldn’t be able to produce blocks quickly enough.
  • Validators have their own costs (which I don’t know, and which vary). Depending on their costs, how many delegations they receive, exchange rates, etc. it may not always make sense for a given validator to operate, and e.g. a validator who doesn’t consider it worthwhile may choose not to.
  • I don’t think that we necessarily need to impose a lower limit on the number of validators in order to figure out how many validators make sense. 255 in this proposal is just a limit, maybe only 150 validators actually sign up, or some of the lower-ranked ones choose not to continue running after some period of time. So in that sense I don’t think there’s a contradiction between my view and @Gavin’s proposal.
  • Still, this is a proposal, up for discussion. There might be reasons to prefer a lower (or different) limit that I/we haven’t considered. Other perspectives very welcome.
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I wonder if we can change our reward address for mainnet?

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Please provide clear validator documentation and configuration requirements to facilitate independent validators to participate in the mainnet launch

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Very interesting proposals.
In my opinion we need to get the tokenomics of NAM before we can set the minimum benchmarks. Other than that, every other thing is perfect.

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Hey everyone, here’s my take:

Inflation and Staking: I lean towards a 5% inflation rate as a balanced approach, but honestly, without seeing the full tokenomics, it’s tricky to commit and understand the impact. We really need those detailed tokenomics soon. It’s crucial for making any decisions and keeping everyone on the same page.

Number of Validators: Something like 120-150 validators could make things more manageable while still keeping things decentralized.

Public Goods Funding & Governance: These initiatives sound promising. However, specifics on PGF rates and incentives for the shielded set are essential. It’s important that we all understand these details to support informed discussions on these topics.

Cheers

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the Anoma Foundation intends to publish a genesis allocation proposal with an accompanying blog post. this topic is about parameters, and it’s okay folks prefer to wait until the blog post before weighing in on parameters

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We cannot know everything without seeing Tokeneconomic. 250 Validator should be too much, max 150. We need to know how much Max Supply and Circulating Supply will be.

Will there be 1 billion floating around while listing on the stock market? Too bad tokeneconomic. We tried and tried in vain.

I think 6% inflation, 14 days unbound is enough