from @Alex North and @Nicola
TL;DR: Increase the storage on-boarding by optionally reducing the collateral requirement at the cost of burning part of the block reward (hence lowering circulating supply)
- Some storage providers have difficulty in depositing the pledge collateral
- Collateral cannot be reduced since it breaks the FIL rewards*
- The network wants to maximise tokens locked and tokens burned
* note: our proposal reduces collateral, but compensates for that by burning tokens
Make the SP opt-in for a pledge collateral discount at the cost of a reduction of the mining reward (which is burned). Our intuition is that this would allow SP that have lending difficulty (especially with current interest rates) to pledge less collateral at the cost of having reduced rewards.
This proposal is directionally in line with other proposals like SDM (the more tokens locked for the longer period, the higher the reward), but instead of proposing to increase the collateral to earn more, we go the other way, reduce collateral requirements at the cost of earning less.
Protocol Intuition: Network Revenue share
- SP can opt-in to put X% less collateral
- Their mining reward is reduced by X% (or a function of X) and it is burned (hence why shared with the network)
Note: QAP is the same, only mining reward is burned
Design space on the portion of block reward burned
- Fixed burn function: The percentage of block reward burned should be calculated at the moment of sector onboarding and should be fixed (since it simplifies the SP reward calculation and earnings are reliable).
- Market for burn function: However, it is ok for the percentage of block reward burned to follow some network parameters that based on congestion control (the more the SP that lock lower collateral, the higher the burn fee).
Design space on the portion of block reward burned
From the analysis on
Why is this a win-win for SP and Network?
- SP: can start mining with less capital requirements
- Network: earns from the SP since a portion of the mining rewards are burnt
- Finally, with a choice of good parameters this could:
- Increase the number of tokens locked (small miners or miners with not enough collateral)
- Increase the number of burned tokens (since a portion of the circulating supply will be burned)
How does it differ from Network-provided loans for miners ?
This proposal is NOT a loan of tokens that the network does to the SP, instead it is a reduction of pledge collateral. If the pledge collateral is not reduced, someone has to put collateral down and take the risk on the storage provider.
- Figure out cryptoecon parameters that will be net positive for the network
- Figure out currency exchange between locked tokens and burnt tokens
- Allow SP to increase their collateral through time to increase their reward (almost as if they are repaying their loans)
- Network rewards can be extended to also earn tx fees
The storage provider (SP) role in our network is crucial for maintaining the integrity and security of the network, however, we have identified a problem that is hindering the growth and decentralization of our network. Some storage providers are finding it difficult to deposit the full pledge collateral required to participate in the network. Additionally, the current collateral requirement cannot be reduced without negatively impacting the FIL rewards for storage providers, and the network wants to maximize the number of tokens locked and burned to increase network security and revenue.
Our proposal is to offer storage providers the option to reduce their pledge collateral requirement in exchange for a reduction in their mining rewards. By giving storage providers the ability to pledge less collateral, we hope to attract a wider range of participants, particularly those who have difficulty obtaining the necessary collateral, particularly in light of current interest rates.
The protocol will allow storage providers to opt-in to a reduced collateral requirement, in exchange for a reduction in their mining rewards. This reduction in mining rewards will be compensated by burning a portion of the tokens, thus increasing the network security and revenue.
This proposal aligns with other proposals such as "Storage Dynamics Model" (SDM), which rewards storage providers for locking tokens for an extended period. However, instead of proposing to increase collateral requirements to earn more, our proposal goes the other way and reduces collateral requirements, but at the cost of earning less.
To implement this proposal, we will need to determine the optimal cryptoeconomic parameters that will be net positive for the network. Additionally, we will need to establish a currency exchange between locked tokens and burnt tokens.
In conclusion, this proposal aims to attract a wider range of storage providers to the network, particularly those who have difficulty obtaining the necessary collateral, and at the same time it will increase the network security and revenue by burning a portion of the tokens.