Dan Larimer, technical director of Block.One, the developer of the EOS protocol, has published proposals to improve decentralized network management and increase the reliability of block manufacturers.
The purpose of blockchain governance is to make decisions in the best interest of as many people as possible while minimizing the opportunity for a small group of people to act in ways that benefit themselves at the expense of the community.
In particular, Larimer proposed that only tokens blocked in a long-term stake contract be given the right to vote. The income from it should compensate for the loss of liquidity and be proportional to the duration of token blocking. To this end, Larimer considers it appropriate to introduce a system of market interest rates similar to US Treasury securities.
U.S. Treasury Yield Curve
According to Larimer's proposal, it is necessary to create six staking pools that block funds for: 3, 6, 12 months, 2 years, 5 and 10 years. Users will receive revenue in proportion to the share in the pool. The weight of the vote is calculated by the sum of their shares in each staking pool.
The withdrawal of tokens will be possible no more than once a week and at interest, for example, for 3-month and 10-year terms, withdrawals will cost 7% and 0.2% per week, respectively.
Transferring tokens from a short-term pool to a longer one will be unhindered. The reverse operation is again possible only with interest.
According to Larimer, his proposed system of staking will establish a yield curve based on the balance of the desire for power and higher profits. Few will want to give up liquidity for 10 years in order to obtain greater profitability and power, but for the period of 3 months, with lower income and influence, the majority will agree, he said.
Elections of 21 block manufacturers Larimer proposes to conduct on the basis of the principle “one token - one vote”. The remuneration of producers should be 0.5% of the annual issue and determined in proportion to the votes received, and not on a block basis. The maximum annual inflation of tokens is assumed at 3.5%.
To stimulate reliable production of blocks, voters (stakers) will be punished by falling profitability for skipping blocks by the manufacturer. For example, if the reliability drops to 97%, the yield will already be 73% of the maximum.
Larimer believes that the proposed changes, first of all, will not allow exchanges to vote with user tokens. Smaller players will be able to gain additional influence and high profitability by participating in long-term staking pools, which will increase the decentralization of network management. In addition, it is likely that even the smaller of the block manufacturers will be forced to provide high reliability.
Since tokens from staking pools will not be able to get on the EOS Resource Exchange (REX), this will increase its throughput. REX profitability will be determined by the shortest 3-month pool, which stimulates the transition of users to them. Also, REX tokens will not receive voting rights, Larimer emphasized.